Breaking down the actual cost of equal pay for the US women

Gender-based wage discrimination has been a growing issue in the global consciousness and the soccer world has been no different. How we arrived at this current state is complicated to unravel, with causes ranging from profit motives to cultural biases, and many reasons in between. This analysis is intended to focus on one particular issue in regards to international soccer, with the understanding that these issues are part of a much larger cultural context that influences how the market values women’s sports.

There are some instances where wage differences across gender are acceptable and others where the lines are more gray. For example, when comparing jobs across industries there is acceptance of disparity. Generally speaking, we are less concerned with the fact that a female data scientist for a soccer club is probably getting paid significantly less than an equally skilled male data scientist at a hedge fund. The business models dictate that data scientists in different industries might have to be paid differently. In this case the wage is a function of the perceived value created by the position, and we can rationalize that concept.

As we consider differences within industries the issue becomes more gray. At worst the disparities could be considered necessary at this point in time, but the movement toward equality should be steady. For example, salaries of women in the NWSL are lower than salaries of men in MLS. This no doubt comes down to the current profitability of each league, which themselves are also affected by the complicated factors such as cultural bias mentioned above, but as owners become equipped to manage equality the dissonance will increase.

Business models do allow for some disparity, but at some point we will find examples where it is unacceptable. Where exactly is that line and how do we find it?

The line is definitely in sight when it comes to the subject of international soccer, and that is largely because the motive of business model has gone away, replaced by a mission to further the sport for all communities. But even non-profits have to consider a business model in order to efficiently further their cause. If resources are allocated to one activity, those same resources can not be allocated somewhere else, which is where using a profit and loss framework is still prudent. If one spends their resources on an activity that returns more profit then they should have more resources to further their mission.

So how should it work? Should business models drive the wages or should we be striving for cultural and financial equality, especially in the case of non-profits where the mission statements are not (or should not) concerned with shareholder value?

As the issue relates to the US women there is not a lot of publicly available data to reach too much certainty, but there appears to be enough to frame the conversation. In the lawsuit filed by the US women there are some compensation facts offered that could help us shed light on what exactly the cost of their request might be.

This wage disparity analysis needs to be broken into two separate discussions. The first is activity that takes place outside the World Cup. These are costs entirely born by the USSF. The second relates to bonuses paid for World Cup results, which are primarily driven by FIFA.

Between the years 2015 and 2018 the suit claims the women played 19 more games than the men. The suit also points out that between 2013-2016, based on their agreements, the women could be paid at most $4,950 per match, while the men could have earned $13,166 per match.

Lawsuit

Assuming the women play nearly five more games per year the required budget increase would at most be $4.3 million. It should be pointed out that those numbers do not reflect any benefit negotiated by the women in their latest CBA from 2017, which would be included into the current budget. That adjustment could significantly reduce the disparity. Also, these numbers only reflect the pay of optimal outcomes. Any draws or losses, which would be expected, would shrink the real gap as well.

There are some other aspects of the suit beyond wages that would increase the budget requirement. The women cite grievances related to travel comfort, field quality and game promotions that, if the USSF were to fix, would require additional funds. Assume, for sake of this argument, that the new CBA, lost game costs and non-wage grievances would roughly cancel each other out in terms of cost and benefit, and that the cost to US Soccer would be $4 million per year.

During US Soccer’s annual meeting Carlos Cordeiro said that the fiscal year 2020 budget would be $136 million. The $4 million number to solve the per game gap would represent a 3% increase in spending which, all things considered, seems solvable. US Soccer currently invests over $100 million of its nest egg in stocks and bonds. Perhaps some of that could be used while they work on developing revenue options to cover the 3% increase.

Now the World Cup. The issue with the incentive system surrounding the World Cup is that the bonuses are a function of revenue paid out from FIFA. The lawsuit notes that the men’s team was paid a bonus of $5.4 million for their Round of 16 exit in 2014, while the women were paid $1.7 million for winning their tournament in 2015. While that appears bad enough, the reality is that if the men had won they would have made over $26 million. That’s not necessarily the fault of US Soccer. The FIFA bonus schedule is strongly tilted towards men. Here is a table outlining the history and laying out the theoretical figures.

In order for US Soccer to make this equitable they would need to potentially pay close to $22 million from their own pocket if the women won the World Cup. Compared to the $4 million, that is a difficult nut to crack.

Covering the potential $22 million windfall for winning the World Cup seems like a bigger challenge, and it would certainly require a refitting of the budget and significant reduction in spending in other areas.

The bottom line is that if US Soccer wanted to solve the per-game wage gap, the estimated $4 million annual number combined with the benefit of being seen as a progressive leader in the community appears to be a good business decision, especially for an entity in desperate need of good will. The World Cup bonus gap is a bigger problem, but one that is largely due to the bias, revenue-driven or otherwise, already inherent in the FIFA system. While FIFA doubled the bonus pool from $15 million to $30 million in this World Cup they’ve already announced a $40 million increase to $440 million for the men in 2022. That problem isn’t going away any time soon.