The Psychology of Financial Incentives in Sports

Imagine an athlete has been running track and field his entire life. They have spent many hard hours training and preparing, just to compete on the biggest stage in the world: the Olympic games. Finally, the time has come. The athlete has been selected to run for his country in the Olympic games! He walks up to the starting line, with one goal in mind: to win the gold. To feel what it is like to be a champion, but then he hears whispers from his competitors, saying that they are only running because they will be paid if they win. They win the race. Someone who was getting paid to beat him crushed all the aspirations that he had dreamed of his entire life in the blink of an eye. Is that fair, and is the psychology behind the incentives justified? track-race-finish-line

Olympic athletes are not only motivated by winning, but by the five and six figure incentives that they could possibly gain from winning a medal. Psychological manipulations are taking place from organizations to athletes unlike ever before in history. Instead of playing for the thrill and excitement, players have been competing since the middle of the 20th century just to earn extra bonuses and rewards (Avgerinou). Where did the love of simply dribbling a basketball, or swinging a baseball bat disappear to?

Incentives, they’re everywhere. Incentive pay can be defined as “a monetary gift provided to an employee or player based on performance, which is thought of as one way to entice the them to continue or begin to further deliver positive results” (Business Dictionary). These growing acts of incentives have been a big problem, especially in athletic organizations. Since the 1950’s, there have been many traces of sports economics in athletics. Incentives were quickly being added to players of value, and were an attempt to show that contracts of players should be based on the value of individual performance, rather than anything else (Avgerinou). However, this expanded into sports markets being based upon how much money a player could earn on a team, rather than loving the team they were playing for, or enjoying their time whatsoever. Money was ingrained into the mind of athletes as the ultimate prize, and they would do anything they could do in their power to earn more of it.

There are many reasons why human beings do certain things. The brain is motivated by many external and internal factors, which leads to the Incentive Theory of Motivation. This theory states that human behavior may be determined by forces that propel us to do something we otherwise would not (Psychology Today). Relating to athletics, many athletes may put themselves in situations of danger, if it mean they could land a large sum of money for making a play. “In 2007, Ravens DE Terrell Suggs needed one sack to earn an incentive payment. He got the sack, and earned $5.5 million. From a psychological standpoint, many wonder how that impacted the way Suggs played that game. Was he willing to take wild chances just to increase his chances of sacking the QB?” (Individual NFL Player Incentives).

Psychology-of-incentivesIf someone is making a lot of money, why do they want more? Why do they need more? People always want money, and that is something that will never change in the growing world that we live in. Many researchers have compared having high amounts of money to higher levels of happiness, which leads to the thought, can money really buy more happiness?

The answer is that yes, it just depends on what the money is being spent on and used towards. “In a study, 16 employees were asked about their happiness levels before and after receiving their annual bonus. No matter what the size of the actual bonus realistically was, employees who spent more of their bonus money on others or charity reported greater general happiness levels than those who spent more of it on themselves” (PBS) . According to US News, there are also other factors on how money can buy happiness. They state that buying experiences, having possession of specific high-end brands, and making special purchases, can also boost happiness levels (US News) . Having large amounts of money in a person’s power may make them happier, but the everlasting feelings and effects depend on how they choose to spend it. Spend wisely, and have a great result, and gain feelings of happiness and satisfaction. In the sports industry, players are eager to earn money, and will go by whatever measures necessary to obtain it.

Tying together the ideas of financial incentives in athletics and happiness, it is important to examine what makes financial incentives so prominent in athletics, and why they exist. Athletes in the 21st century are prone to accepting larger contracts with financial incentives, because sports have also turned into a large business industry. By accepting greater contracts with winning programs, players have a better chance of making the playoffs. Thus, higher performance and making the playoffs means a player can earn more money. Financial incentives are often offered to teams as a whole, but are also offered to specific players who are able to complete certain tasks. When a team makes the playoffs, for each game they play in, they earn more money. In the National Basketball Association (NBA), winning each round gains the team more money. Each season, there is $12 million dollars that is distributed to teams during the playoffs, with the final winner taking home more than $2 million (NBA Championship Economics and The $600 Million Lakers). Therefore, not only does the championship team gain glory from winning the championship, but their happiness also grows when their wallet fills.

The innocence and morality of sports has been altered forever in sports because of financial incentives placed on athletes. The passion and drive behind playing the game is not the same as it was over fifty years ago. Now, instead of playing for the love of the game, players are driven by money and other rewards. Incentives have manipulated the minds of players, and have caused a shift in the direction of athletics. Players are being psychologically driven by these incentives, and unless rules are put into place, the downward spiral will only continue to get worse. Money may lead to happiness, but athletes may have to suffer important values and other forms of happiness to obtain it. Is it worth it?

 

Sources:

http://www.choregia.org/1.pdf

http://www.businessdictionary.com/definition/incentive-pay.html

http://www.pbs.org/thisemotionallife/blogs/can-money-really-buy-happiness

NBA Championship Economics and The $600 Million Lakers

http://money.usnews.com/money/personal-finance/articles/2015/02/19/can-money-buy-us-happiness?page=2

https://www.psychologytoday.com/blog/fulfillment-any-age/201110/motivation-the-why-s-behavior

Individual NFL Player Incentives – Why Are They Necessary? Do They Distort the Game?

One thought on “The Psychology of Financial Incentives in Sports

  1. kbd5161

    I agree with this post because I think that athletes are now tied to money in a way that causes them to view it more as a job than as a passion. However, I think there is a difference between collegiate sports and professional sports, and I believe that this line is determined by the financial benefits. Collegiate athletes are in sports because they love it and may or may not want to pursue it professionally. These athletes are not paid to do it, and to them it is 100% because they love the game. Professional sports, on the other hand, seem to only do it for the job aspect and lose sight of their passion for the game that they used to have when they did it in college or even before then. I think an interesting study would look into professional athletes that were also athletes on a college team, and measure their level of passion for the game. While analyzing that, they could look at whether that passion has increased or decreased due to the fact that they went from being unpaid to paid for their sports skills. It would be an amazing study, but probable to include several third variables that would have to be accounted for and randomized to ensure the best possible design overall.

Comments are closed.