The iPhone 8 and Neymar Have More in Common than Big Price Tags

Theron Mohamed
August 3, 2017

Apple's rumoured iPhone 8 and football star Neymar's proposed move from Barcelona to Paris Saint-Germain might appear to have little in common. In fact, their reported price tags - $1,200 (£914) and €222m (£198m) respectively - threaten to transform pricing in the smartphone industry and football transfer market.

Roughly doubling the price of an iPhone, and nearly tripling the record transfer fee for a footballer, will make it acceptable - perhaps even mandatory - for other manufacturers and clubs to follow suit. Consumers will only perceive a device to be an iPhone rival if it costs a similar amount, several of Apple's rivals told Wired. That allows the likes of Turing Robotics to raise prices without fear: "If [Apple] says, 'mobile phones are going to cost $1,200,' then $1,200 it is," CEO Syl Chao says in the article.

Similarly, Manchester United manager Jose Mourinho fears the Neymar deal will inflate asking prices for footballers: "now you are going to have more players at £100 million, you are going to have more players at £80 million and more players at £60 million." Only three footballers - Paul Pogba, Gareth Bale and Cristiano Ronaldo - have been sold for north of £80 million.

However, 'anchoring' the prices of phones and footballers at higher levels will have different effects. Charging more for the iPhone 8 allows Apple to invest in new, expensive technologies such as facial recognition and wireless charging. This enables its suppliers to scale up production, improve efficiency and lower their costs, allowing competitors to afford the same components and include them in cheaper phones. The result is that Phone 8 buyers pay higher prices to be ahead of the pack, freeing others to simply wait and pay less for the same features at a later date.

The emergence of cheaper alternatives to the iPhone 8 is inevitable, but Barcelona's competitors can't mass-produce Neymar knock-offs and flog them to dozens of thrifty clubs. The best teams have a handful of uniquely gifted players, who are impossible to replicate at lower cost. A shallow pool of world-class talent, coupled with the deep pockets of club owners, protects prices for top players from being eroded. True, clubs face the risks of injury and poor form, and footballers can't perform at the highest level forever. But Paris Saint-Germain is paying for a global, one-of-a-kind superstar - with the prospect of trophies and higher turnstile, merchandise and television revenue - in the knowledge that other teams won't be fielding Neymar clones next season.

The iPhone 8 promises to raise industry prices and prompt copycats to package its innovations in cheaper devices, benefiting both manufacturers and consumers. Neymar's exorbitant transfer fee will raise the prices of other footballers, but their talents can't trickle down to cheaper players, meaning poorer clubs could be priced out of the transfer market and the gap between rich and poor clubs could widen. And while clubs that are net sellers can make more money and invest in players and facilities, net buyers will likely pass on their higher costs to fans by raising the costs of tickets, merchandise and TV rights.

Only a few people will benefit from Neymar's transfer, and many will lose out. Meanwhile, millions who can't afford an iPhone 8 will have similar devices soon enough. Both will be transformative, but Apple's phone should have wider benefits - albeit accidentally.