Economy is perhaps one of the simplest and hardest subjects one can think of. I've been studying it for over 13 years and I can understand why: it takes you a little math, it's language is the math, but there are principles well beyond math which can be helpful to understand many things. I hope this little text is of some help for those who like sports and especially for those who "feel like" they don't understand economy.

Supply: In economy, the supply is a given quantity of any given good at the disposal of the market to be consumed. Let's apply it to sports: the players available to be hired/change team in a transfer. The supply is limited, and it's quality depends on the players characteristics. 

We can go a little beyond when we think about quotas that limit foreign players for example, the "national supply" and "foreign supply" become two entirely different pool of players hence the different prices, that is especially true with soccer within the EU context

Demand: The demand is the "purchase power", in the sense that teams have a demand for players which is an ultimate consequence of the fans demands for sports as a whole.

The demand and the supply have nothing to do with the pool of money available, these forces are the two basic ones of economy, the "need" and the "solution". If you take any kind of course about economy, the first class will doutblessly be about demand and supply.

Prices and Inflation (Money supply): The price is estabilished based on the purchasing power (demand) and the supply. For example, if there are several players of similar quality, prices tend to fall, because there is more supply, if for example many new clubs of the same sport open in a given country, or if a club is purchased by a new billionaire owner, the demand becomes inflated by new money. 

Inflation is basically within sports when there's either too much new money in the scenario or if the teams are trying to buy the same pool of good players and lock themselves through an auction, which makes prices go higher.

Take Europe for example, when the British clubs renewed their TV contract for a fortune, prices started to ride towards the stars. 

Higher  player prices don't mean that the players are getting better, it just means that something is going on within the basic economic principles of supply, demand and money supply.

 in essence I just said that inflation doesn't mean that the goods (supply of players) are improving their quality (not necessarily), it means that the economic forces are acting according to expected patterns (economic theory).

I'd like to highlight that this exercise of applying things to sports may have made very difficult and complex concepts "dumbed down" in a simple example. The deepest consequences and applications of Economic concepts such as supply and demand are subject of deep and intense research within the academic community, my effort here was to point out this particular example of England, in which the English Premier League had prices rising for a reason other than sports (TV Contracts)