Overpaid?

By Lloyd Graff

Jadeveon Clowney, Number 1 Draft Pick in 2014. Tore Meniscus in first game. Had 7 tackles for the season.

With the NFL draft taking place today and the NBA playoffs in full swing, I’d like to broach the topic of whether pro athletes make too much money.

If Jameis Winston, the number 1 overall draft pick, signs with Tampa Bay and the team wins seven games next season with him slinging the ball, how much is he worth to the team? He will likely sign a three or four year guaranteed contract, with a club option for one more year. Tampa Bay will risk the future health of the franchise on a 21-year-old immature athlete. Winston will get financial security in exchange for being locked into a contract for the next four or five years.

The deal that Winston will get is basically prepackaged by the union agreement negotiated between the players and the owners. Young players coming out of college work relatively cheap. The average career for an NFL player is four years. They often get hurt and sometimes sustain life threatening head injuries. Leg injuries, which happen to almost every player to some degree, will lead to hobbling arthritis over time. The players are gladiators who choose this life, but the health costs are substantial.

The NFL wage structure has worked out famously for the owners of the teams. The TV money has escalated rapidly despite terrible publicity about wife and child abusers, concussions that lead to early dementia and even death, and the fact that there are fewer than 10 quarterbacks worth watching.

The NFL cartel has a built-in free pipeline of players coming out of college programs. College is a free minor league system. What a deal. Most players do not have guaranteed contracts. The elite players get some “guaranteed money,” having been vetted for several seasons. The NFL’s TV money keeps going up because live broadcasts of sporting events tend to defy the use of the DVR, making the endless commercials still be deemed worth the money.

If wimpy Roger Goodell, Commissioner of the NFL, can make $44 million in 2013 (we know this because the NFL was a “non-profit” group) should we feel bad if a free safety is working for $500 grand? Is a free safety really supposed to work for FREE?

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The NBA, or the “Association” as the players call it, is a little different than the NFL. We got a glimpse of the value of an NBA franchise when Steve Ballmer, former president of Microsoft, ponied up $2 billion to buy the Los Angeles Clippers in a sale forced by the NBA cartel. Ballmer bought the franchise, beating out Oprah Winfrey’s group, because he’s a pretty smart business guy. Franchise values almost always go up over time. Mark Cuban, who sold his tech startup at the peak of the dot.com bubble, invested $285 million for the Dallas Mavericks in 2000. The team is currently valued at $1.2 billion by Forbes.

The 400 current NBA players average $5 million per year in salary. The average time in the league for a player is four years. LeBron James makes $20,644,400 this season, 7th most in the NBA. He only signed a two year deal, which entitles him to a little less money per year according to current NBA rules. I think LeBron can reasonably argue that he is underpaid compared to what he brings to the Association.

LeBron has agreed to become the lead player for the NBA players union, which is interesting because he is moving toward the latter stages of his remarkable career. The NBA players got rid of Billy Hunter, who led the strike that sacrificed 16 games of the 2011-12 NBA season for a modest gain in a player earnings.

The Union recently hired Michele A. Roberts to lead them. She is an African American woman who grew up in a New York housing project to become a top partner at one of the most prestigious law firms in the country, Skadden, Arps, Slate, Meager & Flom. She fervently believes the players she represents are underpaid. She believes players should think more like a Mayweather than a TV weatherman. She argues that the NBA is nothing without the players and that theoretically the players could start their own league.

This is probably just posturing on her part as she prepares for the next big negotiation with the owners. She wants the players to think like capitalists. In Europe, there is no draft for the soccer leagues. Top players move from country to country for the best deal.

The current NBA union structure aids the marginal players. A good example is Nazr Muhammad, the second backup center for the Chicago Bulls. He barely plays in a game. He makes $1.5 million this season as a practice player. A player like Muhammad needs the union. LeBron does not.

Question: Are professional athletes in the United States overpaid or underpaid?

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4 thoughts on “Overpaid?

  1. Avatarmike

    of course they are over paid – but we like entertainment vs. reading a book or playing a board game, or going for a walk or riding a bike.

    much the same for actors . . . aren’t they over paid too?

    look at all the hype in England about “royal” baby . . . some folks just do not have a life i guess . . . wow

     
  2. AvatarSteve Ignots

    As for the TV contacts we subsidize pro sports every time we pay our cable bill whether we watch the sport or not.

     
  3. AvatarRobert

    Professional althletes are paid what the market will bear, which is the definition of a free market system. Unfortunately the government will never figure that out.

     
  4. AvatarMaury

    Since each individual brings his personal opinions and biases to whether professional athletes are over or underpaid, and by how much, the answers are likely to vary widely. It doesn’t really matter what we may think because the market is the final arbiter regarding what individual players are worth. One could argue that the market for athletes isn’t perfect because there is only one seller, the union, and one buyer, the team owner(s), rather than many buyers and sellers. However, that’s that market that exists, so I believe it’s fair.

    Sure, the top athletes are very well compensated, but let’s consider that there are countless aspirants relative to the successes. Players like LeBron James are virtuosos, so they’re extremely rare. The Nazr Muhammads in sports are also quite rare, in part due to the relatively short careers of professional athletes. The pay packages that are negotiated on behalf of these players ultimately reflect the supply and demand for their services.

     

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