How many of you think athletes getting paid millions and millions of dollars isn't fair?? If you just slightly pressed your lips or yelled out, "ME!!" then hopefully this article will allow you to see a different perspective on why they should get paid what they're getting, if not more.
What most people first think of when it comes to athletes and money is the large amount athletes get paid. We forget that athletes are actually the employees, not the owners. Sure, they make a lot of money off endorsement deals, TV commercials, and other advertisements. This is only a select few, though. I'm referring to the money being made from playing a sport.
Each sport is different which is why athletes get paid differently. According to NBA.com, the average salaries for the four most prominent sports are:
- NBA: $5.5 million (2010-11)
- MLB: $3.34 million (2010)
- NHL: $2.4 million (2010-11)
- NFL: $1.9 million (2010)
Those seem like really big numbers, and they should because they are! In a years time, these athletes on average make anywhere from $2-5 million per year. Some of us won't make that much money in our lifetimes! So how is this justified?! It helps to look at sports for what it is: entertainment. And entertainment is merely a business.
Let's take the NBA. A typical NBA roster has 12 players, 4 coaches, a GM, and a president of the team. There's also the staff of workers such as ball-boys, trainers, physicians, marketers, and event workers. An NBA team probably has close to 80 people on their payroll at any given time. Now most of the staff workers make very little, but the athletes, coaches, and professionals usually make good money.
Out of the 80 workers, 12 make on average $5.5 million per year. That number is actually going to go down because of the recent CBA agreement. Coaches usually makes a few million, doctors and trainers combined probably make that much as well even though there are more of them. The GM and president make several millions of dollars, too. All in all, that's about $80 million the owner is responsible for, and that's just the payroll aspect! (Don't forget the taxes, either)
Owners have very large expenses. Meals, per diem, entertainment, hotels, arena supplies and maintenance, travel accomodations, and the payment for the stadium itself all take out a huge chunk of money. At 82 games a year, half of them at home and half away, I'd venture to guess that expenses are about twice as much as the salary that is paid out.
So that brings us up to $240 million. This is just one year folks. There are probably other expenses I'm neglecting, such as advertising, food, equipment, and other team personnel. Let's round it up and make it an even $300 million.
So now that you know how much it costs to run an NBA team, let's look at the flipside of it: the revenue.
As someone who works in the accounting field, I can tell you that most people are concerned with revenue and don't realize the expenses a business requires. Taxes, payroll, supplies, advertising... these things basically eat up a lot of the owners profit. The reason ticket prices are as high as they are is because the owners know that we'll pay it. We'll pay for tickets then go to the arena and buy food. While we're there, we may get some t-shirts or a basketball. This is the primary source of revenue for owners.
There are 42 home games (typcially) and then any playoff games. Expenses are increased (including player bonuses) if a team makes the playoffs. So from ticket prices to sales of merchandise and food, this is the revenue an owner collects to help foot his $300 million bill. Owners also receive revenue through TV networks and through companies like ESPN. Owners take on a lot of risk because if something goes wrong with the team, it is usually tied back to the owner who is at risk of losing it all.
So let's say that an owner brings in $350 million from everything. He gets to keep the extra $50 million (which he'll be taxed on, and if it's a corporation, the owner will pay taxes twice on basically the same money) and that's his salary. Not a bad income, right? Let's get back to the players, because justifying the owner is a whole different ballgame.
Let's start at the top of the employee chain: your star player(s). The owners pay their stars more money because they're less replaceable (look for a future article on the replaceability factor). People will come to see Kobe Bryant (I refuse to use LeBron James as an example) because he's a superstar. Not as many people show up to watch the Washington Wizards. Why? Because they suck and their stars aren't as popular. Stars also win you games, which goes over very well with fans.
Keeping in mind the Lakers-Wizards example, how many people show up to Laker games? It's a full house - that's 18,000 seats. The Verizon Center (the Wizards arena) holds just about the same but is usually only half full. That's 9,000 seats. It's safe to say that if Kobe Bryant came over to the Wizards, those 9,000 empty seats would quickly become filled at probably a higher price per seat. According to Forbes.com, the average ticket price at the Staples Center is $113. Multiply $113 by 9,000 seats by 42 games and you get an additional $42.7 million per year NOT counting the playoffs and without raising ticket prices. So paying your star player $20 million per year, $15 over the average, is justified because he brings in an EXTRA $42.7 million JUST from ticket sales! That's also extra hot dogs, beer, t-shirts, basketballs, etc. which would quickly add up in additional revenue.
So when you calculate how much great NBA players bring in as a whole, they're actually paid just about right. See the problem isn't them, it's us. WE buy season tickets, WE watch them on TV, WE buy their jerseys, shorts, and other merchandise. The problem is us. We are essentially upping their salaries with every game we attend or jersey we purchase.
Athletes will stop making millions of dollars when we stop buying billions of dollars of products.
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