Don’t Hate The Player, Hate The Game
It’s easy to look at the contracts some athletes sign and just shake your head in disgust. The numbers have gotten crazy and for some, the talent level of some players is hard to rationalize against their contract numbers.
While all of that may be true, especially to hard-working folks who work 9-to-5 jobs, there are some things about athlete contracts that are worth knowing.
They Do Not Keep It All
It’s easy to see things like three years and $100 million and get crazy, but the truth is players do not keep all of that money. As a good rule of thumb, players are usually losing 46 percent to taxes and fees. Players who live in the major markets like New York, Chicago and Los Angeles, tend to lose a little more than that.
That’s not to imply that a player couldn’t live a full and luxurious life on the change left after taxes and fees. It’s just important to keep in perspective that players don’t get to keep all of the money.
Said differently, let’s take LeBron James’ new $30 million-a-year deal with the Cavaliers. He’s going to keep maybe $16.2 million of that. While that’s enough money for a couple of lifetimes for many, think about that number in the context of what James is. Isn’t he one of the most recognized faces and names in sports? Doesn’t he generate hundreds of millions in value for the Cavaliers and the NBA? Is $16.2 million really a lot in that context?
That’s before you get into the life-style issues that come with that much fame. By now, you have likely seen the social media picture of former Spurs forward Tim Duncan standing in line at the Old Navy.
Do you believe for a second that James can live a normal life? That he can just go to Chili’s with his kids and be just another person in the world?
It is easy to ignore the tremendous pressure and scrutiny some athletes have to live under. Look no further than the litany of trashy gossip websites and blogs that are ready to pounce on a guy for wearing the wrong shoes.
What’s all of that worth?
Revenue Is Shared at This Level
The NBA and the Players Association have a revenue sharing arrangement: 49 to 51 percent of Basketball Related Revenue is supposed to be paid to the players each year. This includes all salaries and benefits paid.
All of the mechanisms – including the salary cap, maximum contracts and the like – are designed to ensure that the players get their part of the revenue.
In order to meet that, guys have to be paid. It’s easy to get caught up in the number; $100 million to play basketball seems crazy. However, when you put it into the context of the NBA crossing over into the $6 billion-per-year range in revenue, the players’ share has to get closer to $3 billion.
Even using round figures, $3 billion in revenue spread evenly across the 450 possible roster sports (15 roster spots times 30 teams) is an average of $6.66 million per roster spot.
So when you re-compute to push the largest portion of revenue to the top 50 players, the numbers are going to get big, not because of greed on the players’ part, but just in the simple value of the pie the players get to share in.
The other part, and this is something the players’ side always brings up, is who are fans really paying money to see? Shouldn’t those players get the higher end of the pay scale?
There are some who like to suggest if players were taking less money, their teams could field better rosters. That may be true, but considering the NBA has a soft-cap salary system, the only time what a player earns impacts the roster is when teams want to add from the outside or an owner wants to avoid luxury tax.
NBA teams can keep their own players under the current system at any price they want. For example, the Golden State Warriors can keep Steph Curry as long as both sides want the marriage to continue. It has no bearing on what Klay Thompson, Kevin Durant or Draymond Green earn.
The system allows for that.
Careers Are Short
As Spurs great Tim Duncan and Lakers star Kobe Bryant call it a career, it’s easy to forget that it is really rare for players to have careers beyond 10 seasons. In fact, most players are lucky if they can get to six, seven or eight seasons.
Think about this one: Eight of the 30 players drafted in the first round of the 2012 NBA Draft are already out of the league. Three of the remaining guys are playing for the NBA minimum right now or a low-level salary cap exception.
Think about this one: Yao Ming, who is a Hall of Famer, played just nine seasons in the NBA. That’s a very short career for a top overall pick.
While some players have transitioned into fruitful lives and careers after basketball, there is a reality that most players are not going to earn much once their career is over. So another factor to consider is that most players have a very short window to earn as much as they can before their career ends.
Inside the contract numbers, there are a lot of things that are easy to miss. There is no question that athletes pocket insane amounts of money, but to immediately throw out labels like greedy and selfish often overlooks that the environment dictates the value.
Players are a commodity, and good ones are a rare commodity at that. For some teams, landing an elite player is worth twice the price they pay in salary and that’s simply the nature of a market-based economy.
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