Athletes Are Not Overpaid

It is almost certain that at least one in your life, you have heard someone complain about how much professional athletes get paid. Yes, at first glance contracts such as Mike Trout’s 12 year, $430 million or Lionel Messi’s average annual salary around $84 million seem ridiculous. However, if you begin to deconstruct these salaries, keeping in mind the value that the athlete brings to the club, it is clear that athletes are not overpaid, and in many cases even underpaid. 

According to Forbes, the Dallas Cowboys are the world’s most valuable sports club with an annual operating income of $365 million and an overall valuation at roughly $5 billion. That net operating income includes the $143 million spent on player contracts by the team during the 2019 season, showing just how much of an impact superstars such as Ezekiel Elliott, with a base salary of $10.9 million and Dak Prescott, who made just a $2.1 million base salary in 2019, can have. During the 2018 season these players ranked fourth and ninth respectively in league wide jersey sales, bringing in significantly more revenue for the Cowboys and NFL in that way alone than their base salary compensates for. In addition to jersey sales, Elliott and Prescott, as well as other NFL superstars, bring in significantly more revenue for their teams through attracting TV viewers and increasing ticket sales for their clubs. 

Comparatively, the NHL’s Arizona Coyotes, who have been historically noncompetitive and lack superstars on their roster are the lowest valued team in the NHL and operated with a loss of $15 million during the 2018-2019 season. Some of the team’s financial struggles can be attributed to their location in the non-traditional hockey market of Phoenix, however their lack of star power and poor record in 2018-2019 was the biggest factor in their financially unsuccessful campaign. During the season, they were rarely slotted for nationally-televised games, struggled to sell tickets, and did not have a player in the top 15 of league-wide jersey sales. According to hockey-reference.com, the team averaged a home attendance of only 14,596, or roughly 85% stadium capacity, ranking 28th out of the league’s 31 teams.

Conversely, the St. Louis Blues, who also operate in a non-traditional hockey market, were able to lean on their star players to turn in a very successful 2018-19 campaign that culminated in a Stanley Cup championship and a 14% increase in team value, with revenues of $171 million and an operating income of $20 million, according to Forbes. All of this was achieved with their highest-paid player, Vladamir Tarasenko, making only $9.5 million. In terms of jersey sales, the team had two of the top 15 best selling players, Tarasenko (ranked eighth)and Jordan Binninton (ranked seventh), with the latter making only $4.55 million during the season. The value that St. Louis’ strong roster of players added did not stop with jersey sales, as the team averaged a home attendance of 18,096, or 98.3% of arena capacity. Additionally, the team gained a significant amount of exposure and TV revenue through its nationally-televised championship run.  

In 2018 one of the biggest soccer transfers of all time took place with Christiano Ronaldo leaving Spanish club Real Madrid for Italian side Juventus F.C. for $140 million USD. Ronaldo makes a base salary of $35 million USD, however accounting firm KPMG calculated that despite the massive transfer fee and salary, Juventus makes an additional $85 billion USD annually as a direct result of the acquisition. In addition to increased ticket revenues, television deals, and sponsorship agreements, which were included in the calculations, the firm also noted the immeasurable impacts on Juventus’ global brand that Ronaldo and his 204 million instagram followers represent. Having the world’s most famous athlete as a part of the club will allow it to expand and establish its brand globally through essentially free social media advertising. 

In addition to all of the quantitative factors that represent the exponential value that athletes add to their clubs when compared to their salaries, there are also many qualitative factors that suggest athletes are not overpaid. Playing professional sports is incredibly difficult and statistically very unlikely. According to scholarshipstats.com, any given high school basketball player has a 1 in 1,860 chance of going pro, with 1 in 764 for baseball, 1 in 603 for football, and 1 in 835 for soccer. Like any profession, the more selective and difficult it is to get a job, the higher the compensation.

Additionally, by fulfilling their job duties, professional athletes are innately at a very high injury risk when compared to the average occupation. Not only can injuries have severely negative effects on pro athletes' lives, but they can potentially end the athletes’ career and income stream. As is the case for almost all sources of risk, the higher the chance, the higher the compensation. This is certainly true for professional athletes.

While professional athletes are heavily compensated for their profession when compared to an average salary, they are certainly not overcompensated based on the value that they add for their respective clubs, the difficulty of making it pro, and injury risk that they face.  

Works Cited

As.com. “KPMG Estimates Ronaldo's Huge Financial Impact for Juventus.” AS.com, Diario AS, 23 July 2018, en.as.com/en/2018/07/23/football/1532375027_664379.html. 

Badenhausen, Kurt. “The World's 50 Most Valuable Sports Teams 2019.” Forbes, Forbes Magazine, 23 July 2019, www.forbes.com/sites/kurtbadenhausen/2019/07/22/the-worlds-50-most-valuable-sports-teams-2019/#11048541283d. 

“Dallas Cowboys 2020 Salary Cap.” Spotrac, USA Today Sports Media Group, 2020, www.spotrac.com/nfl/dallas-cowboys/cap/. 

“NHL Attendance.” Hockey Reference, Sports Reference, 2020, www.hockey-reference.com/friv/attendance.cgi. 

“Odds of a High School Athlete Playing Pro Sports.” Scholarhipstats.com, Scholarhipstats.com, www.scholarshipstats.com/odds-of-going-pro.htm. 

Settimi, Christina. “Cristiano Ronaldo Takes A Wage Cut And Leaves Real Madrid For Juventus.” Forbes, Forbes Magazine, 11 July 2018, www.forbes.com/sites/christinasettimi/2018/07/10/cristiano-ronaldo-takes-a-wage-cut-and-leaves-real-madrid-for-juventus/#221fff8e29a6. 

Stein, Dan. “Why Pro Athletes Aren't Paid Too Much.” Bleacher Report, Bleacher Report, 3 Oct. 2017, bleacherreport.com/articles/55644-why-pro-athletes-arent-paid-too-much. 

“The Business Of Hockey.” Forbes, Forbes Magazine, 2020, www.forbes.com/nhl-valuations/list/#tab:overall. 

Warner, Ralph. “The Top 10 Selling Jerseys of 2018.” NFL.com, National Football League, 3 Jan. 2019, www.nfl.com/news/story/0ap3000001007569/article/the-top-10-selling-jerseys-of-2018.