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Actually, most football and basketball players end up declaring bankruptcy within 5 years of retiring. Many come from poor backgrounds and seem to think the amount of money they have is unlimited. They try to make up for impoverished childhoods by spending money on all the things they never got as kids...and then some...only to find out excess consumption doesn't really make people happy anyway.
I have business acquaintance with a HOF Quarterback (Trust me, you'd know the name. He's an icon of the game) who retired from football and wound up being in the wealth management business for athletes. We're not huge friends, but I've helped him and his company out from time to time. Plus I've been on a couple of boards of organizations that he's been involved with.
So in talking to him, he mentioned what happens in the business:
1) A kid, either straight out of college or, worse, straight out of high school, has hundreds of thousands of dollars dumped in his lap. Sometimes it's millions.
2) A lot of times, that kid comes from a household that was blue collar, working class, or even more straitened. So there's literally no one in the family to give him advice on how to manage money, and when to engage an attorney or an accountant or an investment advisor.
3) Likewise, these guys equate wealth with all the material trappings, such as the Testarossa or the huge house.
4) That kid coming from that same background has friends and family come out of the woodwork. I mean, if you're a rich NFL player and your brother is barely scraping by or is trying to start a business, it gets really hard to tell him 'No.'
5) These are kids who also believe that they are special. Like being a neurosurgeon or a fighter pilot, you really have to have that kind of confidence to go out and perform on the level they do. So they can't imagine that they're ever going to get into this kind of trouble.
6) So between the conspicuous consumption and the sharks that just cruise around in those circles, they are just big, vulnerable targets.
That's why so many go under when the big salaries dry up.
It's obscene for people to make $100 million for bouncing a ball. But it would be even more obscene for the owners to get the money.
I always love this kind of logic. There's more to a sport than the players. In truth, it's a huge organization of which the players are the most visible part, but nowhere close to the only part. There are thousand gears that have to interlock correctly for a team to run well. Coaches, trainer, facilities, back office, travel and logistics coordinators, scouts, team doctors, and a host of others.
Need a good example? Theo Epstein took over the Cubs management in 2011. It was a crappy team that is now completely turned around, dominating the NL. Here's the primer.
They get paid that much because we watch and support them. We buy the tickets and merchandise. We watch on TV, so advertisers buy up commercial time, giving the league and teams more money, which goes to players. Sponsors pay players tons of money for endorsement deals because they know we'll buy whatever they're shilling.
They wouldn't get paid like they do if we didn't sustain it. Look at the WNBA. Their players don't make anything because no one goes to the games or watches on TV. That league would be bankrupt if it wasn't subsidized by the men's league.
Personally I don't mind seeing athletes making all that money. They have talents that <0.001% of the population have and put in a lot of work to perform at the level they do.
Quote:
Originally Posted by Troyfan
It's obscene for people to make $100 million for bouncing a ball. But it would be even more obscene for the owners to get the money.
There are many amazing and rare talents human beings are capable of. I think the question is why does our society value athletic ability--really just a few select types of athletic ability--to such an extreme degree?? Why do we (as a society) place such honor and importance on these particular talents?
It's obscene for people to make $100 million for bouncing a ball. But it would be even more obscene for the owners to get the money.
They are providing entertainment. If people are willing to pay enough for that entertainment to provide players and owners with that kind of earning after all the expenses, than they have earned the money.
Unless of course the money is not just coming from people paying to watch, or advertisers, and endorsement deals.
Are the players being paid with some kind of debt financing/credit?
I can't really answer this question without knowing what exactly you mean by "earn" and "deserve". There is the economic sense ("true" productivity vs. wages) and there is the sociological sense (does it benefit society for them to be paid as such). Many people seem to frequently forget that these are not necessarily the same in all cases due to externalities.
What are the externalities for a ballplayer?
Economics usually defines externalities as costs or benefits to society that are not captured in the price. If you mine coal and do not pay the cost of cleaning up the pollution, that is a negative externality. If you build a nice fancy house next door to my modest one, you raise my property value and that is (usually) a positive externality. Please finish the thought for ballplayers.
The people who PLAY the sports are putting the fans in the seats. Considering how much money they are bringing in to sports franchises, of course they aren't overpaid. If an owner doesn't want to pay a player, that person can be traded to a team IS willing to pay or the player will get the message he isn't worth what he thinks he is. Also, in most sports (especially the NFL), players rarely collect the full amount that is touted when their contracts are signed.
Lebron James is compared commensurate with what value he brings to the team in terms of skill, and also want he brings in terms of attention, increases in attendance and merchandise sales, etc.
Same thing with Mayweather and McGregor - these guys are flamboyant and get people, lots and lots of people, watching their events.
Actually, one could argue that in team sports, with salary caps and salary slots, that the cream of the league (e.g. Lebron, Steph, Durant, Brady, Rothliesberger, etc.) are actually underpaid compared to their lower performing peers based upon on-court/field production.
Lebron was the 2nd highest paid player (salary) in the NBA this year (Behind Kobe), but only paid ~$1M more than each of the following players - Carmello Anthony, Dwight Howard, Chris Bosh (who significantly under-performed compared to Lebron).
Amid this debate, I will admit a special admiration for sports such as golf and tennis.
Because, while a football, basketball, hockey, or baseball player is on contract and gets paid a base whether he's MVP or rides the pine, golfers and tennis players only eat what they kill, so to speak. If you don't make the cut, you don't make your nut.
A person's salary is directly tied to how much money he generates. The number of people on this planet who can generate enormous sums of money are rather limited. Those that produce get paid well.
Personally, I feel that the salaries for sports stars (and rock stars and movie stars) are way out of proportion to the amount of work that they do, but they generate millions of dollars of income for the team owner. The team owner has to have players that the public will pay to see, and thus the big salaries to try to hire the best players.
Taking in consideration the main leagues in the US (MLB, NBA, NFL, NHL) or football like the premier league, do you think sportsmen earn what they deserve?
The recent Seattle Mariners baseball game I attended with a friend...
Tickets $75 x 2
Hotdog and a beer $16 x 2
2 x drinks before 7th inning stretch x 2 = $36
$218 and I didn't even have to spend $30 to park because I took the train for $5.50 each.
$229 total. Glad I don't have kids... I hear that taking a family of 4 to a professional sporting event is unaffordable.
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