The perennial NBA all-star Joe Johnson, shooting guard for the Atlanta Hawks, is set to make the maximum salary of $119 million dollars over the course of 6 years. His contract has been called “the worst ever”, because although Joe is a very solid player, he is not quite the same caliber of player such as Kobe Bryant, LeBron James, Dwight Howard and other superstars. The large contract has reopened the polarizing question of how much a professional athlete should be compensated for their abilities.
The biggest complaint people have about pro athletes is that their salaries don’t match what they contribute to society. What people fail to realize is that, no matter how high an athlete’s salary is, he is paid for what he is worth. Salaries for the majority of workers are set by supply and demand in the marketplace for their particular set of skills or talents. Typically, when a business requires more production, they hire more staff. If the staff is paid below what can be acquired elsewhere, they’ll leave for the higher paying job. If the staff is paid over what they’re valued, the company’s labor costs are large and they unnecessarily lose money.
With that in mind, lets move on to the compensation of athletes. A sports team cannot simply hire more people to increase revenue. Usually, in order to drive up ticket sales, a team needs to win more or bring in star players. Due to the fact that there are a limited amount of star players and you can only have a set number of players on a sports team, the only way to improve is usually to spend more to attain better players. This significantly drives up the cost of labor as there is a very small supply of elite athletes that have the special talents and skills to excel at the professional level.
There are about 450 players in the NBA, which calculates to .00015% of the US population. These players are selected from the millions that play the sport. Look at it this way – if masses of people paid $40 to be in a classroom with an one in a million teacher, and spent over $50 while there on concessions, teacher salaries would be much higher than they are now.
In 1986, Jim Kelly was offered a then ridiculous contract of $1.5 million per year as the quarterback of the Buffalo Bills. The Bills sold 5,000 season tickets after his signing, with each ticket costing around $300. That amounts to $1.5 million, paying off his salary without even factoring in additional tickets sold, jerseys and TV deals on his account.
Similarly, LeBron James singlehandedly managed to increase the value of the Miami Heat franchise by more than $200 million simply by signing with them. He and his teammates are now predicted to have an impact of over several billion dollars on the city of Miami if he wins several championships, yet he is only paid around $16 million a year! On the flip side, losing LeBron will have a heavy financial toll on the already struggling city of Cleveland.
The average athlete is in-fact not well paid. In fact, professional athletes aren’t even in the top 50 paying jobs in the United States, according to a 2007 report on CNN. Outside of the super popular baseball, basketball and football leagues, most athletes barely make a living. For example, due to its lack of popularity, players in the MLS often room together as they cannot afford housing themselves.
The anti-athlete argument has a populist tilt that results from the public’s misconception of unjustified privilege. The notion that athletes are paid too much for simply playing with a ball is ignorant. Their impact on society is not as important as that of teachers and firefighters, but athletes are not paid for their social impact, they are paid because people want to watch them. Their salaries are the result of our demand for entertainment and our willingness to pay money to have it.
No one seems to question the fact that other entertainers such as movie stars are wildly overpaid, while they make much more money than their athletic counterparts. The average budget for a single Hollywood film is over $100 million compared to the yearly salary cap of $58 million in the NBA. The Hollywood equivalent of All-Stars, the A list, are regularly given $20 million dollars a movie, and potentially much more (Tom Cruise was given $100 million for his role in War of the Worlds). Yet, the public is enraged about the money the top athletes receive, yet seem to not be bothered by the ridiculous amounts actors are given. They’re both entertainers, aren’t they?
Which brings us back to Mr. Joe Johnson. While he is overpaid in contrast to the other athletes in the NBA, the owners of the Atlanta Hawks determined that he is worth paying a large amount of money for valid reasons. It is important to keep in mind that the members of Atlanta Spirit Group (the ownership group of the Atlanta Hawks) are all successful business men with proven track records, who are not likely to throw around hundreds of millions without reason. Without Joe, the Hawks almost certainly have gone into a period of rebuilding where they win very few games. And with the fickle nature of Atlanta sports fans, that would have resulted in a tremendous loss of money to an already not profitable business. So, while Joe’s massive contract isn’t “Average Joe” money, it is, from a economic standpoint, just right.