Salaries of professional athletes draw passionate debate on both sides of the issue. There is no doubt that professional athletes are one of the highest paid professional in America but like any other industry, the difference between the average performers and the so called ‘stars’ is often huge. As a group, professional athletes still do a lot better than many other professions. Both the supporters and the opponents have their arguments to support their position and the debate continues to rage on without any signs of slowing down soon.
The opponents argue that salaries of professional athletes reflect the same level of greed that has become a trademark of Corporate America. For e.g. the per capita income in U.S. in 2010 was only $40,584 (Bureau of Business and Economic Research, University of New Mexico) while the average salary of New York Yankees player was $6.72 million in 2010 (CBS Sports) and similarly, eighteen players of Dallas Mavericks earned a combined total of approximately $88 million (HoopsWorld) or $4.88 million average. The average single year salaries of these professional teams are more than what most Americans make in their lifetimes. The opponents also argue that the professional athletes get elite treatment and are not subject to the same work ethics that apply to the rest of the America. Most Americans have to work hard to earn their livelihood while athletes get guaranteed pay even when they fail to deliver the promised performance or miss out on the whole seasons due to injuries.
The opponents basically approach the issue from moral point of view. The professional athletes’ high salaries can be best understood by taking a pragmatic view of the issue. The first explanation is that high salaries of professional athletes are simply the outcome of economics forces of demand and supply. Professional salaries are not determined by the amount of efforts put into the work but instead by the forces of demand and supply. Most people would agree that the job of a construction worker is harder than a physician yet physicians earn more than construction workers. This is because almost everyone can do the job of a construction worker with minimal training and there is no lack of supply of labor that would be willing to do the job. The job is tough due to the amount of physical labor involved but the employers would not have difficult time finding workers. In contrast, demand for physicians often exceeds their supply which may explain why physicians from developing countries find it easy to get work permits in industrialized countries. Becoming a physician requires years of education, persistence, as well as training. Unlike construction workers, physicians have invested lot of time and efforts in their training and not everyone has the perseverance to endure the hard work required to become a physician. Physicians’ work may be less tiresome than a construction worker because their profession is knowledge intensive. Physicians may be earning millions later in their career unlike construction workers simply because the economics of their profession is more attractive. By the same logic, there are very few individuals in any society that have the rare combination of talent and skills required to become world-class athletes. This is why they get paid a lot more than most other professions.
The second reason is that the professional athletes create more value for their organizations than an average worker does for his/her organization. Movie stars get paid millions only after they have established their box office status. Movie stars are actors just like there are actors in theaters and stage plays but theater actors don’t command as high salaries as movie stars. Similarly, the salaries of casts of different TV shows are not only different from each other but the salary for the cast of the same TV show also increases as the show becomes more popular and attracts greater viewership as well as interest from the marketers. The cast of popular reality series show Jersey Shore were each paid around $10,000 per episode for the second season while their pay for the third season jumped around to $30,000 per episode (Reality TV World). Miami Herald reported that as a result of Lebron James joining Miami Heat, Miami Heat would earn $10 million or more in playoff revenue alone (Nicola). The sports organization not only attract more playoffs attendance but also earn money through merchandise related to their famous players, attract more publicity, and sign more attractive marketing contracts with sponsors among other things.
The third reason is that sports players are valuable brands themselves. There are often huge differences between the salaries of the highest players and the least expensive players in the same team. For example, Dirk Nowitzki earned over $17 million last year while another Dallas Mavericks player Ian Mahinmi earned only $884,293 (HoopsWorld). Merchandise with Dirk Nowitzki’s name generates lot more revenue for the Dallas Mavericks organization and a lot more people go to the Dallas Mavericks game to see Dirk Nowitzki in action than Ian Mahinmi. It will not be a surprise if Ian Mahinmi is hardly a familiar name even in Dallas. Brands command premium which is why P&G commands premium prices for its products even though similar products may be selling for a lot less. Corporate America seeks sports players to endorse their products because sports figures are familiar personalities and their names have tremendous commercial values.