What are athletes worth? With the NBA currently embroiled in a bitter lockout revolving around player salaries and the NFL just coming off a similar players’ strike, I often hear people questioning the small fortunes professional athletes earn.
“Is he really worth $80 million? All he does is put a ball through a hoop…”
Should that skill warrant millions? Short answer, yes.
In sports, as with consumer goods, I believe in the power of the free market. A player is worth exactly what someone is willing to pay them for their services. If someone is willing to pay Kobe Bryant $18 million a year to secure his services, you’ll have to pay more to get him yourself.
I’m sure many will reject the nebulous free market answer so I have something a little bit more concrete. Let’s take LeBron James as an example. He represents the pinnacle of his sport in terms of both skill and worth (and he fits perfectly into my argument).
Throughout his NBA career, James has earned roghly $17 million a season, the maximum allowed. In 2010, After playing seven years for the Cleveland Cavaliers and leading them to previously unseen levels of success, he spurned them and signed with the Miami Heat.
With that decision, the Forbes Magazine valuation of the Cleveland Cavaliers franchise dropped several hundred million dollars overnight. Because one players chose to take his talents to South Beach, an NBA franchise lost nearly half its monetary value.
What if we take this example to the macro level? LeBron James’ exodus from Cleveland and the subsequent drop in tickets sales and attendance drove many businesses near the arena out of business. Suddenly $17 million doesn’t sound so bad.
This phenomena isn’t unique or generational either. The same team depression and devaluation hit the post-Michael Jordan Bulls (not that I’m comparing Lebron and MJ, I’ll save that for another time). Nor is this just for hoops, it’s a pan-sport principle. Anyone who thinks the Indianapolis Colts are pulling down the same revenue without Peyton Manning as they were with him, keep dreaming.
In fact, in light of all this, I would argue that many millionaire athletes are actually under-paid given what they bring to a team, city and fan base. Look at recent rookie phenoms like Steven Strasburg, Cam Newton and Blake Griffin. Their play and presence alone brings in fans and puts a buzz in the air. The buzz, teams know, translates very well to dollars.
So the next time you scoff at a new mega-contract for a superstar athlete, just think, it might actually be a bargain.
