Player Salaries and Economic Rent

A couple months ago, I wrote about rookie salaries--whether or not they're "too high," and how the NFL's next labor agreement is certain to reduce them. With all the recent attention on NBA free agents, some are wondering why a backup point guard on the Orlando Magic is paid more money than NFL superstar Tom Brady. The issue of player salaries is an emotional one because it touches on our human instincts for fairness.

First, let's look at some facts. From USAToday's salary databases, here are the 2009 salaries for the three major professional sports leagues, plus something I'm told is called "hockey."


SalaryNFLNBAMLBNHL
League Total$3.4 B$2.2 B

$2.7 B$1.6 B
Team Average$105 M$72 M$89 M$52 M
Player Average$2.0 M$4.8 M$3.5 M$2.1 M

Personally, I think they're all overpaid, rookies and veterans. If you ask most football players if they would still play football for $80,000 per year instead of $800,000 or $8 million, they'd say yes. It's almost certainly a better proposition than whatever else they'd be able to do in the labor market. If Sam Bradford had the choice between playing in the NFL for $80k/yr or looking for an entry level job in Oklahoma City, what do you think he'd do? Every dollar above $80k is icing on the cake. Technically, it could be considered economic rent.

In economic terms, rent is a misnomer. It does not refer to money you pay a landlord for your apartment. It refers to the money above the minimum amount required to induce the employment of a resource. There is always rent claimed by both sides of all voluntary transactions, otherwise people wouldn't agree to the transaction in the first place. Similarly, there is always surplus value gained by purchasing something above its cost. When you buy something at the store, you enjoy the benefit of the good above its price, and the store enjoys the benefit of the cash above its cost to provide the good.

It seems to me almost all of the economic rent in professional sports goes to the players. It's hard to imagine any other multi-billion dollar company paying more than 60% of its revenue to a few hundred employees. It's not that the salaries are high in absolute terms, it's that the athletes would gladly play for far less. I think that's partly why so many people object to the high salaries for many professional athletes.

Thankfully for my fellow Americans, my personal opinion about how much money other people should make doesn't matter. The market is what matters--supply and demand. If teams thought that top draft picks were overpaid, they would simply offer less money and allow them to hold out, then they could use the money to sign free agents. I'm glad I don't have a committee of economists telling me I'm overpaid, and you probably are too.

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39 Responses to “Player Salaries and Economic Rent”

  1. Phil Birnbaum says:

    Your gratuitous shot at Canada's National Sport has been noted and logged, Mr. [not the real] Brian Burke.

  2. Brian Burke says:

    I tease, but I'm a hockey fan. Go Caps!

  3. Vince says:

    1. Where should the money go, if not the players? More profit for owners? It wouldn't go to teachers, despite the common complaint that athletes make so much and teachers so little.
    2. If the NFL paid $80k salaries, lots of athletes would focus on other sports (starting when they were younger) and the quality of play would go down.
    3. Winning attracts fans and makes the team money, so players that help a team win add a lot of marginal revenue and have earned high salaries.

  4. Chris says:

    I'm not sure I agree that he would play for 80k/year. Perhaps some players would, but the average player is in the league for 3 years. Since he was a high QB pick he's virtually guaranteed 5-7 years. Still, making 80k for those years is not going to set up players for their future. They need to make enough money to be able to "retire" (at the age of 30 or so) fairly securely, because they place themselves at high risk of severe long-term injury. (Not to mention the diminishing of their cognitive ability which is only now beginning to be understood). Sure they would probably play for less than $8 million, I just think you overstated it going all the way down to $80k. Many of the more academically gifted players would choose other professions over football if the payoff were only $80k per year.

  5. Brian Burke says:

    1. In a fairer world, the money would go to stadium construction. Currently, taxpayers subsidize the NFL with shiny new stadia to the tune of $1B a pop. Even the "privately financed" stadia are so subsidized it's a farce. This is true of all major pro sports, not just the NFL. Teachers makes plenty, considering: summers off, huge benefits, short days, can't be fired, no competition.

    2. True, but I doubt that's why salaries are so high. Besides, players do it for more than just money. They do it for status and esteem, which is are more powerful motivators than people acknowledge.

    3. Winning attracts fans, but it's a zero-sum game for the league as a whole. There will always be 265 wins and 265 losses in the NFL each year (as long it's still a 16-game season). It's the league (and union) as a whole that sets the salary structure.

  6. Z-Dog says:

    This is a shockingly poor economic analysis. Brian, are you shilling for owners now?

    NFL football players are exceptionally rare and talented athletes. As inputs into the product called NFL Football, they are irreplaceable without damage to the quality of the product.

    As to your claim of 'rents' and the inducement necessary to get players to play, my question to you is why you ignore the market's answer to that question in favor of your own arbitrary $80k? The players have unionized and collectively bargained with their employers to set wage minimums, below which they will not agree to play and will instead collectively strike.

    When you say athletes SHOULD gladly play for less you're introducing a moral claim into an economic argument. I could argue that doctors should heal for less, that CEOs should work for less, that stadium owners should charge less to families for a day of entertainment, that dairy farms should hand out free milk on playgrounds, or whatever else. But your feeling on what dollar amount should induce a person to play professional sports is without any economic meaning whatsoever.

  7. Anonymous says:

    Brian,
    I think this is the only time I have ever disagreed with you :-)

    Its all about supply and demand. Why should a pop star (Lada gaga?) make millions when far more talented musicians that play classical music and are much more talented make far less? Its because there is more money in pop music than classical music. Same for sports. Hell yes athletes are "overpaid" in the sense that they would play for far less and make way way more than the average citizen makes. But thats irrelevant and fairness has nothing to do with it. There is a lot of money and if the owners dont pay, the athletes will go to other teams. If the NFL were to pay an average of 100K per player, a new league would form and pay the players more.

    As for ownders deserving more, why? Unlike a company that makes products and can easily replace people, sports teams are far more focused. Their only product is that sport (what they make outside of it goes into their pocket). The players get hurt playing the sport - sort of like miners, except they die.

    As for subsidies, I agree they are a bad deal for the public.


    Brandon in New Jersey - Go Jets! Go Giants! Boo Hiss Patriots and Dolphins [but I fear both, Miami is looking good :-( ]

  8. Brian Burke says:

    Z-Dog-US Navy SEALS are rare and talented. So are NASA astronauts. 'Rare and talented' doesn't automatically equate to high salaries.

    Part of my point is that the quality of NFL play would probably not noticeably suffer because of the lack of alternatives to the players.

    My point isn't that salaries should be lowered. Rather, my point is an explanation of why many people feel the way they do.

    But as you say this is irrelevant and fairness has nothing to do with it. I agree. I guess you didn't read all the way to my last paragraph.--Shockingly poor reading skills, Z-dog. :)

  9. Dr Obvious says:

    "Z-Dog-US Navy SEALS are rare and talented. So are NASA astronauts. 'Rare and talented' doesn't automatically equate to high salaries."

    It does in the private sector. I don't know anything about military pay, but I know the pay for astronauts is depressed because there are so few available jobs. I'm sure you've read news stories about private contractor companies that pay military veterans much, much more than the government does for basically the same job.

    And I don't buy the idea that there would be just as large a talent pool if getting stupidly wealthy wasn't one of the incentives. I don't buy that an aging veteran will be as willing to put their body on the line for another year for what they could make selling cars.

    Football players are not bricklayers, as I recall one author saying. They are gladiators, or CEOs.

  10. Guy says:

    "My point isn't that salaries should be lowered. Rather, my point is an explanation of why many people feel the way they do"

    "Personally, I think they're all overpaid, rookies and veterans."

    I think your political views are peeking through here, Brian. Which is perfectly fine --but it's not objective economic analysis.

    I don't know why it's surprising that the players, who are the product, get 60% of the revenue. I could just as easily ask why the players should give 40% of the revenue to guys who do the relatively easy tasks of leasing stadiums, selling tickets, and negotiating TV deals. I suppose their success at getting the taxpayer subsidies you mention is worth something. Seems like you could hire a good league management team and some smart lawyers for a whole lot less than 40%.

    As for what the players would be willing to play for, well, why is that relevant? How much would you have to pay Bruce Springsteen to sing? How much would you have to pay Meryl Streep to act? A whole lot less than they now get paid, I'm sure. But I don't see what that tells us about how much their performance are worth.

  11. Brian Burke says:

    Guy-I think I was pretty clear which parts of the article were personal feelings ("Personally, I think..."), which parts were an explanation of economic concepts ("In economic terms, rent..."), and which part reflects political opinion ("Thankfully...the market is what matters.")

    Feel free to disagree, and I invite anyone to share his own opinion. If there is some mistake in my understanding of rent, please share your own understanding. But I caution everyone not to confuse prescriptive and descriptive analysis. And please don't disguise your own opinions as unbiased "economic analysis."

  12. Anonymous says:

    I think people are confusing your opinion for analysis because you are using economic terms to promote your opinions. For instance, you use the term economic rent without even knowing what it means. The biggest rentiers in the system are the owners, who aren't providing much value at all.

    As for whether people would play for $80k I think you are crazy. Most of these people will never work again after this job. They need money to live on their whole lives. More importantly they need expensive medical coverage their whole lives. If we agree that having players that are completely focused on football is good for the sport then we have to pay them enough that paying the bills each month is not what is on their minds.

    I agree that bidding up superstars is a zero sum game. Once these guys make $10 mil you've pretty much given them enough they never need to worry about money again. I'd like to see the union focus on medical benefits and after league training and support for the rank and file players. The guys making the league minimum and busting their knee after three years are the ones that need the protection of the union, not a handful of overpaid superstars. Unions are there to protect the little guy, not help the rich bicker with the super rich, and if the NFLPA wants the legal protections of being a union they should remember that.

  13. Brian Burke says:

    Anon--You seem upset that I'm using economic terms to promote an opinion about economics. What kind of terms would you suggest? Woodworking terms? Horticulture terms?

    College players play the same sport for free, or at least in exchange for tuition. So I don't think I'm crazy to think a rookie would play for 80k.

    Here is the synopsis of the post:
    1. Players are paid a lot. Like others I 'feel' like they are overpaid.
    2. They'd probably play for much less.
    3. There's an overlap in prices for all transactions, in which both parties would be willing to transact. I think the players are getting almost all of that overlap. My theory is that this may explain why people feel that players are overpaid.
    4. None of our opinions matter, including my own. Only the market matters, and that's a good thing for all of us.

    Some of the comments today are off the mark, reading things into the post that aren't there. A couple commenters said some harsh things without even bother reading to the end.

  14. Anonymous says:

    What a player would "accept" seems irrelevant. What matters is what the customer will accept to pay for the service provided.

    If a Lebron James can sell 50,000 tickets every night at $50 a piece, then he deserves the big bucks. The same goes for movie stars, pop stars, authors, and even business owners.

    An athelete selling their product (entertainment) to a million people, is no difference from someone selling 1 million snuggies. It really doesn't mean anything to say that the snuggy maker really should earn $80,000.

  15. Dr Obvious says:

    The conversation might be easier to understand in terms of producer and consumer surplus, instead of rent and 'other' overlap. (Keeping in mind that the players are the producers, and the teams are the consumers)

    I think what you are getting at with 3 is that you think the producer surplus is greater than the consumer surplus. That's probably likely. Sports are wildly inefficient markets for a number of reasons.

    I don't think an 80k salary would balance out the surpluses, but if you were to say "I think that player surplus is too high, and I think that public funds shouldn't be used to build stadiums, and I think those two things are related and bad," I think I could get behind that.

  16. Anonymous says:

    I think that Brian does understand what economic rent is and that many of the commenters are failing to understand the message. Let's look at the words of one of the pioneers of economic theories related to economic rent, Henry George. He described it as:

    "the part of the produce that accrues to the owners of land (or other natural capabilities) by virtue of ownership" and as "the share of wealth given to landowners because they have an exclusive right to the use of those natural capabilities".

    While he was focused on land owners, the point is that NFL players would work for much less than they currently receive, but, since players have the exclusive right to make use of their abilities, which are in very low supply, they can charge much more than is necessary to compel them to play.

    They do this through coordination (NFLPA). The teams also work together to charge high economic rent. If taxpayers could get their governments to stop subsidizing stadiums, much of this economic rent would dry up, as the league would have to reduce salaries and profits to pay for their own infrastructure. Of course, that won't happen.

    Gabriel Froymovich

  17. Guy says:

    Your theory is that the reason you and many others feel NFL players are overpaid is because they would play for much less money. In other words, you feel they are overpaid because there is a very large gap between how much they can get paid plying their current trade -- professional football player -- as opposed to whatever their next-most-highly-compensated skill might be (the example you choose to give is "entry level position"). My question is, do you think you apply the same standard to other occupations? Do you think heart surgeons are overpaid by the difference between their current compensation and what they would make outside the medical field? Are CEOs overpaid --again, just your feelings -- to the extent they would be paid less if required to do something other than manage a company? Actors? Models? Architects?

    I'll take your word for it if your answer is "yes." But I don't think this describes very well how most people evaluate who they feel is or is not overpaid. For one thing, almost every highly-paid person with specialized skills would be hugely overpaid by this criteria. But the perception of people being "overpaid" does not extent to all highly-paid occupations, or even all highly-paid entertainers. So I don't think the theory holds up very well.

    As for players getting "almost all" the rent here, I'm not sure. If the next contract gives players 65% or 70% of the revenue, does anyone think there will then be NFL owners unable to find buyers for their teams? I don't. And that suggests the owners too are being better compensated than they "need" to be in order to persuade them to do the hard work of owning an NFL franchise.

  18. Anonymous says:

    I have to say that the 4 points in the synopsis are opinions, including point 4: the market being the only thing that matters as a good thing.

    Leaving aside the much deeper analysis about markets as the best social arrangements to obtain certain ends, I'd say that this remark is not only tainted by your "political-economy" point of view, but also a flawed thought in terms of economics as a science. Even if we accepted that market is the best resource allocation mechanism, we would need them to be perfect. In our case, players have a union, the league is a monopoly (and -almost- a monopsony) so there's absolutely no certainty that "these" (product and factor) markets would work in a desirable way from an economcs standpoint. Then, it is an opinion if you think that players earn too much, but it is also an opinion if you think that "thankfully (...) the market is all that matters".

    I'm sorry for any mistake in this comment, English is not my mother language.

    Keep it on. The site is great

    JUAN

    PS: I'm in the group that think players probably aren't payed too much, as they are the main input (by far) in the production function of professional football. In other sports, such as football (soccer) players have prices the owners being the Clubs; for example Ibrahimovic was "bought" by FC Barcelona to Internazionale Milano. The price was Eto'o plus $35 million. I don't know the Ibrahimovic salary, but he must earn $5-8 million a year. In this case, you can see that Clubs keep a portion of the economic rent.

  19. Anonymous says:

    Kids playing in college that have NFL level ability are playing for free because it is their ticket to a big time NFL contract upon graduation. They know if they do well in college they will make the big bucks in just a few years.

    Of course, I think colleges exploiting these people are pretty scumbag. When one of these kids they make millions off gets hurt before they can go pro they get a big "fuck u".

    Guy hit the nail on the head. Any of us would work for a substinance wage if that was the only option available to us. Luckily it isn't, there is a market for our skills that drives our wage up. Your line of thinking could apply to any profession, its meaningless.

    ____________________
    3. There's an overlap in prices for all transactions, in which both parties would be willing to transact. I think the players are getting almost all of that overlap. My theory is that this may explain why people feel that players are overpaid.
    ___________________

    This may be true, I'm no expert on the numbers of whose getting what. However, I don't think its the end of the world if players get this surplus rather then owners. At least they are playing. What have the owners done for the sport? The older owners build the sport, sure, but they have seen their investment grow exponentially, there has been no better investment over the last 40 years. They have gotten their fair share for their help in the leagues early days. The newer owners are just billionaires looking for a plaything or investors looking to suck as much revenue out of the sport for themselves as possible. What value is there in supporting a bigger slice for them.

    You are right that teams should be setting aside more of their revenue for stadium building and improvements to the game. I don't have a problem with that. However, such a slice could come out of the owners pockets, the players pockets, or a mix. To determine what's best I think we need to see the books of teams finances to determine exactly how profitable teams are and reach a fair agreement.

    Even if they do set aside money though, I have a feeling that the taxpayer subsidies will continue. Teams will still have a choice of where to build a stadium, and every local government will want it to be built in their area and will offer subsidies, even if teams can afford it on their own.

    And of course its not just an issue of owners versus players. The owners need to work out a better arrangement between small and big market teams. The players need to work out a better arrangement between superstars and backups.

    What it all comes down to is this. I think that the players put grueling work in and should be rewarded handsomely, and the NFL puts out a good enough product that the owners deserve a decent profit. However, if we don't have football in 2011 just because $100 million players are fighting with $10 billion owners for a bigger slice for themselves its gonna be awhile before I watch football again.

  20. Football Polemics says:

    There's no doubt football players are overpaid, but I think almost very football owner would do it for free as well (the publicity, the prestige, the fun, etc etc).

    The real moral of the story is that we should fight taxpayer-financed stadiums. They are generally just $100M+ giveaways to the rich.

  21. Brian Burke says:

    Everyone seems to agree that there is an overlap in surplus values on both sides of a transaction. If someone sells his labor to an employer, both are better off for it, or else one or the other wouldn't agree to the arrangement. This is true for all occupations and transactions, not just for pro athletes.

    That overlap of surplus value has to be split in some proportion between the seller and buyer. In other words, strictly speaking, I'm better off accepting a meager 1:99 split of the surplus rather than forgoing the deal. Likewise, my trading partner is rationally better off accepting a 99:1 split in my favor. Anywhere in between is a stable arrangement.

    But many people (if not all) have an objection to lopsided splits like that. See the 'Ultimatum Game', for example. Spite has its purpose--to deter unfair deals.

    It appears to me the players currently enjoy a lopsided split. They take >50% of the pre-expense revenue, so unless you think it costs zero dollars to operate and promote the NFL, players are claiming the vast majority of the surplus. Whether you think that's good or bad is up to you.

    Again, I think the point is being missed by some of the commenters. Sorry if the post is unclear, but frankly, I don't think it is. And I think some people's brains are turning off once they get to the line, "Personally, I think they're all overpaid..."

  22. Anonymous says:

    I wonder how true it is that the level of play would be the same. The multi-million dollar yearly paychecks are a great incentive for the stars to apply themselves fully.

    On the other hand, would football still be fun to watch even if the players were not working as hard?

    JudoJohn

  23. Anonymous says:

    I think lesser sports leagues are a decent example that athletes would play for much less. Look at the Arena football leagues, MLS, and even the past NFL. Yes, now that the sport is extremely popular and prosperous, the players might refuse to play for less as a negotiating ploy. However, if the money wasn't there, they'd likely play for less.

  24. Z-Dog says:

    Brian, if you're trying to explain people's feelings, you probably don't need to resort to economic arguments, as emotions and economics are poorly correlated.

    People feel like players earn too much because our society does not reward moral good in the same way that it rewards the ability to create profits. It's easy to hate on someone's salary when they earn it by playing a game, or being in a band, or even by speculating on Wall Street. You were exploring the fairness question though, and well, I don't think you can confuse economics with fairness.

    Btw, Navy SEALs are soldiers and under significant penalties if they try to strike for higher wages. The supply of potential astronauts is still far greater than the demand for astronaut services - they are not nearly as rare as NFL football players relative to the demand for their skills (there aren't very many space flights each year, after all).

  25. Bob Weber says:

    Brian,

    I think you are right on in your post. NFL players would play for less, and in fact, did play for much less prior to several victories by the NFLPA. I found one source that stated average salaries went from $198K in 1986 to $800K in 1993. $198,000 in 1986 dollars is still more thank $80,000 today, but your point is well taken. There are plenty of players who would have a difficult time making that kind of money outside of the NFL.

    Ultimately I have to disagree with the position that the players are overpaid. The revenue from the NFL is going to go somewhere and personally I would rather see the majority of the money go to a young athlete that has worked hard to get where he is at than to someone like Jerry Jones, Al Davis, Dan Snyder, etc... who already have more money than God.

    Sure it would be great if all the teams were a community-owned non-profit like the Packers, but that's not going to happen. It's a business and businesses make money. If the players didn't make 60% of the revenue the ownership would. Someday when the market changes and the league falls on hard times I'm sure players won't continue to get revenue at the levels they do now.

  26. Anonymous says:

    If players aren't highly paid, then are they not more likely to be corrupted by gamblers ? What happenned in 1919 ?

  27. Anonymous says:

    I think that NFL Player salaries are experiencing a bubble much like the housing market where the underlying assumption of constant increase in value is flawed and is due for a crash.

  28. James says:

    Thought experiment.
    If the outcome of the NFL CBA negotiations were complete free agency e.g. no salary cap, no draft, no minimum salaries AND there was no collusion between the owners. Would the players would get more money in an essentially free market system than they do at present?

    In European soccer which has a very free market approach and promotion/relegation. The NY times reported that
    the top 5 leagues had revenues of 7.9Bn Euro but salaries of 5Bn this is 63% of revenue.
    http://www.nytimes.com/2010/06/08/sports/soccer/08clubs.html

    NFL NBA NHL salary caps are calculated as a percentage of revenues between 55% and 58%(I think) Although the definitions of revenue that this is based on varies from CBA to CBA and the NFL and NBA signing bonus/cap exceptions mean that players are probably paid more. (MLB players dont have a specified salary level but I think it is actually a lower %than the other leagues although arguably the contribution to minor leage players and draft signing bonuses should be included.)

    So for a high revenue elite sporting leagues the North American Franchise/Draft model may pay players slightly less than the European Promotion-relegation/no draft model.

    Is this a fair way of working our how much players "should" be paid?

    James






    How much of the revenue is due to the skills of the players and how much is due to the team owners and the league in building stadia, hiring coaches, negotiating TV deals and devleoping a sucessful product.

    Also I think it is this issue that is the crux of the CBA renegotiations as

    I dont think owners buy NFL teams to make money it is more a hobby/vanity project.

    European soccer teams often pay a higher proportion of club revenue on salaries as they are in a promotion/relegation situation and the market is much freer, no salary cap no draft no minimum salary. And there is the phenomenum of billionaires pumping their own money in

  29. JMM says:

    Let me highlight Jeff Clark's post. The taxpayer subsidies enable the high player salaries. If the owners had to finance stadium builds with more common means they could not fund such a high labor rate. I believe the difficulties with getting public financing is one of the primary drivers of the league's position.

    Anyone who thinks capitalizing an enteprise worth hundreds of millions is easy or doesn't contribute much should try to raise a couple of million for an idea. Franchise owners, like everyone else who has seen success is both very talented and very lucky.

  30. misha Golin says:

    Brian,

    Teachers are not paid enough. The starting salary is decent. The benefits are good. Summers off is great. However, according to your "economic rent" model teachers are not paid enough. Yes, the current crop of teachers agree to work at the current salary. However, teachers are gladiators as well, not bricklayers. You only get one physics teacher in the classroom and if he/she is better than the alternative then they are worth the increase. But, if I can make a lot more money being an engineer than a highschool physics teacher then I'm going to be an engineer.

    If teaching salaries were higher I may have stuck with it. Instead, my students complained to me about their new teacher. Apparently, he wasn't a good teacher, but he was willing to work for less than I was. Allow higher salaries, allow firings for nonproductive teachers and it will create competition in the education system. This would greatly improve our product.

  31. Anonymous says:

    Yes, salary and bonuses are a function of both the task and performance.

    It also depends on the function and number of people required to do the task - there are few brain surgeons and an awful lot of cleaners.

    And the competition. So for example there are huge numbers of photographers but only a tiny handful who earn a decent wage. This also applies to National Hunt jockeys who run huge injury risks every time they jump on a horse, generally for peanuts.

    But salary and bonus also reflects the expected longevity of the individual in the role; for example a half-back or a CEO are hardly likely to stick around in that specific role for very long.

    With high incomes comes a degree of social responsibility once one's own finances are reasonably secure.

    There is no point accumulating "indecent" piles of cash without ploughing at least some back to the less fortunate or to the benefit of social projects

    Hugh

  32. Jonathan says:

    An interesting discussion; I think average fans "feel" that players are overpaid for three reasons:

    1. Players' salaries are at least one order of magnitude greater than their own.
    2. Football media extensively cover players' salaries but say next to nothing about teams' income and rates of profit, much less owners' personal fortunes and incomes. And while USAToday does a great job enabling fans to see how much cash money players take in on a yearly basis (DYK, by the way, that Marcus McNeill was the 6th-highest paid lineman on SD last year?), mostly they hear about the big contracts for elite players.
    3. Football fans are overwhelmingly white (like the US population) and players are overwhelmingly black.

    I agree with the many commenters that are against public stadium financing; I also think it would provide owners a better incentive structure to maintain their buildings.

  33. Alex says:

    This has got to be the most frustrating list of comments I've ever seen. Brian, I apologize on behalf of the internet. Your post was perfectly clear and very incisive. Not to mention true. Keep up the good work.

  34. JJB says:

    I agree with Alex 100%. Holy cow! Apparently compensation is a very touchy subject. I understand now why most companies discourage discussing your salary with other employees. I realize that there are a LOT more football players than hockey players, but I'm still amazed that hockey players average as much or more than NFL players, especially since the NFL TV contract is worth SO much more than the NHL contract.

  35. Tracing Error says:

    What a crock! First, almost all economic transactions accrue rent to BOTH parties. Why the focus on the several thousand men we watch play spitting half of revenue rather than the 32 men who split the other half?

    I can't imagine how anyone possibly could believe this:
    "3. There's an overlap in prices for all transactions, in which both parties would be willing to transact. I think the players are getting almost all of that overlap. "
    Most people would do the owner's job (sit in luxury boxes, hobnob with the elite drinking fine alcohol and getting fine food, have lots of power and fame) for nothing, or enough to pay for 10 Big Mac's a week and a studio apartment.

    As to stadium giveaways, yes they are disgusting. But the majority of revenue comes from TV and merch, not tickets. Only 22% comes from ticket sales (http://harvardsportsanalysis.files.wordpress.com/2009/09/the-nfl-business-model-and-potential-lockout.pdf). And subsidies account for only part of that revenue.

    Ultimately, it is TV that stirs the pot in the NFL, and that is merely the viewers attention given up freely. Should that money go to the players or the owners. Who is it we are watching? The answer seems pretty simple to me.

  36. Brian Burke says:

    T.E- Do you doubt the following?: "If you ask most football players if they would still play football for $80,000 per year instead of $800,000 or $8 million, they'd say yes. It's almost certainly a better proposition than whatever else they'd be able to do in the labor market."

  37. Chris says:

    Actually, any more, I highly doubt they would play for $80,000 a year. Too much risk of injury in a sport they average playing for 3 years. You get a concussion, can't walk again, etc. and you've only made $80,000 you are screwed, if you've made $800,000 for a year or two, you might be okay if you invest wisely. Frankly, for the level of risk these guys undertake, only the multi-million dollar guys are making enough in my opinion to overcome the quality of life issues to be suffered after their career is over. IMHO

  38. Anonymous says:

    US Army soldiers in combat make less than 80k and deal with FAR more risk.

  39. Chris says:

    And there are dozens of reasons why that analogy does not hold water. Not the least of which is that once you consider the benefits that they receive, their total compensation probably exceeds 80k. I have multiple friends in the Marines and Air Force who have benefited from free education, housing allowances, etc. etc.

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