You'll hear a lot about "millionaire athletes." Don't buy it.
The image above “athletes and money” was generated on Jasper.ai.
(This is the opening essay from this week's edition of my Sunday Note, which is produced with Zach Peterson.)
IT’S SUPER BOWL WEEKEND and somewhere there’s an uncle shaking his fist at the sky decrying “rich, spoiled athletes” who “should be grateful” for what they have. In reality, most of the people you’ll see play on Sunday are not, in fact, millionaires. Many of them have contracts that can essentially be canceled on a whim, more of them will not play professional American football past the next year or two, and all of them — even the very (very) well-paid ones — will have injuries that will hinder their lives for the rest of their lives.
I am a huge football fan (an addict, even), and I know there are way too many problems with the sport, but I watch anyway. I truly empathize with the role players, bench pieces, and practice squad guys who have their entire worlds riding on what happens over the course of a given Sunday for six months. Here are some tidbits you can use to dispel the myth of the rich, entitled athlete.
The average NFL career lasts just a bit more than three years. For running backs — a position that takes a remarkable amount of physical punishment — the average career is 2.5 years and the pay is among the lowest by position in the sport. If you’re a blue-chip recruit coming out of a major college program, you’ll get your first pro contract at 22 or 23 years old, and be out of the league by 25 or 26. This, after taking a beating at the hands of linebackers, defensive linemen and others who are absolute physical specimens — 6-foot-something, 200-250lbs of fine-tuned muscle, speed and power. It’s brutal and the science is becoming clear as day — playing football leads to lasting, often deadly brain damage in the form of chronic traumatic encephalopathy (CTE).
This is from some new work from the Boston University CTE Center (yes, there’s a major medical field dedicated to it, that’s how bad it is):
Researchers at the Boston University CTE Center recently announced that they have now diagnosed CTE in the brains of 345 of 376 (91.7%) of NFL players studied. By contrast, a 2018 Boston University study of 164 donated brains found one (0.6%) with CTE. The one CTE case was in a former college football player. The NFL player data doesn't necessarily mean that 9 of 10 current and former NFL players have CTE. Exactly how many do is unknown since the condition can only be definitively diagnosed by brain autopsy after death. Brains with CTE show a buildup of a protein called tau around the blood vessels. This is different from what is typically seen in brains affected by aging, Alzheimer's, or any other brain disease. “Every 2.6 years of football at any level doubles your risk for CTE, and the longer you play and the higher level that you play, the greater your risk,” said Dr. Ann McKee, director of the Boston University (BU) CTE Center and chief of neuropathology at VA Boston Healthcare System. She also directs the UNITE brain bank, the world's largest tissue repository focused on CTE and traumatic brain injury. The new research builds on findings from a 2017 study that showed CTE in 99% of the brains of NFL players, 91% of college football players, and 21% of high school football players in the UNITE brain bank.
In short, the earnings window is small, the odds of signing a multimillion-dollar deal are remarkably slim, and playing the sport at the professional level strongly correlates to major illness early in life. The league’s most recent collective bargaining agreement with the players stipulates that a player needs to accrue three full NFL seasons to become eligible to collect a pension — the pension kicks in at age 55 and averages between $30-46,000 per year. Not exactly a golden parachute.
Baseball is similar in some ways but much better in others.
First and foremost it’s much (much) easier on the body. Players play longer, have longer periods of earning potential, and contracts are largely guaranteed. But, as with football, and basketball for that matter, most players will never make tens of millions of dollars. In fact, most professional baseball players will never set foot on a major league field. According to Baseball Almanac, there have been a total of just under 21,000 major league baseball players all time. This is going back to 1876. For perspective, Yankee Stadium has a capacity of 46,537 — if you put every player who has ever been a major leaguer in the stadium it would not even be half full. In short, it’s nearly impossible to become a major league baseball player.
This winter, the Los Angeles Dodgers signed the best player on the planet, Japan-born Shohei Ohtani, to an unprecedented 10-year $700 million contract. A couple of weeks later those same Dodgers landed Japan’s best pitcher, Yoshinobu Yamamoto, on a $325 million contract. These are gaudy figures — outlandish really. They are also complete aberrations. For every player making more than $20 million per year in the majors, there are hundreds of minor leaguers making somewhere between $5,000 and $40,000 — and even the $40,000 earners are rare.
To boot, the conditions in minor league baseball just recently changed with a new labor deal. Major League Baseball — which is to say, team owners — had successfully lobbied Congress for decades to exempt minor league players from minimum wage laws. These are guys who are grinding, following their passion (remember what it means when you tell your kids, your nieces, your nephews to do that), and putting in impossible hours to hone their craft… and then doing a shift at Home Depot to make ends meet. Here’s a very telling story from now-defunct 538 that paints a vivid picture of “the life.”
Corporate executives routinely make more money than even the highest-paid professional athletes, and middle management at a successful Silicon Valley company is a much more financially lucrative life than choosing to pursue professional sports. Some of the parachutes and stock deals in the corporate world make even Ohtani’s deal look pretty run-of-the-mill.
Taken together, professional sports are a great example of class warfare. Owning a major professional sports team is a winning proposition across the board. Go here and look at the chart — between 2018 and 2022, not one single major league baseball team lost value. The Yankees are worth more than $7 billion, up more than 54% over just that 4-year stretch. The median increase in value is 25% across the league in that time frame and there isn’t a team in the league worth under $1 billion.
Owning an NBA team is somehow an even better investment. There isn’t a team worth less than $1.5 billion and the median growth in franchise value between 2016 and 2021 was 45%. That sort of wealth creation is unheard of — unless you look at the valuations and growth of NFL teams. Between 2016 and 2020, no team — NOT ONE — increased in value by less than 61%. Financial managers would kill for returns like that on multi-billion-dollar investments, and I don’t think it’s out of turn to pull for athletes to make as much money as possible, in fact, that’s where I’ve landed on the whole thing.
Every time you hear “these millionaire athletes,” remember that most of these athletes you’re seeing are decidedly not millionaires. The people paying them — often the same people trying to get public funding for new stadiums — blew past the “millionaire” label years ago. And, of course, things are much, much worse for professional women’s sports in the U.S., with the most popular women’s league, the WNBA, having a minimum salary of just $62,000.
Every time you see a headline about an absurd amount of money going to a star athlete, maybe a nice little “good for them” is the way to go — I know that’s where I’m at.