Saturday, December 10, 2011

Do Athletes Deserve The Salaries They Make?

Alex Rodriguez

It is common human behaviour to want more. More money, more amenities, we all want more of everything. That is human nature, but not all of us are equally fortunate. Some of us get paid enormous amounts of money for little or no work while many others (in fact a huge majority of people) have to work very hard to earn their keep. This I can illustrate by a simple example. Alex Rodriguez is a thirty-six year old man of Hispanic descent who was born in New York but grew up in Miami. He entered the workforce directly out of high school. He currently has a job in New York City and has been living a comfortable life since the young age of eighteen. [1] What is his profession? He plays baseball. A majority of people from Rodriguez’s background have to struggle to make ends meet while Mr. Rodriguez is pocketing close to $27,500,000 per year, a figure that some of us can only dream about. Why the disparity? That is the question!

            Athletes have a number of reasons why they earn such large amounts of money. In today’s financially struggling world, people tend to lose their jobs and their livelihoods very easily. Ordinary middle class people might have to work for close to forty hours a week, mostly sitting behind a desk filing through stacks of paperwork and pocket something in the region of $50,000 to $100,000 a year I would say. People are paid for the value of the work they put in. There is huge demand for sports as a pastime so athletes are values very highly by a larger audience. However, such a statement often leads to a rather thought provoking follow up: With education such a vital field in today’s world, why do teachers get paid poorly? It’s quite an interesting question to put forth!

            The supply of athletes is very rare. The supply of outstanding professional athletes is still rarer. It is basic economic knowledge that when the supply of one commodity is very limited, the price for that commodity will be very high. Teachers are available in abundance; this is one of the main reasons why they get paid a lesser salary compared to a professional athlete. Of course this will lead to the argument regarding emergency workers – policemen, paramedics and firemen. Do they deserve a higher salary because of the nature of their work? Firemen and policemen are exposed to a huge number of risks each time they go out on call, while paramedics help save lives. Yet the average firefighter in America earns around $40,000 to $60,000 a year. [2]

            A professional athlete’s life is not just a bed of roses. It has its own thorns too. Young athletes hoping to make it to the big leagues sacrifice a lot of their teenage years training and preparing themselves for a disciplined life. They often tend to put in hours of hard work and sacrifice each day, something that ordinary people might not do on a daily basis. Injury is another demon. An athlete could suffer a career ending injury which could force them out of the game for good. Former Washington Redskins quarterback Joe Theismann’s injury comes to mind. [3] An athlete could also suffer an injury that might heal but cause a massive dip in form. The case of Canadian born English soccer player Owen Hargreaves immediately comes to my mind. [4] Some athletes have even lost their life as a result of a horrific incident during a sporting event. Italian MotoGP racer Marco Simoncelli, who was killed a month ago in Malaysia when he lost control of his motorcycle, is an example. The recent Lokomotiv Yaroslavl plane crash which killed an entire team is another example. [5][6] There exists this high risk factor amongst most athletes. Economic policy usually indicates that a high risk means a high reward as well. This leads to athletes demanding such a high salary. In the case of Alex Rodriguez or LeBron James who were drafted right out of high school, a career ending injury could completely ruin them. Tiger Woods also comes to mind for different reasons. It wasn’t an injury of any sort that ruined his glowing reputation. It was a car accident and numerous allegations of marital infidelities that caused his downfall. A UC Davis study says that the Tiger Woods scandal cost shareholders of companies like Nike and Gatorade close to $12 billion. [7] This scandal cost us everyday citizens a lot of money but because of the ‘Tiger Woods’ brand name he amassed huge amount of money for himself, so technically he can still live a comfortable life with no real worry.

LeBron James
            Athletes are ‘skilled labourers’. As absurd as this may sound it’s true. There is only one LeBron James, one Peyton Manning and one Albert Pujols. The demand for such athletes is so high that their prices escalate to astronomical figures. There might be other youngsters who aspire to make it big in the professional leagues at some point in their lives but chances that they will be better than the best is rare. Hockey is still looking for the next Wayne Gretzky. A high paying salary does not guarantee success in a sport. This adds to the risk element I was talking about earlier. Team owners and officials put a lot of trust into big name players and pay them large amounts of money. However, the nature of sporting events does not guarantee their success each year. English soccer club Manchester City have spent millions of pounds in the last few years and have only managed to win one trophy, the FA Cup in 2011; their first trophy since 1976. [8] They have just announced a record £197 million loss, the biggest loss in English Soccer History. [9] Money can’t buy happiness and neither can it guarantee success.
Jokes Apart: We'll see money like this soon if it continues...
            I’m sure there are people who believe that being excessively skilled in a particular sport is not a good characteristic. Yet, it could be these very people who pay large sums of money to go and watch their heroes in action or spend even larger sums of money to dress the way their favourite athletes dress. Believe it or not, even a simple action like buying a ‘Maple Leafs’ or a ‘Blue Jays’ jersey contributes money to the coffers of the sporting franchise and a large sum of this money is often used to pay the high salaries of the players. Even watching the team play on television, sitting in the comfort of your living room with a glass of pop in one hand and a bowl of popcorn, contributes money to professional teams albeit in smaller amounts. Sporting franchises often sign huge television and radio deals with major sports broadcasting companies that bring in a lot of revenue to the sports teams. Much of this money is again used to pay salaries, so indirectly we pay athletes salaries too. Personally, I feel an athlete is entitled to earn as much they can provided they earn it legally. I love to play soccer and even though I always dreamt of playing professional soccer, I know I will never be able to make it to the level of goalkeepers like Peter Schmeichel, Oliver Kahn and Lev Yashin. [10][11][12] This is why they were professional athletes and I will never be one. They had the skills to make it big, which means that they were entitled to high paying salaries as a result. If as citizens we are against the high salaries of athletes citing them as a “ridiculous waste of money” the only suggestion I can come up with is for those individuals to completely boycott sports teams. This would include complete and total boycott of watching sports teams play and buying sporting merchandise. This is the only way I can see sports franchises and athletes losing a part of their revenue. [13]
Fire Fighters: Deserving a higher pay?
            As I mentioned earlier, it is often thought that noble professions like fire fighters, policemen, doctor’s even soldiers deserve more money than a rookie professional athlete who is just starting his career. The answer to this claim is the same: there is a larger demand for emergency workers compared to the demand for outstanding professional athletes. Because of the lower demand for noble professionals (in most areas of the world) they get paid less compared to professional athletes. This is completely fair in my opinion as every profession is unique in its own way. It is due to the rare supply of good athletes that a renowned doctor might earn $35,000 a year while a rookie sportsman might earn $250,000 a year. Every athlete is also aware of the fact that they are unique. If one franchise is unwilling to pay their demands (except in the case where it is outrageous) they know that someone else in the global market will be willing to meet their demands.

            In connection with the ‘Tiger Woods’ brand that I mentioned earlier, another way athletes can earn huge amounts of money is via their own brand name. The ‘Air Jordan’ range belonging to NBA superstar Michael Jordan is another classic example. Michael Jordan reportedly earned $40 million a year from endorsements alone. [14] It wasn’t Michael Jordan’s basketball skills alone that earned him huge sums of money; it was his economic potential that brought him a lot of wealth too. This merely proves the fact that fame sells, and sells big. Some people might call this outrageous, but Jordan was able to earn most of his money through his brand name and there isn’t much that any of us can do about it. David Beckham is another huge global name in world sport. He reportedly earns $40 million a year even though he is in the twilight of his career. [15]
Mr. Basketball Himself...
To summarize, I feel that most people will always be divided in their opinion whether or not athletes deserve such high salaries for the little work they do. Pros and cons to such an economic question will always exist. It is my personal opinion that an athlete is justified to earn as much as he or she can legally because it is their right to do so. Critics will always exist no matter where we go. It is basic economic principles that lead us to debate over this issue. In short, since the supply of outstanding professional athletes is very low and demand is high, their salaries tend to go up astronomically. Athletes endure huge sacrifices and take a lot of risks as well: such actions will cause their salaries to only go up higher. After all, ABBA puts it so eloquently:
Money, money, money
Must be funny
In the rich man's world.”



References:


[1] Why Do Athletes Make So Much Money? (http://mcamp.hubpages.com/hub/athletesalaries)
MCamp, HubPages

[2] Do Professional Athletes Deserve Multi-Million Dollar Salaries? (http://wg.serpmedia.org/pdf_2ATE/WB2ATE_individual_units/full_color/WG2ATE_Part4.pdf)
Strategic Education Research Partnership 2010

[3] The Hit That Changed a Career
Shapiro, Leonard, Washington Post Staff Writer. November 18th 2005 

[4] Anxiety affected Owen Hargreaves - Sir Alex Ferguson. (http://news.bbc.co.uk/sport2/hi/football/teams/m/man_utd/9163714.stm )
 BBC Sport, 7th November 2010

[5] Marco Simoncelli's death was unpreventable, says MotoGP's safety officer. (http://www.guardian.co.uk/sport/2011/oct/24/marco-simoncelli-death-motogp-tributes)

 Weaver, Paul. The Guardian UK. October 24th 2011

[6] Top KHL squad killed in passenger plane crash in Russia.
RT (erstwhile Russia Today). September 7th 2011.

[7] University Of California Davis: Graduate School of Management. (http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20091228005221&newsLang=en) December 28th 2009

[8] FA Cup final: Manchester City 1 Stoke City 0 Match Report. (http://www.telegraph.co.uk/sport/football/competitions/fa-cup/8514022/FA-Cup-final-Manchester-City-1-Stoke-City-0-match-report.html)

White, Duncan. The Daily Telegraph, May 14th, 2011

 

[9] Manchester City announce biggest ever loss in English football. (http://www.guardian.co.uk/football/2011/nov/18/manchester-city-biggest-ever-loss)

Conn, David. The Guardian UK. November 18th, 2011

 

[10] Peter Schmeichel.
Wikipedia, the free encyclopedia

[11] Oliver Kahn.
Wikipedia, the free encyclopedia

[12] Lev Yashin.
Wikipedia, the free encyclopedia

[13] The Coming Revenue Revolution in Sports
Williams, Jack F.

[14] A Multiple Product Endorser can be a Credible Source. (http://fulltext.ausport.gov.au/fulltext/1999/cjsm/v3n1/redenbach31.htm)
Redenbach, Andrew. Cyber-Journal of Sport Marketing, February 2, 2009

[15] The World's Highest-Paid Soccer Players. (http://www.forbes.com/sites/kurtbadenhausen/2011/04/20/the-worlds-highest-paid-soccer-players/) Badenhausen, Kurt. Forbes, April 20th, 2011



Photo Credit:
Alex Rodriguez: 
http://jimssports.files.wordpress.com/2009/02/5111506200514821.jpg
LeBron James: https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiE22VtJH20VXoz_SSG61kxdYKfNCHvDo-EAE_aGVNr2lGc5BzxCpU1nmUU_RW1XUn9w1wDAmT2k5492F3vFouyrMAzqeaSwEEgpUZDcq1hNpWB68j5qSj-OlTs2bd2SZd61MKHxNUod8Y/s1600/highest_paid_athletes_11.jpg
Man City Money: http://www.sabotagetimes.com/wp-content/uploads/sheikh-mansour_1217186c.jpeg
Firefighters:https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfoKKjQoQqnCTcSYOZuslfjTTWUiMB7Y6u-b1GIDaRmVAQmSw5nnFuCxjFeXUPbyOxYRRFWC7_N09LC5R9w17B504Ktiys6C3Sx-Oug72yhzKIvq0Cnh7cqID-xMTo-ekaee3bQ5fclI5K/
Michael Jordan: http://thebestten.files.wordpress.com/2009/10/michael-jordan-xx3.jpg

Note: This piece was part of my economics term paper, which fetched me a grade on 83%. Feedback and comment are appreciated as always. I've only been studying economics for three months now and it isn't going to be by major in future either.
Also, excuse the faulty spacing of the references. For some reason I can't seen to fix it properly...

No comments:

Post a Comment