What’s so special about those new Jordan’s?

Did you know that Michael Jordan makes approximately 3% royalty on every pair of Jordan shoes sold? … He sold $2.7 billion worth of shoes last year. That’s $80 million a year for an athlete that’s been retired for more than 20 years!

Professional sports in America alone is estimated to be a $485-billion dollar industry, annually. Let me first provide you a sense of context in regards to the extent of the numbers we’re talking about here:

  • The highest paid athlete, Floyd Mayweather earned $105 million last year. You can check out the Forbes list of highest paid athletes here. He has more money than he even knows what to do with, literally. Check out TMZ’s videos of him flaunting handfuls of cash in Vegas strip clubs – in other words, making it rain here, here, here and here. (Yes, these are regular outings for him)
  • The world’s richest sports franchise is Real Madrid, worth $3.44 billion. You can check out the rankings here. In 2013, Real Madrid bought the world’s most expensive athlete from Tottenham for a whomping $125 million.
  • According to Forbes, the average NBA player earns $5.15 million, the average MLB player earns $3.2 million, the average NHL player earns $2.4 million and the average NFL player earns $1.9 million. And these are just salaries. You can read more on this here.
  • On the other extreme, some semi-professional athletes feel that they are barely even being paid minimum wage. A current example that’s close to home is the class-action lawsuit against the CHL, which can be read here.

In fact, even the owners of sport’s major governing bodies feel that athletes are paid too much. Lock-outs are seen time and time again in sport’s major leagues. The most recent example was the 119-day NHL lockout in 2013. Without getting too far into the gritty details of these labour contracts, it’s clear that much of the dispute revolves around players demanding more money/security and the league not entertaining these demands.

Now, this all serves as a sufficient numerical explanation of why some athletes get paid such large amounts of money – because we pay them such large amounts of money!

The Toronto Maple Leafs rake in approximately $142 million in ticket sales each year. You can check out the revenues of all NHL teams here. But why are tickets so expensive? The simple explanation is supply and demand. The demand for Leafs tickets is strikingly high and the supply is limited (approximately 20-thousand seats), therefore the average cost of a ticket to see the boys in blue is $137.47, the highest in the NHL. You can check out average ticket costs for all NHL teams here.

The more complicated explanation seeks to justify why the demand is so high. Why is society willing to spend so much money on sports?

Is it perhaps that we value the hard-work and dedication of athletes? I ask you then, if it’s the athlete that we truly care about, then why do their surgeons make a small fraction of their salary, between $200-430 thousand a year? Trainers and therapists even less. Surely the jobs of the coaches, trainers, doctors, surgeons and therapists are just as important as the one who scores the goals.

No, it goes further beyond this. Society doesn’t spend their money on sport, society spends their money on entertainment. Which is why we choose to spend on our money on the athlete – the one that directly provides us with the entertainment, not their team of administrators. To sufficiently tell you why society values entertainment so highly would go far beyond the confines of a blog.

Now that we’ve justified our reasoning for spending so much on athletes, we must now ask; how do athletes justify their salaries?

Muhammad Ali is famously known for saying, “The fight is won or lost far away from witnesses – behind the lines, in the gym, and out there on the road, long before I dance under those lights.” Indeed, the sacrifices and risks that athletes make throughout their career is significant although it’s not always glamorized in the media; intense training regimens, scrutinizing hours, early mornings, risks of lifelong injury, etc. It’s also important to note that athletes often make other sacrifices that are a little less glorified – basketball players who can’t read, football players who jeopardize their mental stability and sprinters who dope themselves all serve as examples. At the end of the day, being an athlete is a job. It puts food on the table for themselves and their loved ones. In this sense, it’s not much different than the lives of doctors, lawyers, teachers, professors, engineers and all other doctrines of workforce – other than the length of their career. Most athletes spend, on average about 12 years in their professional career, significantly shorter than the average worker. On the assumption that the average household income in America is approximately $50 thousand, multiplied by an average of 40 years in the workforce, the result is a lifetime income of $2 million – less than what the average professional athlete earns in a year.

Furthermore, most of the top American athletes earn nearly twice the amount of their salaries in endorsements. Lebron James for example, his salary is $19.3 million and he earns $58 million in endorsements. Major companies compete for multi-million dollar endorsement deals for athletes that they want to be the face of their company. In the world of sport, Michael Jordan, a long-time retired athlete rakes in $80 million a year in endorsements from Nike. You can check out Nike’s top aces here.

So maybe you’ll think twice next time you’re about to drop a couple hundred bucks on those new Jordan’s – after all, they won’t improve your jump shot.

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PS- A possible solution, an attempt to help justify the salaries of athletes was proposed on The Dylan Ratigan Show on NBC. You can check it out here. He suggested that both athletes and fans should be equity partners in the franchise, equal share-holders; “share the pain, share the gain” as he so eloquently put it. This further justifies why personally, I am so fond of the Greenbay Packers and Real Madrid CF – both are both fan-owned teams. These institutions can exist and still allow athletes and franchises to earn their millions, while protecting the integrity of sport as a business and maintaining a strong fan base. It creates a very positive atmosphere, where a successful season for the team is also a successful season for the shareholders and fans alike.

Krishen Persad – 250 696 012 – kpersad2@uwo.ca