“Really, it doesn’t matter at all what anyone predicts, it’s what you do,’’ Krzyzewski had said on Wednesday. “Somebody said we’re not in President Obama’s Final Four. As much as I respect what he’s done, really the economy is something that he should focus on, probably more than the brackets. So why would I care about that?”
Everybody has something to say about the economy and now it is my turn. One of my favorite books of all time is by William Rhoden of the New York Times called $40 Million Slaves : The Rise, Fall, and Redemption of the Black Athlete. Rhoden illustrated how highly paid athletes lack power and are in a way “slaves” working for an owner that does minimal work and an owner that makes an obscene amount of money at the expense of his or her athletes/slaves. I won’t get too much into the book and the slaves metaphor, but I will say that it certainly can change your perspective on athletes and may dispel some of the popular beliefs of how lucky they are to be so wealthy and how they are overpaid, and so powerful.
That being said, a couple weeks ago I read an article by Jim Caple that was and is on par with what I have been saying for years about athletes’ salaries and compensation. The article is called “Sports salaries shouldn’t anger us, even in a bad economy.” I will cut and paste the most important aspects of his article below and will italicize his words. My words and commentary will be in regular font.
While unemployment soars (600,000 jobs cut in January alone), stock prices plummet (lowest in a dozen years) and many of us bookmark monster.com, Manny Ramirez won't sign a two-year, $45 million contract from the Los Angeles Dodgers. Spring training started two weeks ago, no other team is offering him a job and Manny isn't willing to accept that offer because it isn't enough money.
If that doesn't make steam comes out of your ears like Yosemite Sam then it's probably because your outrage is too narrowly focused on Octomom.
Or perhaps what angers you is the way UConn coach Jim Calhoun so quickly and arrogantly dismissed a question about whether he would consider a pay cut ("not a dime back") when the state is facing massive deficits. Or perhaps it's the $20 million contract offer that quarterback Kurt Warner reportedly feels is inadequate for returning to the Cardinals. Or the $500 million arena billionaire Clay Bennett demanded Seattle taxpayers build him before moving the Sonics to Oklahoma.
Or it could be any of the sports salaries that have been so far beyond the average American's pay stub for so long that the disparity has infuriated fans since Scott Boras was advising his fellow Little Leaguers to hold out for two postgame snow cones (with extra orange syrup).
Should those salaries upset us? Or at least, should they upset us now any more than they ever have?
The answer is no, especially now. I agree with the 1 percent of fans who answered the survey by saying salaries bother them less these days. Given the fury regarding the obscene executive compensations in the past year, sports salaries shouldn't bother us as much as in the past. The salaries of sports figures may be monstrous, but they don't affect our employment and livelihoods.
Yes, Ben Roethlisberger's $27 million paycheck (including signing bonuses) this past season was awfully high for throwing around a leather ball 19 weekends. But at least he led the Steelers to victory in the Super Bowl. Kerry Killinger received more than $14 million in compensation while leading Washington Mutual into the biggest bank failure in U.S history, and worse, his replacement, Alan Fishman, reportedly received a like amount despite working only 18 days before the company collapsed.
Sure, Kevin Garnett has earned $174 million for running up and down courts in his gym trunks since 2000, but at least when he misses a shot, it doesn't cost thousands of people their jobs. Richard Fuld, former CEO of Lehman Brothers, received $484 million during the same time period even though he led his company into bankruptcy and helped spur the current economic crisis.
And yes, Richie Sexson received $50 million to strike out 497 times and bat .244 for the Mariners over the past four seasons. But at least Seattle fans weren't required to buy tickets to watch him do so. According to Forbes, Richard Wagoner Jr., the CEO of General Motors, made $25 million over the past five years, and we all have to help pay for his poor performance through a $13.4 billion (and possibly $30 billion) federal bailout.
Sports pay may be astronomical, but Derek Jeter and Peyton Manning aren't cheating us out of our retirement funds (as Bernie Madoff and R. Allen Stanford allegedly did many people, including several athletes). CEO compensation is what is obscene.
Look at it this way. It's not like player salaries are going to go to Habitat for Humanity otherwise. If the money doesn't wind up in the pockets of multimillionaire athletes, it will wind up in the Swiss bank accounts of multibillionaire owners, and of those two, I know which one I prefer with the money. Nor do high salaries correspond with higher ticket prices. Teams set ticket prices not on how much they pay Kobe Bryant but on how much we're willing to pay to see Kobe. After all, how many times have you seen a team lower ticket prices after losing a top player to free agency?
If we don't like it, no one is forcing us to buy tickets, no more than we had to buy a ticket to see "Master and Commander," for which Russell Crowe earned $20 million.
Calhoun asserted that his $1.6 million salary (and as he gloated, he actually makes more than that) is different than the salaries earned by the lowly rabble of other state employees because his program brings in $12 million to the University of Connecticut. Well, when you consider the various revenue sources, the team probably does generate that much money and Calhoun shares a great deal of credit for the team's success over the years. He isn't wholly responsible, though. The marketing department, public relations staff and the base of alumni support are important as well. Nor does that $12 million go directly into the school's bank account. As the Hartford Courant determined, approximately $6 million goes to cover the basketball team's expenses, leaving it with a "profit" of $6 million.
In other words, Calhoun's $1.6 million salary is about 27 percent of the program's net profit, a rate of return that would impress most CEOs other than the aforementioned Killinger, Fishman and Fuld.
But still. Fine. Many athletic departments are self-sustaining while college athletics have been in an ever-escalating arms race since John Wooden's Pyramid for Success had only a single, base level. So if no other state employees are being asked to take pay cuts, why should a coach just because he's the state's highest-paid employee? By the same token, if other state employees are being asked to take cuts, then he should as well, if only for appearance's sake.
After all, NFL commissioner Roger Goodell works for a private enterprise, yet he recently announced he's taking a 20 percent pay cut, while we can only hope it kept the league from cutting more than the 169 jobs it did.
And perhaps we'll focus more on the salaries that really affect us -- i.e., the CEO payouts that the board of directors rubber-stamps for one another -- and less on the ones that merely make us envious.
Or perhaps, more likely, we'll continue business as usual, with players earning untold millions to play games that make the owners untold millions more while the rest of us jealously wish we were in their place instead of worrying about our jobs disappearing.
So does the current economic climate affect your feelings about the money sports figures earn? The answer, I suppose, depends on whether the player is on your team and how high his ERA is.
Just recently outrage emerged over individuals at AIG making bonuses despite the company doing terribly at the expense of taxpayers. Taxpayers more or less paid money to ensure that people who already make way way way way more money than them get even more money despite the company, AIG, doing terribly. Of course, I understand this outrage of this circumstance, but why is the outrage just emerging during a financial crisis?!
For those not in banking / those who did not already hear, top 1st Year bonus last year was $65K and top 2nd Year bonus was $85K. Those are down from $90K and $115K year before last respectively.
Below that, “2nd tier” bonuses for 1st years were in the $50-55K range and 3rd tier bonuses fell by another $10-15K.
Over the past week many analysts have been complaining that bonuses are going to be “so low” this year and that they will fall off a cliff compared to last year.
Those points may be true, but “only” making $125K (or anything in the six-figure range) is still an absurd amount for a 23 or 24-year old who is just out of college.
I would also point out that back in 2005, top 1st Year bonus was $60K. Even with all the economic problems this year, bonuses were still higher than they were in 2005!
Not only are these people still being compensated handsomely, but they are getting bonuses no matter what. That is to say that people are making bonuses despite the health of their company or potentially his or her performance. Just think if an athlete were to make and end of the year bonus while individually performing terribly or your team performing horribly. Imagine the media fervor and outrage that would result in this “injustice!” Politicians, journalists, and the typical sports fan would undoubtedly jump in give his or her two cents and turn the athlete into a PARIAH where they can no longer enjoy human freedoms such as walking down the street, going to the grocery store or spending time with his or her family without someone interjecting their opinion.
One of the most important aspects that the general public fails to see is how do we fix the athletes make to much money issue? Do we reduce athletes salaries and let the owners put the money back in there pockets? As Caple said, . It's not like player salaries are going to go to Habitat for Humanity otherwise. If the money doesn't wind up in the pockets of multimillionaire athletes, it will wind up in the Swiss bank accounts of multibillionaire owners.” Or do we just distribute the athlete’s salaries among the general public? What type of financial system does this sound like? Is that a financial system that we in America detest? Of course it is.
The Dallas Cowboys are worth 1.612 billion dollars, generate 269 million dollars a year in revenue, and have an operating income of 30.6 million a year. 19 of the 32 NFL franchises are worth more than 1 billion dollars while the least valuable NFL franchise is worth 839 million. How is this possible?!
The reasons that these athletes can make the money that they do is because people will pay to go to the games and watch the games on television. Teams set ticket prices not on how much they pay Kobe Bryant but on how much we're willing to pay to see Kobe. The easiest way to reduce these salaries is to refrain from sports. That is, refrain from an exceedingly interesting entertainment outlet: sports. Stop filling out NCAA tournament brackets, watching the Super Bowl, the World Series, watching the Olympics, buying Air Jordans, and idolizing athletes such as Lance Armstrong, Michael Phelps, Kobe Bryant, Michael Jordan, Tom Brady, Peyton Manning, and etc. And, tell your children, nieces, and nephews that they can’t play watch sports anymore, tell your children, nieces, nephews, and godchildren that they can’t play sports because they may potentially become good at it and reach the point where they make too much money or are responsible for creating a market where many people make money. You can’t…we can’t! Or, owners could lower ticket prices which would mean lower income and revenue and lower salaries for players…and owners…YAY?! Will they do this? NO WAY!
Indeed, athletes make a ridiculous amount of money, but in this current economic system why should they not? After all there leagues are profitable, the athletes create a limitless amount of jobs ranging front office, to parking attendants, to companies such as Nike and Wheaties, to ESPN, and the profession of journalism. And, athletes are not directly responsible for the well being of me and/or the economy. For the most part if an athlete underperforms or is no longer productive, he will lose his job, and will not continue to be employed, make money, have a salary increase each year, and get a bonus despite performance and health of the company or industry. Athletes don’t really what we can call “no matter what money.” In fact, if an athlete in the NFL is hurt, on the job mind you, he can lose his job and not be paid the full amount of money on his contract. Where else in the world can you get hurt on the job and not get paid?! This coupled with the fact that playing football takes years off of your life and lowers your quality of life, and the NFL is one of the most profitable sports leagues suggests that athletes, indeed, could make more money. They won’t, but they could.
Athlete's are criticized for their salaries because of envy and jealousy. For some reason we are not as jealous or envious of Wall Streeters. I don't know why, but that's the world we live in.
Sporty nation, I’ll leave you with this quick and easy fact if an athlete screws up, he screws himself over and his family, not pension plans, not corporations, not consumer spending, retail, the ability to get loans, and not the free world. I won’t lose my job if Alex Rodriguez has a bad season. This is my Minority Report.
"if an athlete underperforms or is no longer productive, he will lose his job, and will not continue to be employed, make money"
ReplyDelete- not if you're allan houston
and what if you work on wall street but are part of a profitable division at a company like AIG? You work 14 hour days, lead a profitable business group and are successful, you don't deserve a little extra loot?
Allan Houston is an outlier as in Andruw Jones and a few more. These people are in the bottom .1%
ReplyDeleteYou don't deserve extra loot when the company is not profitble.
In simple terms Daniel's company losses 1 million dollars in a year and then Daniel pays $500,000 in bonuses that same year to the few that are doing well...
We won't talk about the bailout aspect. Word?