Los Angeles Lakers: Is Kobe Byrant Underpaid?

Emotion is what sports are all about, and love for a team makes watching sports exhilarating and worthwhile.

However, emotions can cloud our thoughts about what actually might be happening on the court.

Whether you enjoy sports or not, you probably think professional athletes get paid too much money.  You constantly hear about the latest contract negotiation, and athletes holding out for an extra two million or five million dollars.

The average household income is $46,000, according to mybudget360.com.  This site also shows the top 3 percent make $200,000 and the top .12 percent makes $1,600,000.

The average football player in 2006 made $1,750,000.

Looking at these numbers, it is easy to say that athletes make too much money. But if you look at the numbers again, .12 percent of the American population is making $1.6 million a year, which amounts to 360,000 people making over $1.6 million a year.

That’s a lot of people making a lot of money that no one seems to care about.

Why do athletes get the bad rap for demanding high salaries?

Let’s look at other professionals within the aforementioned .12 percent.

Highly-acclaimed actors demand well above $1.6 million to film a movie. The movie executives are incredibly intelligent people and continue to pay a high price for certain actors.

Why would they continue to do this when the supply of actors is so high?

Obviously, it’s because the demand is high for star actors.  The Hangover 2 producers are going to pay Bradley Cooper, Zach Galifianakis, and Ed Helms $5 million each. What did they make in the first movie?

Not even $1 million, combined.

What does this show us?

Nothing but simple economics, and that the demand for these three actors is astronomical.

The question is: Are these athletes, who many perceive to be egotistical, womanizing jerks, worth all this money to play a game that most of us play for free?

The emotional response is: No way. I would play in the NBA for $50,000-a-year, and so should these guys.

This is also the stance taken by seemingly every writer you find on the Internet. If you take a step back, and take emotion out of it, you might rethink your stance.

First, we need to realize what it is athletes do. What do they sell?

They sell entertainment, and are therefore in the entertainment industry.

I know this sounds redundant, but I want to make my point clear that athletes only offer entertainment.

The sports organizations know and understand this. Their product is the game and its players. The players and their respective agents know this and therefore exploit this fact.

Can you blame them?

Let’s say, for example, you were to make your company $1 million in the last year, and you had a base salary of $50,000. A competing company notices you bring that extra income to the company and offers you $100,000 to work for them.

Would you turn it down?

Would you not go to your current employer and tell them you just got an offer from the biggest rival in town and try to squeeze out even more money from the two companies fighting over you? 

If you’re thinking that fighting over a few extra thousand dollars is nothing compared to fighting over a few extra millions, I have to ask: How is it any different?

When did fighting for a little bit of money become okay and fighting over a lot money become a bad thing?

This still does not answer the question of whether or not athletes are worth the millions  they make. 

Organizations make around $1 million per home game. Each team hosts 41 home games, (not including pre- and postseason) and, as of 2007, earned an additional $30 million in exchange for league-wide television contracts. Thus, each team brings in around $70 million in revenue for the season.

Here’s where the worth of the player really matters.

Merchandise, on average, brings in around $5 million to each team. But, I am sure for the Miami Heat, that number this year will be a lot higher.  

Then you have your local television contracts and, finally, corporate sponsorships. Of course, this all varies from team-to-team because corporations are more likely to sponsor the L.A. Lakers than they are to sponsor the Minnesota Timberwolves, even if Kevin Love is pulling down 30 points and 30 rebounds in a game.

How does this make players worth the money they make? As I said before, the players and the games they play generate team revenue. There wouldn’t be lucrative sponsorships and TV deals nearly without L.A.'s Kobe Bryant and players like him.

The L.A. Lakers make close to $150 million a year. Kobe Bryant, according to the always reliable Internet, made around $23 million last year. That’s 15.3 percent of the Lakers total income going to the biggest reason that income is even coming in.

Yes, the Lakers have a great supporting cast with Paul Gasol and Ron Artest, among others, but do we really want to watch a Lakers game to see Paul Gasol’s finesse moves? Sure, old Ron Artest would be worthwhile just because you never knew when he might self-combust.

But, thanks to Ron’s therapist, the possibility of the unpredictable explosion from Ron Artest is now no longer there.

Kobe Bryant is a star, so his worth is very high.

But what about the average athlete?  

As I said before, a football player makes on average $1,750,000 a year, and the average length of an NFL career is five years. That comes out to $8,750,000 before taxes on what an average NFL player will make while in the league.

That means if a player were to enter the league at age 22, play five years (to age 27), then retire at a normal age of 67, he would, on average, make $194,444 a year until he turned 67. 

The problem is, taxes on his earned income in the first five years, depending on where he lives, brings that income number significantly lower. Not only does he have to pay in-state taxes, but also taxes for every state he played in.

It’s referred to as the 'Jock Tax,' because professional athletes are the only ones that report it. The rule is, if you make money in a state you have to pay taxes in that state on the in-state income earned. The IRS cannot keep track of every businessman who makes money in other states, but it’s easy to see what state a professional athlete plays in.

Let’s say, then, that after taxes, the income will end up around $150,000 a year for the rest of his life.  Sounds really good, until you think about the lifestyle of an athlete, and I am not talking about going out every night and spending thousands on partying and gambling every night.

These players have to pay for their agent, and take care of not only their immediate family, but extended family as well.

They are also more likely to buy nicer houses and nicer cars than a person making $150,000 dollars a year can afford.

The easy answer is to not participate in that high-end lifestyle.

But, it's hard to say ‘sorry, I don’t have the money to help you out. I am only making $1,750,000 this year,' to the people that need your help.

It's a good thing that the NFL takes some of a player’s salary and puts it in an annuity.  Annuities are not the best retirement option, but they’re safe, and will provide the players with something to live on for the rest of their lives.  

When you think about it, players don’t make that much money.

They are entertainers. They can only make the money that is provided by people paying to see them play.

If we really want to stop athletes from making as much money as they do, then we need to stop watching them play.