NBA Players are not overpaid
The Gap between ownership and players continues to grow despite the lucrative contracts players are signing
In 1984, Magic Johnson signed a 25-year contract for $1 million a year. At the time, it was the longest and most lavish contract in the history of sports. The contract included all of the services Magic would provide as a player and after he retired as a coach, General Manager, or another capacity for the Laker organization.
Inflation adjusted Magic's payday amounts to roughly $62 million dollars for a lifetime of service of the NBA’s greatest point guard to the Laker organization. At that time, there were only three players in the NBA that were earning a million dollars a year. Those included the great Kareem Abdul-Jabbar and Moses Malone.
Today, that will not even buy the Lakers two years of Lebron Jame’s playing time in his mid-thirties or a meeting with Paul George.
While I am sure that Johnson gripes that he was underpaid in his career, Bill Russell and Wilt Chamberlain may have a different sentiment. Russell in 1965 signed the highest paid contract in NBA history worth $100,001 dollars a year for three seasons; this was just after Chamberlain because the first NBA player to earn six figures. Inflation adjusted in 1984 dollars, Russell’s salary was worth a little of $300,000 a year; roughly a third of what Magic was making at that time.
Chamberlain did not only continue breaking scoring records, but he continued to break salary records as well as a player. In 1968, Wilt Signed the most lucrative sports contract ever, 5-year $250,000/year between. Inflation adjusted, the entire contract was worth 9 million dollars today. Maybe he should thank Russell for the salary increase.
To put Wilt’s pay day into further perspective, in 1968 David Bloch paid 2 million dollars to establish an NBA franchise in Phoenix. In 1987, the Suns were sold for 44.5 million dollars or just over 100 million dollars in value today. Johnson that same year made $2.5 Million in salary.
There does appear to be a trend that the best players are paid the most money and that the market is the best indicator of talent in basketball. As it is in most professions too.
The Value of the Phoenix Sun's franchise is now worth roughly 1.5 billion dollars. The highest paid NBA player today, Stephen Curry, is making less than 38 million a year.
Its common for superstar players these days to sign contracts worth over 200 million dollars. Mike Trout just signed a 500 million dollar a year contract. And most players make more from business activities off the field than on the field. Lebron's career earnings according to investopedia have surpassed over a billion dollars; nearly 4 times what he has made on the court.
However, many NBA players still earn a fraction on and off the court compared to what superstars like James and Curry earn.
The Knicks today are worth over 4 billion dollars and that value went up over 11% last year. To put this in perspective, the averaged NBA franchise is now worth close to 2 billion dollars and is going up at nearly 13% a year.
Donald Sterling bought the Clippers in 1981 for a reported $12.5 million dollars. The Clippers were sold reportedly by Sterling in 2014 for over 2 billion dollars. This payday does not take into account the money Sterling likely made yearly from being the owner of the team.
Considered what the owners of NBA teams are making these days and what franchises are worth, you could argue that the gap between players and ownership has gotten worse in sports. According to Forbes, Jordan earned just north of 90 million dollars as a player and made most of his money from corporate partnerships: roughly 1.4 billion. Jordan's is worth an estimate 1.9 billion today
In 2010, Jordan after being a minority owner in the Hornets franchise bought a controlling interest in the Hornets when the club was worth a reported 175 million dollars and now has a controlling interest in the franchise. The Hornets Franchise is now worth just north of a billion dollars and Jordan owns reportedly 90% of the team.
However, it appears that Jordan has made a substantial fortune from being a team owner. In 2014, 4 years after buying a controlling interest in the Hornets, Jordan became the NBA's first billionaire. Based on this analogy, players like Larry Bird and Johnson, who built the NBA in the 1980s should be far richer than they are today. In that respect, players today are greatly underpaid.
It appears that all fields have seen a trend towards richly compensating those at the top of the organization and ignoring the needs of those at the bottom. Sports fans often forget that many of society’s ills are permeated through sports as well. Like income inequality. And hence the reason for writing this article. Sports are simply pastimes for fans, they are a reflection of what is going on in society as well.
Athletics for many poorer students is a gateway to them receiving a quality education. For many, it is the only way they can afford higher education. And many athletes have full careers after their playing days are over.
Given what others are paid and worthy, NBA player’s salaries are justified. However, whether or not we should have a system that so richly compensates people at the top is another discussion altogether.