Salaries of Professional Athletes - Literature review Example

Are pro athletes paid too much? Introduction Are professional athletes paid too much? This is the crucial question that this paper seeks to answer. With each passing year the salaries of athletes seem to rise at more extraordinary and often ridiculous heights. The question which remains unexpressed in everyone’s mind is whether or not said athletes are paid too much or just enough. This paper shall assess both sides of this issue in the hope of coming up with a more academic or professional assessment of the argument. From this assessment, this student now seeks to prove that professional athletes are not paid too much; that they are paid just enough. It shall discuss this issue using evaluations published by experts on the topic; a thorough assessment of professional athletes’ salaries shall be made based on accepted standards in the field of economics and sports. Discussion Professional athletes are reportedly paid millions of dollars annually. Salaries of professional athletes from the NBA, MLB, NHL, and the NFL seem to increase per year and for each athlete. The latest figures from the 2007-2008 sports season reveal that Alex Rodriguez was paid $28 million; Jason Giambi, $24 million; Shaquille O’Neal, $21 million; Kevin Garnett, $23.8 million; Julius Peppers, $14.1 million; Carson Palmer, $13.5 million; Scott Gomez, $10 million; and Daniel Briere, $10 million (Gilmartin “Articles”). Based on 2002 statistics, basketball players have an annual salary of $2.2 million, with 220,000 as minimum starting salary; baseball players register an annual salary of $1.37 million with $109,000 as minimum starting salary; hockey players have an annual salary of $892,000 and 125,000 as minimum starting salary; and finally football players register an annual salary of $795,000 and 131,000 starting salary (Strategic Reading, p. 26). The figures above seem to be lopsided when they are compared or set side by side with annual salaries of teachers, police officers, fire fighters, or even doctors. Many critics weigh in on this issue as they evaluate the factors which contribute to such high salaries and whether or not such salaries are deserved. An article which dates back as far back as in the 1990s attempted to evaluate the issue by weighing in both sides of the argument. On one hand, it contends that professional athletes are worth their high salaries because sports consumerism drives or dictates the terms of this market. This article cites Larry Lundy, a sports marketing director at Walt Disney who contends that there is only a limited number of superstar athletes, however, the demand for them from fans is very high (Find Articles “Business Library’). With increasing demand, the price of each athlete also rises. Another sports agent also pointed out that such athletes are fairly paid when compared with salaries of other people in the entertainment industry; and since sports is also considered as entertainment, these athletes’ salaries should therefore be evaluated in a similar context (Armato, as cited by Find Articles “Business Library”). Moreover, most of these athletes also believe that these athletes deserve their high salaries because they are able to draw in large crowds from the paying public. And team owners are consequently able to make money from ticket sales, television deals, and sales of team memorabilia (Find Articles “Business Library”). Such money would not have been forthcoming if not for these athletes whose names alone are capable of attracting millions of dollars. These millions of dollars translate to profits; and these athletes deserve to have their fair share of these profits no matter how exorbitant they may seem. On the other side of this issue, this same article discusses that such athletes are not worth their exorbitant salaries. The article argues that these athletes are not worth it because others “more important are more worthy” (Find Articles “Business Library”). Other professions like police officers, firefighters, and doctors save lives and more often than not, they do so while risking their own. The article also cites those serving in the military who go to dangerous and sometimes fatal lengths to defend the country, and yet they are only paid paltry sums as compared to sports athletes (Find Articles “Business Library”). Teachers are also paid low salaries, and yet they have the heavy burden of shaping the future and the lives of millions of children everywhere, including future athletes. Even the President of the United States has a lower salary as compared to professional athletes. And yet, it does not seem sufficient to label such disparate difference in terms of ‘entertainment’ value (Find Articles “Business Library”). Another article sought to assess this issue by pointing out that even in times of economic hardship, these athletes rake in millions of dollars in annual salary and these sports activities which they engage in are enjoyable and even relaxing to them. Tiger Woods is one such athlete and in 2007 alone, he managed to earn about $111 million. David Beckham also makes his mark as one of the highest paid athletes earning an average annual salary of $50 million (RootZoo, 2009). The article argues that such astronomical salaries have not always been that way. In fact, in 1910, football player Jim Thorpe was only paid $250 per game. At present, Olympic athletes do not even make as much as professional sports athletes. These Olympic athletes go through similar rigorous training schedules and similar pressures to perform well, and yet they are not paid as much as the professional athletes (Rootzoo, “General”). Again, this seems to point out the presence of disparities in professional athletes’ salaries. Since it is actually possible to pay Olympic athletes at lower salaries, surely, it is safe to conclude that it may also be possible to pay professional athletes at lower rates? Still another article sets forth that professional athletes are making more money “in a society where salaries and wages are traditionally based on the value of one’s work (Shepherd College People and Websites “Professional”). Some economists contend that a person’s salary should be based on what is economically important and beneficial to the people. These professional athletes actually do not make as much of an impact on the economy as compared to teachers or lawyers, or firemen, or even the President of the United States. They are paid to play games that they already enjoy, and these games do not even make important contributions to society (Shepherd College People and Websites “Professional”). From another point of view, it is important to note that these professional athletes work hard in their chosen sport. They work both within and off season; they attend miniature camps and seasonal training camps. The games that we see them playing in is just the tip of the iceberg. Beyond such games are weeks and even months of training, which consequently improve the quality of their game to their highest level. They work all year to earn such seemingly exorbitant salaries. When viewed from this aspect, it may be logical to conclude that said athletes deserve their high salaries. In an article by Hatfield (“Lifestyle’), he pointed out that, in a purely monetary sense, our present society seems to put more value on professional athletes as compared to schoolteachers. And this amount is generated from revenues and profits which the sports organizations actually generate. In the real sense of the business situation, when professional athletes are paid a certain amount, the sports organizations are actually making even more money from these athletes. These athletes are able to rake in large amounts of cash for these organizations, and seen from this angle, athletes should then be paid a large share of these profits (Hatfield, “Lifetyle”). However, if we follow-up this question of whether or not athletes deserve such exorbitant salaries, the question is more difficult to settle. In coming up with a clear and acceptable answer to this issue, we would need to weigh in on a more comprehensive economic and even social discussion of the issue. From an economic point of view, those who argue that professional athletes are not paid too much set forth their argument on the concept of supply and demand. An important and undeniable aspect about sports is the large market present for it. There is a market for a $1000 seat at the Super Bowl (Hatfield “Lifestyle”). The professional athletes are paid such high salaries because when they step into the field or the court, people expect to see a quality game. They would not have as much expectation when they watch a local game. Hatfield (“Lifestyle”) cites the instance when Vince McMahon started his own football league with the hope of competing with the NFL. In his league, he hired disgraced football players, ex-convicts, and some Canadian/Arena Football Players. But, his league did not generate expected profits and he lost millions of dollars in his attempt (Hatfield, “Lifestyle’). When we consider the basis of teacher’s salaries, we establish that they are not based on their performance. They are instead, paid based on an annual salary which they receive even if they are the best or the lousiest or the most boring teachers. Those who finish teacher’s degrees and who pass the necessary accreditation can become teachers and they usually spend their golden years as teachers; whereas, athletes can stay in their profession only up to their 30s (Hatfield “Lifestyle”). These athletes also have to stay in shape and train all year long and they continually expose themselves to injuries every time they play a game. Based on this assessment Hatfield (“Lifestyle’) again emphasizes that for a fair comparison between athletes and teachers to be made, teachers also need to be paid on the basis of their performance – just as professional athletes are. For this fair comparison to be made possible, schools need to be privatized. Privatization makes possible an assessment of the teacher based on his performance; and punishment is often rendered to teachers who perform badly in these institutions. However, such privatization does not seem to be forthcoming. Until then, there can be no fair comparison of teachers versus athletes’ salaries (Hatfield “Lifestyle”). In an assessment by Camp (“Topic”), he thoroughly undertook an inquiry regarding the nature and the causes of the exorbitant salaries of professional athletes. He sought to assess the issue by evaluating the meaning of ‘worth’ in professional sports; who ascribes this ‘worth’ and why do they pay such athletes such a high salary; what is the difference between the athlete and those who have regular professional jobs; and what is the correlation between specialization and salary, in terms of the laborer? (Camp, “Topic”). First and foremost, he discusses ‘worth’ in terms of how society views it. Society often views athletes as being paid more than they are actually worth (Camp “Topic’). This worth is also often set in the context of the importance of a profession in society. A teacher teaches eager young minds; a doctor and a nurse saves lives; a soldier defends the country; and the professional athlete plays games and entertains the people. When the other professions are crippled, society is also often crippled; but when sports athletes are crippled, the game goes on, or the people are simply deprived of games to watch (Camp “Topic”). Secondly, Camp (“Topic”) discusses about who ascribes such ‘worth’. Since these athletes are paid by their team owners and sports organizations what they are said to be ‘worth’; such worth is then ascribed by these team owners. On the part of the athlete, he works to please his employer in the high hopes of being ‘worth’ the large exorbitant salary he is being paid (Camp, “Topic”). Economic and sports analysts set forth the use of the Marginal Revenue Product (MRP) which takes a look at the performance and similar factors like age, experience, height in order to assess a player’s market price. The higher the player is in terms of this MRP, then the higher his salary usually is; however this MRP system is still far from accurate because bids for a player’s worth may be far above the player’s actual worth. In these instances, a player may then be considered as ‘overpaid’ or not ‘worth’ it. From this assessment alone, there are obvious flaws which can already be credited to legitimate questions on the tag prices set on such athletes (Camp “Topic’). Thirdly, in assessing what athletes actually produce, we again assess the salaries of professional athletes based on the revenue they generate from the games they participate in. Since these athletes do generate millions of dollars in revenue, the worth of these athletes is actually based on such revenue earned (Camp “Topic”). In these cases, a professional athlete is expected to ‘deliver the goods’ and to live up to what he is actually ‘worth’. Followers of Adam Smith set forth that the contention that a person should be paid based on the importance of his work does not make any sense at all. They demonstrate the diamond-water paradox where water, being essential to our existence is actually worth far less than a diamond, which is actually an insignificant item (Camp “Topic’). Diamonds are rare, therefore are worth more. In the same sense as professional athletes, who are also rare; therefore, they, too should be worth more. Lastly, the concept of specialization lends its credence to the determination of salaries through Rosen’s (as cited by Camp “Topic”) assessment in his article “the Economics of Superstars” where he describes that the distribution of rewards of athletes, as compared to other professions, is actually more significant with inequality. It is also non-linear, in the sense that as the salaries of athletes rise, their natural ability wanes (Camp “Topic’). This disproportionate salary structure is mostly due to intense competition; even when the difference is small, such difference often makes a big impact on winning or losing. Fans expect their top and their favorite players to play – not those in the second tier (Camp “Topic”). The basis of athletes sports salaries sometimes ends up about what a player can relatively do, not what he can absolutely do. Rosen (as cited by Camp “Topic”) again points out that such is not the basis seen or used among teachers or even electricians. For these teachers, their tasks have already become routine; and other competent persons can already achieve the same outcome. It is actually easier to attain the skill set needed in order to accomplish tasks in relation to teaching or any other profession (Camp “Topic”). In the teaching or the medical profession, there is no difference between the people who finished first or last in their class; they would still be called teachers or doctors or lawyers. However, in sports, winning is the ultimate goal; coming in first is more important than anything else. Therefore, the specialization involved or required for each athlete is at a higher premium. Conclusion The discussion above demonstrates various arguments both for and against the issue of whether or not professional athletes are paid too much. Those who argue that professional athletes are paid too much cite that a person’s salary should be based on a person’s importance or worth in society. Those who have more important professions like the nurses or doctors, soldiers, or teachers deserve much higher salaries because of their contribution to society. They contend that sports athletes provide entertainment – entertainment which can be discarded or done away with without crippling or seriously affecting society. On the other hand, those who argue that professional athletes are not paid too much set forth various economic theories which mainly speak about the demand of the people for such athletes. Such demand translates to money – money which then translates to revenues for team owners. On a personal note, this student chooses to side with those who argue that professional athletes are not paid too much because this side of the issue is based on sound economic theories, not on vague and baseless comparisons. Since, this issue is very much related to the principles of economics then the same principles should be used to settle it. The basic principles of economics – of supply and demand – dictate market prices; we always apply these principles in determining prices of commodities and even the salaries of other professionals. Therefore, those same principles should also be applied in determining the salaries of athletes. The demand for these athletes is high – the same high that fill stadiums, courts, and fields. However, supply of these athletes is limited. When the demand is high, but the supply is low – the price of the commodity, or in this instance, the salaries of professional athletes should therefore be pegged at higher ‘prices’. Based on this logical and economically-based analysis, the salary of professional athletes is therefore not high at all; it is just enough and is economically justified. Works Cited Camp, M. “Why Do Athletes Make So Much Money?” Topic. 2009. HubPages. 02 December 2009 from http://hubpages.com/hub/athletesalaries “Do pro athletes make too much money” p. 26. 2003. Cambridge University Press. 02 December 2009 from http://www.cambridge.org/elt/strategicreading/SR%20downloads/SB1_Unit04.pdf Gilmartin, M. “Do Pro Athletes Really Deserve Their Salaries?” Articles. 14 July 2008. Bleacher Report. 02 December 2009 http://bleacherreport.com/articles/37550-do-pro-athletes-really-deserve-their-salaries Hartfield, J. “Athletes Salaries Reflect the Market”. Lifestyle. 5 December 2000. Prometheus Institute. 02 December 2009 from http://www.theprometheusinstitute.org/index.php?option=com_content&view=article&id=233:athletes-salaries-reflect-the-market&catid=58:sportsandgames&Itemid=54 "Professional Athletes Are Making Too Much Money." Professional. 2001. Shepherd College People and Websites. 02 December 2009 http://webpages.shepherd.edu/mwidmy01/athhtm.htm “Salaries Of Professional Athletes”. General. 11 May 2009. Rootzoo. 02 December 2009 from http://rootzoo.com/articles/view/Water-Cooler/General/Salaries-Of-Professional-Athletes_13440 “Show me the money! Do pro athletes make too much money? - includes related information on sports heroes of the past, Babe Ruth and Wild Chamberlain” Business Library. Find Articles. 5 May 1997. 02 December 2009 from http://findarticles.com/p/articles/mi_m0EPF/is_n26_v96/ai_19437488/ Read More