Deepak Badri – Apr 8, 2024
Madison, WI — Millions and millions of people watch US sports each year, with the National Football League (NFL), National Basketball Association (NBA), and Major League Baseball (MLB) at the top. These three leagues collect billions of dollars in revenue each year. While this means that the billionaire owners of the organizations in these leagues get richer, so do the players.
In this article, we will talk about how athletes make money and the unique financial situation for each league.
The NFL boasts the title for the most viewed national sports league, and this title brings benefits. Recently, the NFL announced a new salary cap (the amount of money each team can use to pay their players with some complications and exceptions) to $255.4 million.
For a reference, the current highest average salary for an NFL player is Joe Burrow, who is averaging $55 million a year over the next five years. In the coming years, this highest average salary will likely go up as these contracts are structured on a year-to-year basis.
However, on the other end of the spectrum, even the lowest-paid NFL players can make hundred-thousands of dollars if they stay on a squad for a full season. Keep in mind, this doesn’t include signing bonuses or other financial incentives that could lead to an even higher payout. This is to be expected from the NFL, an organization that hosts many of the most viewed TV programs annually. What about the NBA?
The NBA is structured differently, as they don’t bring in as much revenue as the NFL or even the MLB. Although still in the multi-billions of dollars, the NBA total annual revenue is roughly half of that of the NFL.
Even still, the biggest player contracts in the NBA rival those in the NFL. The largest NBA contracts hover around $50 million yearly, and are projected to grow to $60 million in the 2026–2027 season. The biggest NBA contract currently, based on average salary per year, is Jaylen Brown who will be making over $57 million a year.
NBA players can be paid so well, even with a smaller league revenue, because the NBA has much fewer players than the NFL. Each NBA team are allowed a maximum of 18 players, while each NFL team is capped at 53. The NBA also has different rules regarding their cap space, as NBA teams are allowed to go over their cap space but are subject to penalties in free agency when trying to acquire players.
The NFL has strict cap space rules, the NBA has soft cap space rules, and the MLB doesn’t have cap space rules at all.
That’s correct. The MLB has no restrictions on how much money a team can spend on their players. So what is stopping the richest teams from outbidding smaller teams for the best players? The answer is nothing.
This lack of a cap space has been quite controversial and will continue to be. The Los Angeles Dodgers and the New York Yankees, both very deep-pocketed teams, having been spending tons of money to attract big-ticket players, large crowds of fans, in hopes of bringing home a championship.
For example, the Los Angeles Dodgers have a payroll of over 300 million dollars, but they also found a loophole in spending their money. One of the best players in the MLB is Shohei Ohtani, known for his ability to both bat and pitch at the highest level. The Dodgers recently signed him to a record-breaking contract of $700 million across 10 years, but the contract is structured so that Ohtani is paid 2 million dollars per year with the remaining $600+ million being paid out when the contract expires.
Some consider this an unfair practice because players are incentivized to join the richer teams, even if the smaller team drafted and grew the players. However, that doesn’t necessarily mean that teams can just “buy” a World Series Championship. There have been different instances where a team with a much smaller payroll have outperformed richer teams to win.
All in all, an increase in athlete contracts is largely due to the increase in league viewership and revenue. Because of this, athletes (former or current) from the NBA, MLB, and NFL are some of the richest people in the world.