Why Are Professional Athletes Overpaid
Jeremy Reuben Tang Choon Yang
U1480059A
SS1003 Assignment 1
Topic: Are professional athletes overpaid?
Introduction
There has been an incessant debate about whether professional athletes genuinely deserve the extravagant salaries that are transacted to their bank accounts throughout the lifespan of their contracts. Professional athletes are physically gifted human beings who excel at a certain sport and receive an income through their hard work and determination. These individuals are the cream of the crop in terms of fitness and their respective talents when it comes to performing in the sporting arena. These same athletes have to constantly maintain their fitness during peak and off-peak durations of the season, have diets planned under …show more content…
scrutiny to attain optimal weight and muscle mass and most train at least 6 days of the week. Football is played 9 months, NBA (National Basketball Association) teams play 82 games and MLB (Major League Baseball) players play 162 matches annually. Golf and tennis players and NASCAR racers are travelling abroad all year round to participate in prestigious sporting events to bring their team or country honour (My Essay Examples. (n.d.). Retrieved October 6, 2014). The rigour of the above mentioned activities seems suffice in explaining their enormous incomes.
An overview of sports as a money making industry
One of the biggest arguments is whether athletes deserve to get a salary worth millions of dollars a year. The world of sports is a profit making industry and there are several reasons as to why it appears to be inflated. Fans from all over the world pay to watch these athletes rival against each other. A ticket to watch the Wimbledon finals costs 2,667 pounds and similarly a group stage game of the UEFA (Union of European Football Associations) Champions League costs 390 Euros. Essentially, these figures are a major contributing factor to athletes’ salaries. In addition, fans purchase the merchandise of the players whom they admire and hold in high regard as they may want to revel in the fantasy of emulating him or her. Lastly, television companies pay these famous teams and athletes to broadcast sports coverage for a myriad of people to participate in the spectacle of these major sporting events. The 2008 Beijing Olympic Games generated US$1.7 billion in television and exclusive rights (World Intellectual Property Organization. (n.d.). Retrieved October 6, 2014).
Reasons for the selection of topic
Professional athletes started receiving an excessive income dating back to the 1st century. John L. Sullivan was an average boxer who earned four times as much as the then American president. Some athletes have too much money and might be ignorant on how to manage it which may inadvertently develop a ‘God-Almighty’ demeanour (My Essay Examples. (n.d.). Retrieved October 6, 2014). Alex Rodriguez, from the New York Yankees, is a clear example of one who has a bloated contract. He signed a 10 year-contract, worth US275 million, back in 2008 and is now a laughing stock albeit being an outstanding baseball player during his prime. He was slapped with a 211 game ban for the entire 2014 season and post season games after being involved in arguably the biggest steroid scandal in baseball history. Despite the suspension, Rodriguez will receive 61 million through 2017 after the ban has been lifted. Likewise for Tiger Woods, who was caught and subsequently admitted to having an alleged affair with Rachel Uchitel, a nightclub promoter and up to 14 other women in 2009. He lost endorsements to Nike, Gatorade and Gillete later on. Forbes reports that he still gets paid 54 million a year, half of his prior salary (Professional athletes are overpaid and selfish. (n.d.). Retrieved October 6, 2014.). The above mentioned examples have clearly tainted the good name of their respective sports; people who were supposed to be role models for the younger generation have engaged in acts of misconduct and infidelity. Moreover, they are currently still getting paid more than they deserve despite their selfish ways. The excessive wages seems to have tampered with their minds which led them to indulge in such ‘foolish behaviour’.
Another reason why athletes may be getting overpaid is because the money from endorsements from sporting brands has not been included yet.
This is a separate income from their contracts with their agents or teams. Big brands such as Nike, Adidas and Gatorade spend as much as US$1.6 billion on endorsements every year because athletes can help to build brand awareness, validate a product’s features and boost the brand equity. Building brand equity is the main reason for endorsements, which is ‘the value a company realizes from a product with a recognizable name’. LeBron James earned a hefty 15 million dollars by donning Nike products in 2013 and raised US$100 million dollars in profit. Big brands are more often than not, willing to pay athletes to create and maintain that brand equity. Paying the athletes a huge sum of money is an avenue for which the brand can generate greater returns and revenue in the long run. Rory Mcllroy has a ten year contract with Nike worth 250 million dollars as he has topped the golf charts and emerged as the top golfer for the past few seasons (Big brands spend so much on athlete endorsements. (n.d.). Retrieved October 6, 2014). Athletes who endorse the product do not only get paid in huge sums, they are also sponsored that brand’s products such as shoes, apparels, sporting gear etc. It is unthinkable of what one can do with so much money and this is a fairly convincing factor that athletes earn too much
money.
There are more pertinent issues that the money could be directed to such as humanitarian aid and poverty. There are many people who are desolate and less privileged; the excess amount of money could be used to help these people afford basic necessities such as water, food, clothing and housing. Kimi Raikonnen’s annual salary of US$51 million was more than Tuvalu’s (Polynesian island nation) GDP of US$37 million. This money could be used to supply electricity to all the rural parts of Indonesia for up to 4 years. The entire Major League Baseball industry plus Lance Armstrong’s US$218 million profit cloaked by a lie, is 7 times larger than the entire New York City (My Essay Examples. (n.d.). Retrieved October 6, 2014). If the money of these 2 entities is sufficient to run a second world nation, what about other athletes in other sports? In addition, there are others with more noble professions such as teachers, lawyers and surgeons who do not make half of what these athletes earn. Naturally, saving a life or educating the mind should gain more recognition than those who play sports for a living, of which many people would play for free if given the chance.
An alternative perpective
However, it is true that athletes only earn so much money because their sporting career is short lived. The average span of an athlete’s career usually lasts for an estimated 20 years. Athletes train hard and toss their bodies on the line to support their families and also for the entertainment of fans watching the sport from all over the world. The number of hours they spend training and refining their skills to peak for a match or tournament appears to be a valid reason as to why athletes earn the kind of money they do. Moreover, some of them end up getting injured (some of which are career threatening injuries) and also succumb to inevitable illnesses. Stiliyan Petrov was the then captain of Aston Villa Football Club in 2011 and was diagnosed with acute leukaemia, as with Eric Abidal who was a player at Barcelona was diagnosed with a cancerous liver in that same year (Eric Abidal looks for a repeat of heart-warming recovery as football family comes together again. (n.d.). Retrieved October 13, 2014.). Without the income that they have received, they would not have been able to afford the required healthcare and still be living healthily today. Abidal is a man who possesses great mental strength and has managed to overcome this handicap and still be playing professional football. He is currently at Monaco Football Club in his hometown, France, wearing the captain’s armband and leading his team to fight for the Ligue 1 title. Athletes place their bodies under immense physical and mental stress and might stand to be susceptible to inevitable predicaments like the ones mentioned above, which requires a great deal of money for them to recover and thus lead normal lives again.
Solutions to curb this issue
It is possible that governments could tax the income of these overpaid athletes, which means that a proportion of their incomes is absorbed by the government. The amount of tax imposed is decided by the country of residence, wherever the athletes are participating in. This tax is more commonly referred to as the ‘jock tax’. There are 2 ways in which the athletes can be taxed; firstly the "duty days" method, which divides the player's total number of work days during the season by the number of days spent playing in the state; And secondly the "games played" method, which divides the total number of games in the season by the number played in the state (Niquette, M. (2014, June 5). Hate Taxes? Be Thankful You're Not a Pro Athlete. Retrieved October 6, 2014). Professional athletes who reside and play in other countries usually have a third of their incomes end up with the local governments. One such country is the United States of America, which taxes any source of income regardless of the source. Although this may create disincentive effects for athletes for residence, this is one of the more effective solutions in preventing the sports industry from becoming over-inflated. Governments could put the money to better use as well, for example fund hospitals, children’s homes and even produce more public goods. Some may also contest that the taxes imposed are only a small constituent of athletes’ income. For example, Fernando Torres, who makes 200,000 pounds a week when he was at Chelsea Football Club and LA Laker’s Kobe Bryant who earned an estimate of US$30 million in the 2013-2014 season to be labelled as the highest paid NBA player (The 50 Most Overpaid Athletes of 2013 - 34. Jayson Werth. (n.d.). Retrieved October 6, 2014), but this appears to be the most impartial solution for all involved parties. Undeniably, athletes work hard to earn their money as well.
Another possible solution could be encouraging these top sportsmen to participate in charity and works of kindness and some have already done so. Serena Williams set up 2 schools in Kenya, namely: SW Secondary School in Matooni and Wee Secondary School in Makueni; David Beckham who has his own charity organization: Victoria and David Beckham’s organization, is a strong advocate for ‘Malaria No More’ and an ambassador for UNICEF; Eli manning undertook a five year campaign to raise US$2.5 million to construct a state of the art paediatric clinic (20 of The Most Charitable Professional Athletes. (n.d.). Retrieved October 6, 2014). These compassionate individuals have served as exemplary individuals, through which many other athletes can follow suit and do their part to contribute back to the society, thus making the world a better place to live in.
Conclusion
This report may have neglected many other athletes who do not earn the same kind of money as the above mentioned. The average salary of a professional athlete ranges from US$30,000 to US$60,800 per annum. And the most important idea to be considered is if these athletes make it to the professional level. Even so, the top athletes in the world make enough money which could possibly see through the next 3 generations in their family. Athletes also sign contracts that are worth tens of millions of dollars at that point in time, which reflects the current form of their performance. It does not reflect or have a clear prediction on their sporting performance in the future. Hence it does not seem logical to pay professional athletes astronomical wages but rather, pay them according to their performance in a given span of time.
References http://www.complex.com/sports/2013/08/most-overpaid-athletes-2013/jayson-werth The 50 Most Overpaid Athletes of 2013 - 34. Jayson Werth. (n.d.). Retrieved October 6, 2014. http://www.debate.org/opinions/are-most-professional-athletes-overpaid Are most professional athletes overpaid? (n.d.). Retrieved October 6, 2014. http://thoughtsonoverpaidathletes.weebly.com/what-the-problem-is-and-how-to-resolve-it.html What the Problem is and How to resolve it. (n.d.). Retrieved October 6, 2014. http://www.michaelchatman.com/uncategorized/michael-chatman-giving-show-20-of-the-most-charitable-professional-athletes/ 20 of The Most Charitable Professional Athletes. (n.d.). Retrieved October 6, 2014. http://catawba.edu/files/2013/8871/4302/Are-Professional-Athletes-Making-Too-Much-Money.pdf http://www.quchronicle.com/2004/04/professional-athletes-are-overpaid-and-selfish/
Professional athletes are overpaid and selfish. (n.d.). Retrieved October 6, 2014. http://myessayexamples.blogspot.sg/2012/03/pro-athletes-get-paid-too-much-money_15.html My Essay Examples. (n.d.). Retrieved October 6, 2014 http://opendorse.com/why-big-brands-spend-so-much-on-athlete-endorsements/ http://edition.cnn.com/2013/12/31/sport/eric-abidal-cancer-barcelona-monaco-football/ http://www.businessweek.com/articles/2014-06-05/cities-states-tax-visiting-pro-athletes-and-make-millions Niquette, M. (2014, June 5). Hate Taxes? Be Thankful You're Not a Pro Athlete. Retrieved October 6, 2014. http://www.wipo.int/ip-sport/en/broadcasting.html World Intellectual Property Organization. (n.d.). Retrieved October 6, 2014 http://blogs.independent.co.uk/2012/04/03/eric-abidal-looks-for-a-repeat-of-heart-warming-recovery-as-football-family-comes-together-again/ Eric Abidal looks for a repeat of heart-warming recovery as football family comes together again. (n.d.). Retrieved October 13, 2014.
U1480059A
SS1003 Assignment 1
Topic: Are professional athletes overpaid?
Introduction
There has been an incessant debate about whether professional athletes genuinely deserve the extravagant salaries that are transacted to their bank accounts throughout the lifespan of their contracts. Professional athletes are physically gifted human beings who excel at a certain sport and receive an income through their hard work and determination. These individuals are the cream of the crop in terms of fitness and their respective talents when it comes to performing in the sporting arena. These same athletes have to constantly maintain their fitness during peak and off-peak durations of the season, have diets planned under …show more content…
scrutiny to attain optimal weight and muscle mass and most train at least 6 days of the week. Football is played 9 months, NBA (National Basketball Association) teams play 82 games and MLB (Major League Baseball) players play 162 matches annually. Golf and tennis players and NASCAR racers are travelling abroad all year round to participate in prestigious sporting events to bring their team or country honour (My Essay Examples. (n.d.). Retrieved October 6, 2014). The rigour of the above mentioned activities seems suffice in explaining their enormous incomes.
An overview of sports as a money making industry
One of the biggest arguments is whether athletes deserve to get a salary worth millions of dollars a year. The world of sports is a profit making industry and there are several reasons as to why it appears to be inflated. Fans from all over the world pay to watch these athletes rival against each other. A ticket to watch the Wimbledon finals costs 2,667 pounds and similarly a group stage game of the UEFA (Union of European Football Associations) Champions League costs 390 Euros. Essentially, these figures are a major contributing factor to athletes’ salaries. In addition, fans purchase the merchandise of the players whom they admire and hold in high regard as they may want to revel in the fantasy of emulating him or her. Lastly, television companies pay these famous teams and athletes to broadcast sports coverage for a myriad of people to participate in the spectacle of these major sporting events. The 2008 Beijing Olympic Games generated US$1.7 billion in television and exclusive rights (World Intellectual Property Organization. (n.d.). Retrieved October 6, 2014).
Reasons for the selection of topic
Professional athletes started receiving an excessive income dating back to the 1st century. John L. Sullivan was an average boxer who earned four times as much as the then American president. Some athletes have too much money and might be ignorant on how to manage it which may inadvertently develop a ‘God-Almighty’ demeanour (My Essay Examples. (n.d.). Retrieved October 6, 2014). Alex Rodriguez, from the New York Yankees, is a clear example of one who has a bloated contract. He signed a 10 year-contract, worth US275 million, back in 2008 and is now a laughing stock albeit being an outstanding baseball player during his prime. He was slapped with a 211 game ban for the entire 2014 season and post season games after being involved in arguably the biggest steroid scandal in baseball history. Despite the suspension, Rodriguez will receive 61 million through 2017 after the ban has been lifted. Likewise for Tiger Woods, who was caught and subsequently admitted to having an alleged affair with Rachel Uchitel, a nightclub promoter and up to 14 other women in 2009. He lost endorsements to Nike, Gatorade and Gillete later on. Forbes reports that he still gets paid 54 million a year, half of his prior salary (Professional athletes are overpaid and selfish. (n.d.). Retrieved October 6, 2014.). The above mentioned examples have clearly tainted the good name of their respective sports; people who were supposed to be role models for the younger generation have engaged in acts of misconduct and infidelity. Moreover, they are currently still getting paid more than they deserve despite their selfish ways. The excessive wages seems to have tampered with their minds which led them to indulge in such ‘foolish behaviour’.
Another reason why athletes may be getting overpaid is because the money from endorsements from sporting brands has not been included yet.
This is a separate income from their contracts with their agents or teams. Big brands such as Nike, Adidas and Gatorade spend as much as US$1.6 billion on endorsements every year because athletes can help to build brand awareness, validate a product’s features and boost the brand equity. Building brand equity is the main reason for endorsements, which is ‘the value a company realizes from a product with a recognizable name’. LeBron James earned a hefty 15 million dollars by donning Nike products in 2013 and raised US$100 million dollars in profit. Big brands are more often than not, willing to pay athletes to create and maintain that brand equity. Paying the athletes a huge sum of money is an avenue for which the brand can generate greater returns and revenue in the long run. Rory Mcllroy has a ten year contract with Nike worth 250 million dollars as he has topped the golf charts and emerged as the top golfer for the past few seasons (Big brands spend so much on athlete endorsements. (n.d.). Retrieved October 6, 2014). Athletes who endorse the product do not only get paid in huge sums, they are also sponsored that brand’s products such as shoes, apparels, sporting gear etc. It is unthinkable of what one can do with so much money and this is a fairly convincing factor that athletes earn too much
money.
There are more pertinent issues that the money could be directed to such as humanitarian aid and poverty. There are many people who are desolate and less privileged; the excess amount of money could be used to help these people afford basic necessities such as water, food, clothing and housing. Kimi Raikonnen’s annual salary of US$51 million was more than Tuvalu’s (Polynesian island nation) GDP of US$37 million. This money could be used to supply electricity to all the rural parts of Indonesia for up to 4 years. The entire Major League Baseball industry plus Lance Armstrong’s US$218 million profit cloaked by a lie, is 7 times larger than the entire New York City (My Essay Examples. (n.d.). Retrieved October 6, 2014). If the money of these 2 entities is sufficient to run a second world nation, what about other athletes in other sports? In addition, there are others with more noble professions such as teachers, lawyers and surgeons who do not make half of what these athletes earn. Naturally, saving a life or educating the mind should gain more recognition than those who play sports for a living, of which many people would play for free if given the chance.
An alternative perpective
However, it is true that athletes only earn so much money because their sporting career is short lived. The average span of an athlete’s career usually lasts for an estimated 20 years. Athletes train hard and toss their bodies on the line to support their families and also for the entertainment of fans watching the sport from all over the world. The number of hours they spend training and refining their skills to peak for a match or tournament appears to be a valid reason as to why athletes earn the kind of money they do. Moreover, some of them end up getting injured (some of which are career threatening injuries) and also succumb to inevitable illnesses. Stiliyan Petrov was the then captain of Aston Villa Football Club in 2011 and was diagnosed with acute leukaemia, as with Eric Abidal who was a player at Barcelona was diagnosed with a cancerous liver in that same year (Eric Abidal looks for a repeat of heart-warming recovery as football family comes together again. (n.d.). Retrieved October 13, 2014.). Without the income that they have received, they would not have been able to afford the required healthcare and still be living healthily today. Abidal is a man who possesses great mental strength and has managed to overcome this handicap and still be playing professional football. He is currently at Monaco Football Club in his hometown, France, wearing the captain’s armband and leading his team to fight for the Ligue 1 title. Athletes place their bodies under immense physical and mental stress and might stand to be susceptible to inevitable predicaments like the ones mentioned above, which requires a great deal of money for them to recover and thus lead normal lives again.
Solutions to curb this issue
It is possible that governments could tax the income of these overpaid athletes, which means that a proportion of their incomes is absorbed by the government. The amount of tax imposed is decided by the country of residence, wherever the athletes are participating in. This tax is more commonly referred to as the ‘jock tax’. There are 2 ways in which the athletes can be taxed; firstly the "duty days" method, which divides the player's total number of work days during the season by the number of days spent playing in the state; And secondly the "games played" method, which divides the total number of games in the season by the number played in the state (Niquette, M. (2014, June 5). Hate Taxes? Be Thankful You're Not a Pro Athlete. Retrieved October 6, 2014). Professional athletes who reside and play in other countries usually have a third of their incomes end up with the local governments. One such country is the United States of America, which taxes any source of income regardless of the source. Although this may create disincentive effects for athletes for residence, this is one of the more effective solutions in preventing the sports industry from becoming over-inflated. Governments could put the money to better use as well, for example fund hospitals, children’s homes and even produce more public goods. Some may also contest that the taxes imposed are only a small constituent of athletes’ income. For example, Fernando Torres, who makes 200,000 pounds a week when he was at Chelsea Football Club and LA Laker’s Kobe Bryant who earned an estimate of US$30 million in the 2013-2014 season to be labelled as the highest paid NBA player (The 50 Most Overpaid Athletes of 2013 - 34. Jayson Werth. (n.d.). Retrieved October 6, 2014), but this appears to be the most impartial solution for all involved parties. Undeniably, athletes work hard to earn their money as well.
Another possible solution could be encouraging these top sportsmen to participate in charity and works of kindness and some have already done so. Serena Williams set up 2 schools in Kenya, namely: SW Secondary School in Matooni and Wee Secondary School in Makueni; David Beckham who has his own charity organization: Victoria and David Beckham’s organization, is a strong advocate for ‘Malaria No More’ and an ambassador for UNICEF; Eli manning undertook a five year campaign to raise US$2.5 million to construct a state of the art paediatric clinic (20 of The Most Charitable Professional Athletes. (n.d.). Retrieved October 6, 2014). These compassionate individuals have served as exemplary individuals, through which many other athletes can follow suit and do their part to contribute back to the society, thus making the world a better place to live in.
Conclusion
This report may have neglected many other athletes who do not earn the same kind of money as the above mentioned. The average salary of a professional athlete ranges from US$30,000 to US$60,800 per annum. And the most important idea to be considered is if these athletes make it to the professional level. Even so, the top athletes in the world make enough money which could possibly see through the next 3 generations in their family. Athletes also sign contracts that are worth tens of millions of dollars at that point in time, which reflects the current form of their performance. It does not reflect or have a clear prediction on their sporting performance in the future. Hence it does not seem logical to pay professional athletes astronomical wages but rather, pay them according to their performance in a given span of time.
References http://www.complex.com/sports/2013/08/most-overpaid-athletes-2013/jayson-werth The 50 Most Overpaid Athletes of 2013 - 34. Jayson Werth. (n.d.). Retrieved October 6, 2014. http://www.debate.org/opinions/are-most-professional-athletes-overpaid Are most professional athletes overpaid? (n.d.). Retrieved October 6, 2014. http://thoughtsonoverpaidathletes.weebly.com/what-the-problem-is-and-how-to-resolve-it.html What the Problem is and How to resolve it. (n.d.). Retrieved October 6, 2014. http://www.michaelchatman.com/uncategorized/michael-chatman-giving-show-20-of-the-most-charitable-professional-athletes/ 20 of The Most Charitable Professional Athletes. (n.d.). Retrieved October 6, 2014. http://catawba.edu/files/2013/8871/4302/Are-Professional-Athletes-Making-Too-Much-Money.pdf http://www.quchronicle.com/2004/04/professional-athletes-are-overpaid-and-selfish/
Professional athletes are overpaid and selfish. (n.d.). Retrieved October 6, 2014. http://myessayexamples.blogspot.sg/2012/03/pro-athletes-get-paid-too-much-money_15.html My Essay Examples. (n.d.). Retrieved October 6, 2014 http://opendorse.com/why-big-brands-spend-so-much-on-athlete-endorsements/ http://edition.cnn.com/2013/12/31/sport/eric-abidal-cancer-barcelona-monaco-football/ http://www.businessweek.com/articles/2014-06-05/cities-states-tax-visiting-pro-athletes-and-make-millions Niquette, M. (2014, June 5). Hate Taxes? Be Thankful You're Not a Pro Athlete. Retrieved October 6, 2014. http://www.wipo.int/ip-sport/en/broadcasting.html World Intellectual Property Organization. (n.d.). Retrieved October 6, 2014 http://blogs.independent.co.uk/2012/04/03/eric-abidal-looks-for-a-repeat-of-heart-warming-recovery-as-football-family-comes-together-again/ Eric Abidal looks for a repeat of heart-warming recovery as football family comes together again. (n.d.). Retrieved October 13, 2014.