Overpaid Athlete Syndrome

Athletes are humorously overpaid.  The argument in favor of insanely high salaries follows the line of reason that the athletes generate a gazillion dollars of revenue for their firms (teams), and therefore should be compensated accordingly.  This is the same line of reasoning that leads most organizations to overpay their sales force.  How how much you generate matters little in determining how much you are worth to your organization.  The true value is two fold:

1. How much you generate, relative to somebody else who could be in your position, and
2. Your alternative employment prospects

Consider the case of the NFL/NBA/MLB athlete.  Number two is not even debatable: the average professional athlete is not worth close to their salary in a different industry.  Many go to "college" and never see a classroom (more on that in another useless rant near the start of college basketball season).  Stars on the field are not necessarily stars in the classroom.  Sure, it happens, but by and large it's just not the case.  Even those who go on to successful careers have income prospects that are nowhere near seven (or eight) figures per year. 

Point number one is debatable.  Fans to value seeing the best athletes, but fans - especially NBA fans - want to see superstars.  That's why teams should focus their spending on superstars, and tell the rest of the players that they can play for less or not play at all.  After all, there are plenty of other marginal players clamoring for a chance to make it in "the league."  The fact is that most players are entirely replaceable (economically speaking), as long as a team hangs onto a couple of stars.

Remember, the object of a sports fanchise on the business side is to make money, not to win games.  If the owners stood up to the players' union and said, "Strike all you want . . . we'll find plenty of guys who want to play," then they could make a ton more profits.  They might lose their superstars for a bit, but the union would eventually have to cave.  A logical solution would be for the teams to spend their money on a really really really really good long-term health plan for their players (ok, I have slipped into an NFL-only argument, but let's keep running with it).  That would probably cost less than their $80+MM/year salary cap, and though fans might grumble, I doubt they would stop coming or watching or buying merchandise bearing the names of superstars.

You may say, "But Barry, with all of this discontent, wouldn't they start their own league to compete with the NFL?"  The answer is, "Probably, and they would lose their shirts."  The NFL basically has a monopoly, given to them by congress years ago (in a deal that actually birthed the New Orleans Saints.  True story.  Look it up.).  That monopoly was affirmed by the USFL's failure in the 1980s, over which the NFL was ordered to pay $1 in an antitrust lawsuit.  The court said, "Well NFL, you're out of line, and the law says that we have to acknowledge that.  Buuuuut, the Redskins are on a killer run these days, so we're gonna go ahead and give y'all a pass on this one."  I may be paraphrasing.

So you see, athletes have little other income prospects (though I hear that Kurt Warner was about to get an enormous retention bonus at the Shop Rite before he left to become an NFL Hall of Famer).  Most of them don't perform significantly better than any number of their colleagues who want to play.  Therefore, athletes are overpaid, and franchise owners are suckers.