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  • It seems like every year pro athletes in the NFL, NBA and MLB are signing

  • new record breaking deals, but not all athletes are pulling in big

  • contracts. In fact, a lot of one athlete will earn over his career depends

  • to a surprising degree on the league they play in.

  • The National Football League had some of the flashiest contracts in 2019.

  • That makes sense, since the NFL is one of the biggest and most profitable

  • sports leagues in the U.S.

  • But on average, it's not paying its players nearly as much as those in the

  • MLB and the NBA.

  • There are three big reasons why NFL players make less on average league

  • structure, salary caps and guaranteed money for players.

  • As for the NBA, well, their players have an especially good.

  • In addition to having a higher average pay per player, they also make more

  • money off the court than their peers in the NFL and MLB.

  • That's partly because NBA players have a bigger fan base outside of the

  • U.S. as of 2019.

  • It's the second most popular sport in the world.

  • NBA star LeBron James land won the biggest endorsement deals ever with

  • Nike. That could pay him one billion dollars over his lifetime.

  • So why do players in America's three biggest sports leagues make wildly

  • different salaries in order to answer that?

  • First, we have to understand how sports contracts work.

  • Player contracts are partly based on how a specific league is structured.

  • The number of games in the season.

  • The number of teams in a league and the number of players on a team.

  • NFL teams have 53 players on an active roster, the MLB has 25, and the NBA

  • has 15. The NFL season is the shortest of the three.

  • There are 32 teams that play 16 games throughout the regular season.

  • In total, there are 256 games played collectively.

  • The NBA has 30 teams across its league that play 82 games in the season,

  • bringing the total amount of games played to 1,230.

  • Then there's the MLB, which has the most amount of games played of the

  • three leagues during its regular season.

  • There are 30 MLB teams that play 162 games in a season totaling to 2,430

  • games played collectively.

  • Even though teams across all three leagues tend to prioritize their

  • spending on star players in terms of average salary per player, the NFL

  • ranks dead last out of the three.

  • A lot of it boils down to basic math.

  • The NFL plays the least number of games in a season and and employs the

  • greatest number of players.

  • There are 1,696 active players in the NFL.

  • In the MLB, there are 877.

  • And for the NBA there's 439.

  • Then there's the number of teams.

  • Every league has a common pool of cash that is divvied up among teams

  • every season. The more teams there are, the smaller the cut of the pie.

  • The size of the cash pool has a lot to do with the TV broadcasting field

  • signed by each league.

  • Ironically, more games doesn't directly translate to bigger TV rights for

  • leagues. So when you take a look at the data that we look at, you know,

  • the NFL has the highest percentage of avid fans across the world.

  • Call the big four, which is the three other stick and ball leagues next to

  • the NFL. Their fan base is massive.

  • It's almost it's almost half of the U.S.

  • population sort of reports some interest in the NFL.

  • The length of season thing is actually kind of interesting because if you

  • think about it, scarcity of games.

  • Right, could potentially work in the NFL favor.

  • There's just a concentrated level of interest across a shorter number of

  • games. Each year, the NFL receives an estimated 6.5

  • billion dollars. The NBA gets an estimated 2.6

  • billion dollars and the MLB makes an estimated 1.9

  • billion dollars. And so the players receive today 51 cents out of every

  • dollar. And that is 51 cents out of the entire 8 billion dollar franchise.

  • That is the NBA Enterprise.

  • That is the NBA. And that certainly does include the broadcast agreements,

  • the local agreements, the national agreements, digital international on

  • any type of broadcast agreement is included in our overall cool of

  • basketball related income.

  • 51 cents of it is delivered to the players through the vehicle of our

  • salary cap slash luxury tax system.

  • But player pay isn't all about league structure.

  • It also has a whole lot to do with how well a player performs for a team

  • and the rules. Each league sets through the collective bargaining

  • agreement with player unions.

  • Every league has its own set of rules around how it decides to pay its

  • players. It's called a collective bargaining agreement.

  • The CBA is a set agreed terms made by the league's players association and

  • the league itself. It covers everything from the number of games, rookie

  • wages, practice requirements, health care and player contracts.

  • Each league has its own CBA and in turn, each league has a different set

  • of standards of how player contracts work.

  • One core component of the CBA is something known as revenue sharing.

  • Every league has a common pool of cash that split among teams and players

  • each season. The bulk some of that money comes from television and media

  • rights deals. Another key component of the CBA is the salary cap.

  • It is the total amount of money each team in the league is allowed to

  • spend on player salaries.

  • In 2019, the NBA salary cap was set to 109.14

  • million dollars.

  • The NFL salary cap was set to 188.2

  • million dollars. And the MLB technically doesn't have a salary cap.

  • They have a tax system in place but we'll get back to that.

  • The salary cap helps create competitive balance among teams because it

  • prevents, richer teams from signing all the best players.

  • The NFL has a hard cap, meaning that teams in the league can't go over the

  • salary cap no matter what.

  • The NBA is a little bit more lax.

  • It has a soft cap.

  • The league issues a base salary cap number, which teams can go over as

  • long as they pay a luxury tax.

  • But there's a limit to how much a team can go over that soft cap.

  • You are able to exceed it for a variety of reasons.

  • You're able to exceed it to resign your players.

  • That's the Larry Bird exception.

  • You're able to sign a player off the market, a free agent.

  • Under the mid-level exception, you're able to trade for players who will

  • bring you higher over the salary cap under the assigned player exception.

  • So we have a lot of exceptions to the cap and it keeps it soft.

  • And that encourages owners and teams to give guarantees, to give long term

  • goals and encourages them to be able to give generous deals and not

  • necessarily. Choose between one player or another.

  • Luxury tax limit helps prevent bigger teams and bigger markets like New

  • York and Chicago from overspending on players.

  • And so we agreed to put in place this luxury tax back in 1999 following

  • our six month lockout so that if you exceed that tax threshold, which is

  • usually about 20 million dollars over the cap, that's about where it is

  • right now. Then you're going to have to pay for it.

  • You can do it, but you have to pay.

  • And the tax is pretty significant.

  • It's more it used to be dollar for dollar and now it's more than dollar

  • for dollar. And it allows those teams to feel as if they really need to

  • go. They have a window.

  • They're going to take Iran. They're able to do it.

  • They're able to pay that tax and still take these players.

  • As for the MLB, they have something similar to the NBA soft salary cap,

  • but it works a bit differently.

  • Historically, the MLB has always seen big payroll disparities between big

  • market teams and small market teams.

  • In 2003, the MLB CBA implemented a luxury tax similar to the NBA soft

  • salary cap. It's called the competitive balance tax.

  • MLB teams that exceed the predetermined payroll threshold are subject to

  • this tax. Unlike the NBA, there's no luxury tax limit.

  • So a team can pay over as much as they want, as long as they pay the taxes

  • and are okay with facing league penalties like lower draft picks.

  • For 15 years the New York Yankees weren't too concerned with the payroll

  • threshold or loss of draft picks.

  • The team paid over 341 million dollars in tax penalties alone from 2003 to

  • 2017. Another very important part of the league, CBA, is guaranteed

  • contracts. A fully guaranteed contract ensures a player will receive the

  • full value of their contract no matter what.

  • Unlike the MLB and NBA, not all contracts in the NFL are fully guaranteed.

  • Even though on paper, NFL players sign big flashy contracts, that doesn't

  • mean they'll see all the money they've been promised.

  • Unlike the NBA and MLB, guaranteed contracts aren't really a thing in the

  • NFL. Take the Oakland Raiders quarterback.

  • Dereck Carr's contract is a five year 125 million dollar contract.

  • Of that 125 million dollars, little bit over 70 million dollars is

  • guaranteed. Compare that to the MLB as Yu Darvish.

  • The pitchers contract is a six year, 126 million dollar contract that is

  • fully guaranteed. That means no matter what happens to him, he's taking

  • home all 126 million dollars.

  • Generally speaking, across all three leagues, there are basically two

  • kinds of contracts, rookie and veteran contracts.

  • Once a player completes their rookie deal, they can renegotiate for a new

  • contract as a free agent for the NFL.

  • Most first round rookies in franchise tag players have fully guaranteed

  • contracts. If you're looking at a big time like quarterback or wide

  • receiver guys, you're looking at five year, sometimes six year contracts.

  • And the first two to three years on those contracts could be potentially

  • fully guaranteed. But pass that you get in an area where the only thing

  • protecting that player against being released is a pro-rated signing

  • bonus. So signing bonuses, so you have a 20 million dollar signing bonus,

  • the preparation, which you think an accounting tool for the salary cap

  • where that 20 million is divided by five.

  • If it's a five year contract or even if it's a six year contract, only

  • prorated contract over five.

  • So other than first round rookies in franchise tagged players, there are

  • no regulations forcing a team to guaranteed every single dollar on a

  • player's contract. Of all veteran contracts in the NFL, only 13 have fully

  • guaranteed contracts.

  • Five of those contracts are worth over 10 million dollars and only one

  • contract is for more than one year.

  • Despite the NFL being famous for not paying their players contracts in

  • full, the MLB and NBA are known to have massive contracts with hundreds of

  • million dollars. They're 100 percent guaranteed.

  • MLB contracts are pretty straightforward since they are fully guaranteed.

  • The value of the contract is typically divided evenly through the

  • contracts length. So let's say you and the team don't agree on the number

  • you're going to come up with one number in your agent or whatever.

  • The team with another number based on Rosa Autistics.

  • It's not like you're gonna be at 100 made a difference.

  • So it's gonna be based on a good, good amount of statistics.

  • And then with that they own the team could either accept the team or deny

  • they go to arbitration. So it's like a panel and the panel goes and

  • discusses after February, I believe.

  • And then with that, they either pick the teams or they pick yours it's not

  • in between or anything.

  • So they kind of based on the statistics of other players at your level in

  • the league and they're going to pick one or the other.

  • So it's how you put yourself in a position to probably get a higher

  • contract or you're going to get some of the worst.

  • Nba contracts are very similar to them obese contracts.

  • The Golden State Warriors player Steph Curry signed a five year 201.2

  • million dollar contract in 2017, meaning that he makes over 40 million

  • dollars each year. So even if he gets injured, Curry is still taking home

  • 40 million dollars.

  • Another key difference is that some NBA players can make even more money

  • off the court in 2018.

  • Three of the top 10 athletes in the world with the highest earnings from

  • endorsement deals were NBA players.

  • No player in the top 10 played for the NFL or MLB.

  • Endorsement deals are huge for NBA stars.

  • It allows them to make a steady flow of cash outside of their contracts.

  • Players can sign endorsement deals with pretty much any company and these

  • deals can prove to be very profitable.

  • Well, after a player retires, take Shaquille O'Neal.

  • He retired back in 2011.

  • Please continue to lend multi-million dollar brand deals.

  • Since then, brand endorsement deals have tend to favorite NBA athletes

  • because basketball has more of an international reach than baseball and

  • football. And NBA stars have a huge following on social media.

  • As for the MLB, Mike Trout has the highest paying contract in baseball

  • history, worth over 426 dollars over 12 years.

  • Trow also makes an estimated 2.5

  • million dollars from endorsement deals.

  • Compare that to NBA star Kevin Durant.

  • D has a four year 164 million dollar contract with the Brooklyn Nets.

  • But when you count in sponsorship dollars, the pay divide is bigger.

  • In 2014, Durant signed a 10 year deal with Nike worth an estimated three

  • hundred million dollars.

  • And sneaker deals are huge for NBA stars.

  • LeBron James annual income from his sneaker deal is worth 32 million

  • dollars a year. For comparison, back in 2017, Odell Beckham Junior signed

  • the biggest sneaker deal in the NFL, worth 25 million dollars over five

  • years. So LeBron just went looked at his personal Instagram account.

  • His most recent post is a picture of one of his Nike pairs of sneakers.

  • So really strong promotion quality.

  • It's a product placement thing, single use of a hashtag or mentioned.

  • And it generated about 1.6

  • million total. Interactions on that post.

  • So because of the quality of the promotion and level of engagement that

  • it's getting. It could be worth anywhere from 500 thousand to about 1

  • million dollars in an adjusted add value based on the quality that

  • promotion and engagement that it generated.

  • And LeBron James has a lifetime endorsement deal with Nike worth a rumored

  • 1 billion dollars over time.

  • The super max contract is unique to the NBA and it's one of the biggest

  • contracts in sports.