Why do Athletes get Paid so much?

Why do Athletes get Paid so much?

Feb. 12 2023

Cristiano Ronaldo’s move to the Saudi Arabian Club “Al-Nassr” and his astronomical contract, worth $536,336,818 over 2.5 years ($214,534,727 per YEAR), has shown just how much athlete contracts have ballooned in recent years. It brings up an interesting conversation about how much sportsmen should be paid and why they are paid such ludicrous amounts. However, it’s important to first lay out some information about how money works in sports. Athlete contracts are no different from regular contracts, team sport athletes are generally paid for a certain amount over the course of the time, specified in the contract, that they stay in the team for. There are various bonuses the athletes can get based on performance, team and even commercial success. Athletes of individual sports, such as tennis and golf, are often paid off individual tournament winnings. Alongside earnings on the field, most top professionals get sponsorships from major sports brands, such as Nike, Adidas or New Balance which can pay just as well as their main contracts. Michael Jordan, for instance, has one of the most successful sports partnerships ever, that being with Nike. The deal has earned Jordan an astonishing 1.3 billion dollars as of 2020, and has resulted in the creation of the 3 billion dollar brand “Jordan”, which has now transcended Jordan and basketball itself, and transformed into a fashion label.

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Which Sport is the Most Lucrative?

The most popular sport in the world is football (soccer), and by a large margin! More than a billion spectators are thought to have watched the 2022 World Cup final alone! So it would make sense for footballers to be the highest paid athletes right? No, even though football players, Lionel Messi and Cristiano Ronaldo, boast the highest contracts EVER (and their former teams Real Madrid and Barcelona providing the highest average salaries per player across any sport) basketball, and the NBA more specifically, has the highest paid players on average. In fact, no football leagues are among the top 3 highest paying sports leagues. The closest is the English Premier League, in 4th place. The NBA is amongst its other American sport counterparts; The NFL, MLB and NHL in being the highest paying leagues. American sports make up more than 95% of the top 100 largest sports contracts in history. Why do North American leagues have such a hold on the sports market? The roots of sports run deep within North American culture and thus bring almost all of its citizens into the market. North Americans also have much easier access to services that serve sport entertainment than other areas of the world. Furthermore, the internet is much more widespread, and with that comes the abundance of sports streaming services and other means of watching and interacting with sporting bodies across many industries. As of 2021, North America makes up around 40% of the sports spectator market. However, other areas of the world are slowly gaining, with the fastest growing regions in the spectator market today being the Middle East and Eastern Europe.

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Why are American Sports Individually so Rich?

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The most basic explanation is the fact that they create the most profit. The NFL is the most profitable sports league in the world, in large part due to its incredible marketability and appeal to advertisers. There’s a number of reasons the NFL is incredibly attractive to advertisers: it’s high number of teams compared to its games per season drive sky-high viewership, its competitiveness creates large fan-bases for most teams, the size of each team individually, its an extremely skilled and entertaining sport, and its frequent breaks allowing for many ad slots. All this fosters a perfect environment for any potential advertiser. The massive amount of money that comes in due to advertising allows each team to spend more on their players. In a sport like football, keeping a world class player could mean the difference between winning 3 super bowls in 5 years and no rings in 70 years. Almost all of the above reasons also transfer to another major American icon - baseball, who’s now global audience and incredible profitability make it so that more than half of the top 100 contracts. Both of these sports also employ the strategy of having long contracts, often more than 5 years. This allows them to make big money moves, but spread out over many more years than sports like soccer. Baseball teams, for instance, regularly hand out contracts which last for more than 10 years!

It has never been a more lucrative time to be an athlete, salaries are soaring and contracts are long. American teams have dominated in terms of pure buying power and wealth, but with the rise of sports spectatorship in other regions of the world America may not stay on top forever. If you like informational and fun content about all things sports, cards, coins, and figures make sure to check out our social media!

18th Feb 2023

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