Professional athletes are some of the highest-paid people in America. They are each paid to play a game in the sports industry. A public misconception of these athletes is that they are all paid wealthily. However, many factors affect the salaries of players. These factors range from industry marketing and monopolistic competition to athletes’ individual performance and endorsements. The wages of athletes vary drastically from sport to sport which leads to the salaries of top athletes in one sport to be much lower or higher than those of athletes in another sport. The topic of professional athletes’ salaries evokes ethical dilemmas and draws concern because of the nature of the earnings. There is controversy over whether athletes should earn more than people in more important professions such as doctors and scientists. In order for Americans to understand why professional athletes are fairly compensated for their work, the components within the sports industry such as marketing, the policies and income of different sports and leagues, cultural relation to sports, and athletes’ individual actions that affect players’ wages must be analyzed and taken into consideration.

The determination of athletes’ salaries involves many factors. The following research concentrates on four main factors: the difference in salaries depending on sport, the monopolistic nature of sport franchises and leagues, the cultural relevance to sports, and players’ individual opportunities and importance to a sport franchise. These categories play a critical role in determining players’ salaries and are constantly changing which means that players’ salaries are changing as well.

In Kathryn Jay’s scholarly article entitled, More Than Just a Game, she correlates American culture with the sports market. Jay is a published author who has written several fiction and non-fiction novels such as “Smooth Landings” and Romantic Signs.” Throughout this novel, Jay uses true components that impact an athletes’ salary such as sport marketing and cultural relation to sports.

Jay conveys her message that sports in America are a beacon of patriotism and an opportunity for athletes, sponsors, and television and radio networks to compete on the open market. Jay constantly makes connections between sports and American culture and government regulation. She conveys her message that sports in America are a beacon of patriotism and an opportunity for athletes, sponsors, and television and radio networks to compete on the open market. She uses Mary Lou Retton, an Olympic gold-medal gymnast, as an example of the marketing that sports created. She was the first woman to be on the cover of a Wheaties box. Jay also recognizes that only athletes with well-received public images have a strong chance of claiming sponsorships and that the government uses sports and athletes as an opportunity to discourage drug use. She discusses the “War on Drugs” campaign saying, “A popular “Just Say No” campaign hammered home the message that drugs were a national disgrace, but for any athletes looking for an advantage that might bring them victory, using drugs, especially performance-enhancing drugs, made sense” (Jay 183). As the government looked down upon the drug use of athletes so did the media. Lance Armstrong is an American cyclist, who at the time was in his mid-20s, and had just overcome a life-threatening battle with cancer and won the 1999 Tour de France. He became a national sensation and garnered more than $5 million is endorsements. However, accusations of Armstrong using illegal drugs surfaced even though he passed every drug test he was given. He commented on this, “I think if I passed all those tests, they’re still gonna say, it’s something” (Jay 7). Armstrong’s situation serves as an example as to how sports and athletes have been recreated into consumer products. 

With so many athletes endorsing brands such as Nike and Adidas, it’s easy to think that nearly all athletes receive sponsorships, but this is not the case. Athletes must maintain a good public image to be a sponsor, as seen in the case of the Lance Armstrong. 

Jay presents a bias by not including much historical perspective throughout the novel. She doesn’t focus on the economics and politics of sports but rather concentrates on other factors relating to the success of sports leagues such as marketing and patriotism. For example, when analyzing the success of the National Football League, Jay puts little emphasis on the laws that provided a protective market environment to the league in such as the determination of franchise location with the exchange of favors. Overall, More Than Just a Game offers much insight into recent developments in American sport.

In a scholarly article, Lawrence M. Kahn explains how sports owners, a small interconnected group, acts as monopsonists in paying players and how individual team-player bargaining and outside options available options to teams and players affect players’ salaries. Kahn is a Professor of Labor Economics and Collective Bargaining at the School of Industrial and Labor Relations at Cornell University.

Until 1976, players in each of the four major sports were bound by the reserve clause to remain with their original team, unless that team decided to trade or sell them to another team. They weren’t allowed to become free agents, who could sell their services to any team. Free agency resulted in a rise in athletes’ salaries. Actions were taken to enforce free agency. For example, The MLBPA achieved a collective bargaining agreement in 1968, which included the reserve clause. This meant that the team could reserve a player for only one year beyond the expiration of any current contract. In the 1980s, the owners were found guilty of colluding by not making offers to free agents (Staudohar, 1996). Kahn compares estimates of players' marginal revenue products to salaries to analyze the degree of monopsonistic exploitation. This process begins with the measures of a player's performance and its effect on a team's winning percentage. Secondly, it estimates how team revenue is affected by winning percentage, along with other factors like the size of the local market. A player's marginal revenue product is estimated by multiplying his contribution to winning by the impact of winning on revenue. Scully (1989) and Zimbalist (1992) updated and refined Scully's (1974) calculations for the late 1980s and Scully (1989) found that star players in 1987 were paid 29-45 percent of marginal revenue product. In 1989, players with less than three years' service ratio of salary to marginal revenue product was just .38 times what it was for those eligible for salary arbitration only and .18 times that for those eligible for free agency. 

Some argue that monopsony should be prominent in sports, but this research produces evidence that making the labor market more competitive leads to higher salaries than would be the case under monopsony. Competition allows teams and players and opportunities to be successful in terms of performance and earnings.

The research method was developed by Scully (1974) in his work on baseball and has been elaborated in many papers such as in Scully (1989) and Zimbalist (1992). Kahn details abrupt shifts in salaries that are difficult to explain without appealing to the theory of monopsony while providing an alternative method of research on salary determination by estimating players' marginal revenue products to salaries. By doing this, Kahn shows that he is unbiased.

The next source is another scholarly article written by Jay Topkis. Topkis is a New York lawyer with degrees from Columbia and Yale University. Obviously, he holds a strong understanding of law which allows him to analyze the laws and contracts in sports, specifically baseball, and connect them to an apparent monopoly.

Topkis connects players’ contracts with the monopolistic sports industry. Most sports and in this case, baseball, are organized which means that each team playing a regular schedule and using players who get their living primarily from the sport is divided into leagues. Contracts make agreements between leagues and teams and players easy. The most important feature of a contract is the “reserve clause” by which the club “reserves” the right to sign the player for another year. Unfortunately for the player, he cannot simply seek out the team that will pay him the most money at the start of each season because he knows that he must work for one employer. His only ability to increase his pay comes from the owner’s fear that he will be unhappy over his salary and play badly. If a player were to break a contract he would not be able to play for another team and would most likely face legal repercussions, so players will often be stuck playing with a team for an extended amount of time. 

A common misconception of sports is that athletes consistently receive high-paying contracts, but this article shows that this is not the case. Rather, athletes often cannot accept higher-paying contracts without facing legal repercussions.

By writing this article, Topkis shows that he has a vast knowledge of sports law. He associates himself with the idea that sports should have to abide by anti-trust laws which displays his bias of associating sports with a monopoly. He discusses the mechanics of a contract and how they ease agreements between teams and players. Even though Topkis gives several examples of contracts and the circumstances surrounding them he only provides his viewpoints, so he is biased.

Athletes’ salaries also depend on the value that they hold to their team. In a scholarly article entitled, “Labour Markets in Professional Sports.”, Sherwin Rosen and Allen Sanderson explains how athletes’ salaries depend on not only their performance but the performance of athletes on the same and other teams. He also illustrates how the sports business is one where players’ salaries, franchise values, and stadium costs are all shifted by orders of magnitude. Rosen was an American labor economist and had ties with many American universities and academic institutions and Allen Sanderson is a senior lecturer in the Department of Economics at the University of Chicago, so he carries plenty of credibility on this topic of athletes’ salaries.

Rosen and Sanderson state that sports involve contests which results in the value of one player depending on the performance of another. They relate this idea to the system used with complimentary goods saying, “Just as restaurant owners choose their menus to cater to customer tastes for meals, team composition is efficiently chosen by the self-interests of team owners and players working through standard market forces” (Rosen, Sanderson F49). The quality of players on opposing teams affects the marginal product of a player on any given team. If a league were to position players on teams to maximize its revenue maximize its total revenue, between-team complementarities would be in use. Labor supply in professional team and individual sports is determined by aspects such as players’ natural talents, attitudes toward risk and personal discount rate, occupational choice, individual work ethic, training and education, the payees, and post-retirement options. In the United States, the supply of athletic talent for professional sports comes from two main sources: minor league systems and colleges and universities. As a result, professional sport leagues have instituted a variety of restrictions among owners that affect the employment of players and their distribution across teams and impact the supply side of labor markets.

Most people focus strictly on an athlete’s sole ability to play his sport, but his value derives mostly from his worth to the team. Rosen and Sanderson explain how teams view players’ ability in relation to the franchise.  They also explain how other elements of supply and demand exist within professional athletics such as factor substitutions, pay and marginal value product, and wage discrimination. Factor substitutions involve player advisement by agents. The associations bargain collectively over working conditions, pension benefits and insurance, grievance procedures and league-wide arrangements such as a minimum salary, any direct restrictions on total payrolls or individual salary caps, and player compensation.  Pay and marginal value product is about the study how a person's pay is related to personal skill and human capital. Lastly, wage discrimination discusses the historical trends of players’ wages in relation to their race. All these factors tie into the determination of player salaries and by including them in to their research Rosen and Sanderson prove that they don’t have bias on the topic.

The next source is an article entitled, “The Lowest Paid Athletes in All of Professional Sports,” written by Evan Grossman of mensjournal. Grossman compares the salaries of professional athletes from different sports which shows that, in contrast to common misconception, not all athletes make millions of dollars in salary and endorsement deals. Athletes’ salaries depend on aspects such as players’athletic ability and the customs of the sports such as set salaries and insurance policies. Though this article was published on mensjournal, this is a magazine that is published by the acclaimed private magazine/newspaper publishing industry, American Media, Inc. Also, Grossman has worked in the news industry for over 15 years and is currently a journalist for the New York Post.

Grossman begins by presenting the salary of Floyd Mayweather, the highest paid athlete. Mayweather earns more than $73 million each year and can make more than $30 million on a single fight in a sport that only hands large checks to a select few. On the other hand, small club fighters typically make a couple hundred dollars per fight while they build up a following. This illustrates his point that the salaries of athletes depend on their ability and time spent playing their sport. Grossman uses bowling and golf as examples of a sport in which the athletes only get paid they win. In fact, the PBA World Series of Bowling is a 10-day, five-event super tournament that costs $900 to enter. At the high end of the PGA salary spectrum, Rory McIlroy raked in more than $8 million in 2014. Chris DiMarco, who finished No. 377 on the PGA money list after playing in seven events and making one cut in 14 rounds of golf, made $6,370. Some sports have multiple leagues and the salaries in each are different. The NFL has some of the highest paid players in the world such as Aaron Rodgers, Tom Brady, Matt Ryan, and Joe Flacco who are all paid at least $30 million dollars per year. In the NFL, rookies are given a minimum salary of $420,000, but on lower levels, the pay isn’t as generous. Arena Football League players earn only $830 game paycheck. That amounts to less than $15,000 for the 18-game regularseason. AFL players also have the option to get $150 monthly housing stipends. Sports such as lacrosse has franchises that strategize in keeping payroll down. The indoor National Lacrosse League pays a $9,200 flat salary for rookies, who could get a raise to as much as $34,000 if they rise to become franchise players. Teams have taken advantage of this by stocking up on younger players or negotiating trades with other teams to obtain a higher draft pick. There is also an emphasis put on signing local players, so the nine teams don't have to pay as much for travel expenses for a 16-game regular season. 

In contrast to popular belief, not all professional athletes are paid highly because their salary relies heavily on sport and league regulations. Grossman explores a variety of components that affect the wages of athletes. He focuses on the difference in salaries in different sports and the strategies that teams within the sports use to best utilize the league’s salary regulations. Also, he backs up his claims with statistics. Because of these reasons, Grossman proves that he is unbiased on the topic. 

 In his scholarly article entitled, “The Determination of Bonuses in Professional Sports.” Gary Neill Ross Gary Neill Ross states that the value of an athlete to a sports club varies with the relative contribution that he could make to each club’s revenue. He has a PhD in economic from the City University of New York and is a globally known and respected economist. Although this article was written 42 years ago, the article well-explains that a sport team owner would be willing to offer a player a bonus if the present value of the player’s expected net return to his club is greater than zero.

Many of the players in the professional team sport industry receive bonuses when they sign their first uniform player contracts. The bonuses are given to the players by sport club owners as an inducement for the players to sign with their clubs. A prospective player would probably receive bonus offers from several teams if the free agent market is competitive. The player's value to each of the clubs would vary with the relative contribution that he could make to each club's revenue. Once a player accepts a team owner's offer and signs with a club, he then becomes subject to the reserve or renewal clause. This permits the club for which a player is currently signed to renew the player's contract for the following year at a salary not less than a percentage of his current year’s salary. The team owner has the option to renew the contract without the player's consent, so long as the player's salary is not reduced below a certain level. The reserve clause thus permits sport team owners to control for as long as they wish the property rights to a player's services. The team owner is under no obligation to continue to employ a player and could cancel a player's contract at any time. However, in the NFL and NBA the reserve clause is slightly different because these leagues allow a sport club owner to renew a player's contract for the following year. This allows any player to "play out his option" (Ross 43) and become a free agent.

Often people fail to recognize that the sports industry follows a competitive, market economy as do many other industries. Many places of employment in America offer bonuses to people who provide exceptional value to them. Sports is no exception to this. As a player’s value increases he is likely to receive bonuses and offers from teams to provide his services. This article was written 42 years ago, so the methods that sport owners use to decide how much athletes should be paid may have changed since then. In this sense, Ross presents bias in this article.

Monetary opportunities for athletes are a driving factor in the sports market. In an article entitled, “Conor McGregor fights Floyd Mayweather this evening: Why is it happening?,” The Telegraph sports writers explains the driving factors behind one of the most anticipated boxing matches in recent history. Telegraph Sport is part of the British newspaper website The Telegraph. The website has received awards such as UK Consumer Website of the Year and Digital Publisher of the Year. The Telegraph is currently the third most visited British newspaper website, so it has an obligation to produce credible content.

In this scenario, both boxers could earn as much as $100 million for the fight, which obviously gave both boxers motivation to perform. Also, the fact that both boxers came out of retirement created much anticipation which only increased the potential payout. Both boxers had their own reasons for coming out of retirement. McGregor expressed his desire to continue to work on his fighting ability stating, “Nothing else was going through my mind. It is time to go back and live the life that got me this life” and Mayweather took more of a marketing approach saying, "I'm a businessman, and it makes business sense. I believe in what me and [adviser] Al Haymon talk about every day." Revenue from ticket sales and TV subscriptions for the fight were expected to net the fighters tens of millions of dollars.

It’s often misconstrued that most athletes can earn millions of dollars but cases such as this show that only athletes who have solidified a strong reputation in their sport have the best opportunities to earn large amounts of money. This is apparent in the Mayweather vs. McGregor boxing match because Conor McGregor is a UFC lightweight champion while Floyd Mayweather is a boxer who at the time and still today holds an undefeated record. The fact that the two didn’t compete in the same sport drew controversy about the monetary motives behind this fight. Even other athletes such as 10-time world champion Osca De Lay Hoya spoke up about the money-based boxing match. De Lay Hoya said this about Mayweather and the match, "He's never laced up a glove. I call it a circus, I don't think it's fair for the sport of boxing."

As this article was written just a few days in advance of the fight during the peak of the anticipation, the authors claim about the motivation behind the match could’ve been swayed by the hype. For example, the article provides social media posts from both fighters displaying their money or their winning belts which might persuade one to believe that money was the determining factor in the fighters agreeing to the bout.

Lastly, in an article entitled, ““Can Conor McGregor Win?” MMA’s Best Coaches Analyze His Chances,” Bleacher Report writer Jonathan Snowden collects opinions of who will win the fight and analyzes possible outcomes of the fight. Bleacher Report is a sports-based newspaper website launched in 2007. The website follows an application process that allows only the top 20 percent of candidates earn the right to publish on the site and provides educational resources for new and veteran writers which makes it a credible source on the topic.

This article picks up where the previous one left off, gathering opinions of the fight from MMA coaches. Snowden further enforces the idea that sports are driven by marketing and economics. The article starts with a quote from MMA coach Greg Jackson on the Mayweather vs. McGregor fight, "On paper, there's no way he can win," Jackson says. "You have the best pro boxers, who trained their whole life, and couldn't come close.” Another MMA coach Brandon Gibson stated, “All the things that make Conor such a great martial artist don't necessarily 

translate into the ability to become a champion boxer.” Statements such as these provide insight into the reason why the fighters agreed to step into the ring against each other. With odds stacked so highly against McGregor, it becomes apparent that he has more to gain from the money he’ll earn from the fight rather than from the outcome.

Only a handful of athletes could return from retirement and expect to be paid millions of dollars from one performance. However, in the case of McGregor and Mayweather they could expect this. This shows that not all revenue opportunities are the same for all athletes.

As the opinions from this article are collected solely from MMA coaches and not boxing coaches presents a bias in this article. Also, the coaches themselves could have a bias against one of the fighters or sports involved in the fight.

The topic of if professional athletes are overpaid is one of public debate. Sports are a popular form of entertainment and pass time in America, so it makes sense as to why athletes’ earnings have sparked controversy. However, athletes’ salaries vary drastically depending on the sport they participate in and are ultimately determined by their impact on the revenue brought in by the franchise they belong to. This paper demonstrates that since athletes’ salaries are determined economically rather than by job importance they aren’t overpaid. A common argument used to claim that professional athletes are overpaid is that they “just play a game” and their job does not hold much importance. Though this is a valid statement it does not consider the entertainment significance and economic factors that determine athletes’ salaries. Another claim made as to why athletes are overpaid is that athletes typically don’t work as many days throughout the year as people employed in other professions. However, athletes spend many hours practicing so that they can perform well. Also, in sports such as football and hockey athletes put themselves at a relatively high risk of injury. The side of the argument that states that professional athletes aren’t overpaid concentrates on the cultural significance of sports, the work that athletes put into their profession, and the factors that determine athletes’ salaries such as player significance to franchise revenue. The salaries of athletes can be misconceived as always being high. Some athletes are paid millions of dollars to play their sport while other athletes, even top athletes, in other sports are not paid as highly, showing that athletes’ salaries are affected by the popularity of their sport. Over the last century, sports have become an economic opportunity for athletes, sponsors, and television and radio networks to compete on the open market. Likewise, as sports have evolved into one of the most popular forms of entertainment they have transformed into a beacon of patriotism in America. The income of salaries is also impacted by the endorsements they receive and to acquire endorsements athletes must maintain a reputable public image. The argument of if professional athletes are overpaid is important because sports a significant part of American culture and are one of the largest industries in the country. It also sparks controversy if Americans involved in more vital professions such as doctors and teachers should be paid more than the athletes who earn more than them. The topic of athletes’ salaries also explores the development and incorporation of open market policies and economics into the sports industry. 
