LeBron James officially signs $154 million dollar deal; Makes us ask, “Are professional athletes overpaid”, and, “Are sports leagues doing enough to maintain team competition”?

Four years, $154 million dollars— LeBron James’ contract is now official, and his coveted No. 23 Los Angeles Laker’s Jersey can finally be sold to the masses. Today marks the beginning of the new league year, and National Basketball Association (NBA) fans, sports broadcasting mediums, and merchandisers alike are gearing up for another season of top-notch hoops.

However, in the midst of the commotion, is anyone dissecting the numbers and their effects on the competition in the NBA? Are NBA players overpaid? Better yet, are professional athletes paid too much? 

Do professional sports leagues do enough to ensure competition for markets, both big and small, so that fans across the nation are ensured strong match? 

How do professional athletes’ salaries and contributions affect ratings, game turnout and merchandise sales? Let’s dig deeper.

LeBron James’ Salary, Salary Caps and Competition

LeBron James is about to collect a cool $35.6 million dollar check for the 2018-2019 season— making him the highest paid NBA player of all time. This number will increase each year, hitting another record-setting $41 million for the 2021-2022 season, according to reports by Spotrac. 

In an effort to maintain competition between teams and avoid one-team domination, the NBA  set the salary cap to $101.869 million for the upcoming season. This is just one of the measures the league takes to help prevent larger market teams, like LA, New York and Miami, from outbidding smaller markets and stacking their teams with all of the superstars. 

This cap is not an “absolute ceiling”, but any team that exceeds the limit is subject to a “luxury tax”, which penalizes the team by reducing their ability to spend on future seasons. 

Additionally, the new provision in the National Basketball Association’s collective bargaining agreement called the “designated player exception” attempts to help small market teams to hold onto power players, like Gordan Hayward of the Utah Jazz. Hayward played an exceptional season, and would likely leave for a larger market team. However, with the new exception, the Utah Jazz could offer the star player millions of dollars more to stay, only if he is named to an All-NBA team as one of the top six players in his position. “#Stayward”, seems to be the hashtag buzzing around Salt Lake City these days. 

In all major sports leagues, the draft is a great way to help maintain equality amongst teams. Teams pick the top college and international athletes to join their roster with the lowest-ranked teams picking first. 

Are professional athletes overpaid… or underpaid?

Although we know that sports leagues are taking steps to maintain competition, there are still loopholes and there’s no doubt that larger markets will continue to reign supreme. 

But how do these numbers translate? Do these athletes with gargantuan salaries really bring in the numbers? Are they overpaid, or are they actually underpaid? 

According to Forbes, a team’s value is comprised of four factors: Sport, Brand, Market and Arena.

• Sport:  the portion of a team’s value attributable to revenue shared among all teams

• Brand: the team’s specific brand

• Market: the portion that comes from its city and market size

• Arena: the part attributable to its arena (i.e. home game ticket sales, premium seating, & non-professional sporting events)

So lets take some of these factors into consideration.

1. First of all, sports is a significant part of our culture— Sports are everywhere we go; on our TV’s, playing inside restaurants, on the radio and in our communities. Rich, poor, man, woman, republican, democrat, young or old, sports fans have no one demographic. Sports have a huge reach, and the fandom is stronger than ever.

2. “But they are being paid millions to play a GAME”, you say? Although it is a “game”, it is a form of entertainment, and to be able to play that game well IS work. Most athletes have trained their entire lives to get to a coveted professional level. It takes skill, sacrifice and so much more. Becoming a professional athlete is excruciatingly difficult and is one of the rarest jobs ever. Did you know only 0.00014% of the U.S. population has a shot at becoming a professional basketball player and 0.00054% have a chance to become a professional football player? Let that sink in.

3. Superstar athletes are almost irreplaceable. Let’s compare professional athletes salaries to others. An article in Sports Illustrated points out that David Letterman made an annual salary of $28 million, about the same as LeBron last year. When Letterman fell ill, they were able to replace him without a drastic decline in success. However, when LeBron James left the Cavaliers back in 2010, the results were catastrophic; and his impact was recognized as soon as he returned years later.

4. Are sports leagues not making the money back? A study from 2013 concluded that the total revenue by all American sports (including college) was about $60 billion. Most sports teams, if financed properly, do indeed make their money back… and then some. Without these star players, they would have no team, no entertainment, no merchandise, and no ticket sales. 

Do you think sports leagues are doing enough to maintain competition amongst teams? Do you think professional athletes are overpaid or underpaid? As an avid sports fan and long-time attorney in sports and entertainment law, I will refrain from commenting. However, I think sports leagues can rack their brains for creative ways to keep competition between teams stronger so fans (like myself) can experience a better show and those in smaller markets don’t have to worry about their team perishing, or moving to a different location like the San Diego— I mean, Los Angeles Chargers. 

LeBron James has four fiscally fabulous years ahead of him, and certainly LA Lakers fans are thrilled. Only time will tell if he will deliver on these very lofty expectations. If we take a look at his track record, I am guessing he’ll do just fine. 

*Disclaimer – This is in no way to be considered legal advice. An attorney client relationship does not exist from your reading of this blog or your following any of the suggested courses of action above.