The Millionaire Next Door

There Ought to be a Law!

Football season is in full swing!  I agree with those who say it is the best sport in the world. I enjoy watching professional football, but there is a problem.  More and more the press is focusing less on the actual play of the game and more on ancillary issues. For example, I am really not interested in how much player X is paid compared to player Y. This issue of income is particularly bothersome to me as someone who studies the affluent population.

Earlier this year USA Today published the salaries for NFL players.  [3/9/10-Player Salaries ]. The reason I kept this article in my file is because it confirms what I suspected.  Most NFL players do not make $10M or $15M a year. In fact, most of them do not make $1M or more per year.  Of course, in the context of the typical American household, NFL players do quite well.  The median household annual income is about $53,000. 

In about 2 out of 3 teams, the median annual income for a player is under $1M.  In fact, for 2009, the median income was $790,000. Perhaps there ought to be a law! Anytime the press speaks of someone like Chris Long earning over $16M a year playing for the St. Louis Rams, it should be required to mention that the median team income is $541,630. It should also be required to publish the income of the sports agents who represent the highest income producers in the NFL. This may encourage youngsters to obtain a law or accounting degree and then become an agent!  

But in terms of the U.S. population of the those who make $10M or more annually, the NFL is in the minor league. From what I can gather, less than 50 NFL players make $10M or more. There are nearly 20,000 Americans who generate an annual income of $10M or more.  The majority of them are highly successful business owners; some of these own NFL teams.  Perhaps they should have their income published as frequently as the players.  

Making $10M or more annually even in America is a long shot: about 1 in 6,252.  Contrast this to making a perfect score on the SAT: 1 in 1,000.

8 thoughts on “There Ought to be a Law!”

  1. I just sent this article to my husband for his son (8) who thinks he is going to grow up and be a pro basketball player with parents who are 5’1″ and 5’9″ ha ha

    Anyway, I wish more of the information you share in this article was advertised.

    We continue to remind my step son that engineering is a good back up plan in case his basketball dreams don’t become profitable. His dad and I are both engineers.


  2. I’m not sure what the point of this blog posting was. Does Dr. Stanley honestly believe that there should be some sort of disclosure requirement that reporters discussing player salaries also mention median player salaries and the salaries of agents? Why? There is no question that making millions as a pro athlete is a supreme long shot. People aren’t going to stop trying to reach the pros just because they are armed with the knowledge that the median salary is significantly less than that of team stars. Frankly, the odds are equally long that someone becomes a successful agent of a professional athlete.

    In any event, who cares? People like knowing the salaries of the players because they are so obscene. Also, who you have on your team playing the game goes a long way to deciding whether your team wins or loses on the field. People and athletes are not fungible. It is fun to compare the salaries of different players and analyze productivity to see whether a particular player is a “good deal” or not based on how he plays.

    Also, I think your analysis misses out on the fact that a good deal of player compensation (particularly in the NFL) comes in the form of a bonus when a contract is signed and is not accounted for in the yearly salary.

    I generally enjoy these blog postings. This time though, I think you stepped out of your area of expertise. With all due respect, you can do better, Dr. Stanley.

  3. Michael of Massachusetts

    I agree, let’s just enjoy the sport, if the guy has succeeded in making it to the NFL, then God bless him, and if the fans that buy the products and fill the seats want to support those salaries then God bless them too! Let freedom ring loud and clear and I hope they have someone in their lives that can give them sound counsel on how to save some of that income for the time when they will not have it! All good athletes have a brief moment in the sunshine! Thanks as always Dr. Stanley!

  4. @Megan, I believe he means that $53k is the median household income for the typical household whereas the NFL household income median is $790k. I’m not sure how the context of the article makes this seem low.

    Great article Dr. Stanley.

  5. The other fact that is germane to this discussion is the typical length of a NFL player’s career. I recall reading somewhere that the average career length is only around three years. While 3X the median salary of $790,000 is still a chunk of change to earn in three years, what are the future career prospects for a former, possibly injured, NFL player?

  6. Something that is overlooked or unknown is the fact that every professional athlete must have a tax accountant/CPA. From golf to baseball to poker player, you name it, if they get paid to play then the state where they play the game wants their cut(unless there isn’t a state income tax). It’s a nightmare trying to file taxes in every state especially for baseball players. Think about it, just for baseball there are 165 games and roughly half are played at home and the rest on the road. Then with interleague games even more states were added to the mix. So while it may be too tough to get to the top of the pyramid as a professional athlete or agent, there will never be enough accountants etc. Wish I had paid more attention in school.

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