When did athletes get so rich?

Stephen Curry's yearly salary is a cool $34 million. Where did all this money come from?

nolan ryan warming up money
(Image: Chuck Andersen/Wikimedia Commons/Big Think)
  • Athletes didn't start to make serious money in the U.S. until Curt Flood sued baseball.
  • The emergence of television advertising also began to play a role.
  • The purchasing power of the average American hasn't moved since the 1970s.

There have always been rich athletes, but it is not unreasonable to suggest that today — in this century — there are more rich athletes now than there used to be. If we're to define 'now' as occupying the 20th century and 'rich' as getting paid more than one million dollars per year, then we can say that some of the first 'rich' athletes of our modern times included Dave Parker (MLB), Nolan Ryan (MLB), Moses Malone (NBA), Bobby Orr (NHL), Derek Sanderson (NHL), and Lam Jones (NFL.)

There were certainly rich players before the modern age. Not only was the Roman athlete Diocles purportedly worth $15 billion at the end of his life, but Babe Ruth, the Sultan of Swat, who nearly made the equivalent of one million per year during the height of his powers, was so comfortable with his wealth that he was rumored to have thrown a piano into a lake to test his strength. But there's a reason why athlete wealth has hit new heights.

The powder keg

So what prompted the change? What took us from an era of soccer players being former coal miners to soccer players being rich? What sparked the sudden contemporary surge? The short answer: The re-establishment of sport as a modern spectacle, free agency, and television.

Free agency is when an athlete, in effect, offers themselves up to highest or best bidder. And, until relatively recently, that wasn't the case. From 1879 to 1975, the 'reserve clause' was the rule by which American sports teams operated. A 'reserve clause' effectively meant that a player could not negotiate a contract with another team. A player could be traded, sold, or released at a team's whim.

One reason why this problem persisted for so long — why a team could buy or sell a player without so much as a question put to the player — was the fact that Major League Baseball had an exemption from federal Antitrust laws. Why? A decent argument could simply be central position baseball occupied in American culture. Judges knew what baseball meant, so they kept finding ways to 'protect' it.

The reserve clause finally began to change when Curt Flood refused a trade from the St. Louis Cardinals to the Philadelphia Phillies in 1969. He objected to how poorly the Phillies had been doing, the quality of the stadium, and his concern over encountering racist fans.

Flood eventually sued Major League Baseball. The case made its way to the Supreme Court, which ultimately sided with Major League Baseball. Flood was blackballed from the game. It wouldn't be until 1998 that Congress would officially pass the Curt Flood Act to recognize the fact that players officially have a right to their free agency (though nothing was mentioned in the Flood Act about team relocation, broadcasting agreements, and more.) Sports had, by then, gained a series of rights through incremental steps taken by collective bargaining.

Additionally, television ads brought (and continues to bring) money to the game. Consider that the Dodgers made nearly $200 million from TV advertising and broadcasting in 2016. NFL TV ad revenue hit $3.5 billion in 2017. March Madness made $1.2 billion from advertising in 2018. TV ad revenue nearly accounts for 40% of hockey player salaries.

But beyond free agency and television, it's also worth noting that the presence of certain players alone caused the price of athlete salaries to jump. In 1995, Patrick Ewing was making a little over 18 million dollars with the New York Knicks and was the highest paid player in the league; the next year saw Michael Jordan make over 30 million with the Chicago Bulls.

A period of growth

How much have athlete salaries have grown since the 1970s or 80s? How do these wages compare to the average American?

The wages of athletes in the NBA have increased 344% between 1980 and 2016, 304% in Major League Baseball, and 266% in the NFL. (As of this writing, we have yet to come across relevant NHL-related data.)

During that period — nearly three decades — the average American worker has not seen their purchasing power move. In 1981, indexed for inflation, the average American made a salary of $13,773. As of 2017, the average American salary is $50,322 per year. That's an on-year percentage increase, but there are reasons why that isn't good enough: the price of schools has gone up. The price of housing has gone up. To summarize in extremis the well-researched thesis of The Two-Income Trap, parents have been increasingly financially punished for being parents for the past 40 years, forever pushed into paying more and more for the necessities of life.

As of 2016, the highest average player salary breaks down as follows: The average NBA player makes $6.25 million per year; the average baseball player makes a little less than $4.6 million per year; the average hockey player makes a little less than $3.1 million per year; and the average American football player makes $2.1 million per year.

Do athletes deserve that much money?

Yes. Even as they've made more money over the past thirty-some years — even if we're to skip past the fact that athletes making more money overall is a comparatively recent historical trend; even if we're to point out something a little bit more situational, like the fact that Liverpool F.C. used to be comprised of literal coal miners — the legal structure in place in which these sport teams operate are still abnormally tilted in the direction of the owners.

And it isn't just that athletes deserve the money; it isn't just that college kids deserve the money or, at least, more options for them to choose from. It isn't just that payment toward athletes and student athletes needs to be much more reflective of a commitment to racial equity. It's that athletes deserve a stable exit path for when they leave the sport that they play, too.

Per a 2009 Sports Illustrated article, 78% of NFL players go broke within the first two years after they leave the NFL. Of NBA players, 60% go broke within the first five years after they leave the game. J.R. Richard — a star pitcher with the Houston Astros — was homeless for two years (even sleeping beneath a bridge) before getting a job with an asphalt company.

The story of rich athletes in our modern times is both a simple story and a complicated story. The examples are bright and present enough in all our lives for all of us to see, but — if we poke at the contours of the system just a bit; start to ask why things are the way they are just a bit — we'll begin to get a sense of a long-standing historic financial structure that privileges the wealthy and the few.

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