Should NBA Players Get Paid Less?
Across the wide spectrum of the sporting world, NBA players are some of the highest and best compensated athletes. Averaging annual salaries in excess of $7.5 million, NBA players typically have secure and guaranteed contracts, ensuring that the money owed to them will be appropriately paid.
But the conversation of pay has come into the spotlight recently, particularly when comparing the significant pay disparity between the men’s game at the NBA and the women’s one in the WNBA. With players in the WNBA averaging just $120,000 per year, the stark difference between the two has people asking, should NBA players get paid less?
Below, we are going to look into just whether or not NBA players should be paid less and if they are overpaid. In addition, we will also touch on how an NBA players performance and accomplishments on the tea can help contribute to both the individual franchise team and the league as a whole.
NBA Players Are An Asset to a Team
Yes, NBA players are paid a lot. And yes, one could argue, that NBA players are overpaid. However, it is important to consider who is paying these players’ salaries. And for that, we will need to look to the owners of the individual franchise teams.
Simply looking at a sample size of some NBA team owners, we can see that the average owner of an NBA team is worth several hundreds of millions or billions of dollars.
- Daniel Gilbert, Cleveland Cavaliers: $7 Billion
- Tom Gores, Detroit Pistons: $5.7 Billion
- DeVos Family, Orlando Magic: $5.4 Billion
- Micky Arison, Miami Heat: $5.2 Billion
- Tilman Fertitta, Houston Rockets: $4.7 Billion
- Mark Cuban, Dallas Mavericks: $4.3 Billion
- David Blitzer and Joshua Harris, Philadelphia 76ers: $4.2 Billion
- Jamie Dinan, Wes Edens and Marc Lasry — Milwaukee Bucks: $4 Billion
- Peter Guber and Joe Lacob, Golden State Warriors: $3.8 Billion
- Gayle Benson, New Orleans Pelicans: $3.2 Billion
- Glen Taylor, Minnesota Timberwolves: $2.9 Billion
- Tony Ressler, Atlanta Hawks: $2.9 Billion
- Herb Simon and Stephen Simon, Indiana Pacers: $2.6 Billion
- Michael Jordan, Charlotte Hornets: $2.1 Billion
- Miller Family Trust, Utah Jazz: $1.7 Billion
- Jerry Reinsdorf, Chicago Bulls: $1.5 Billion
- Ted Leonsis, Washington Wizards: $1.4 Billion
- Clayton Bennett and the Aubrey McClendon Estate, Oklahoma City Thunder: $1.2 Billion
- Robert Epstein, Irving Grousbeck, Wycliffe Grousbeck, Boston Celtics: $850 Million
- Vivek Ranadive, Sacramento Kings: $700 Million
- Robert Sarver, Phoenix Suns: $400 Million
And these NBA owners are rewarded handsomely when their team succeeds. Looking at current NBA franchise valuations, the Golden State Warriors are currently ranked second behind the New York Knicks with an estimated valuation of $5.6 billion.
The Warriors, though, were most recently purchased by Peter Guber of Mandalay Entertainment and his partner Joe Lacob, in 2010, for a then record $450 million. That is, in just a little over a decade, the Warriors have been able to increase the franchises valuation by over 1,144%.
Clearly, for the owners of the Warriors, investing in high-quality, excellent players has long-term value and can substantially increase the overall value of their stake in the franchised team.
The NBA is a Business
Whether unfortunate or not, the NBA is, above all else, a business that engages in the entertainment industry. The NBA and its franchise owners are continuously looking at the bottom line and for ways to increase profits while reducing overall costs. That is, the NBA is not a non-profit.
And business has been good.
The average NBA team value is now over $2.2 billion, a modest increase of 4% from 2019. And that is just valuation, which does not take into account yearly revenue and net profit which is measured by earnings after interest, taxes, depreciation, and amortization.
And even with the pandemic effectively decimating the NBA season last year, with the absence of home games and ticket sales, average team profits fell only 12% to $62 million. Let me repeat that, without ticket sales, fans, and food sales, the average profit for an NBA team was still $62 million.
And if we look at just the most exclusive, biggest markets, specifically the New York Knicks, the Golden State Warriors, and the Los Angeles Lakers, their valuations cross $4.6 billion.
Again, that is just the valuation. These teams continue to generate operating income, that is the amount of profit realized after deducting operating costs and expenses, such as wages and depreciation, in excess of $155-200 million annually.
Elite Players Fill Stadium Seats
We’ve already established that the NBA is a business. And as a business, it is in the interest of each franchise owner to maximize profit while minimizing costs. And while we as casual fans may believe that franchise owners are limited to ticket sales to make a profit, nothing can be further from the truth.
Rather, NBA franchise owners have a plethora of sources to generate additional revenue and income. And these revenue sources occur both during the season and the off-season.
By far, one of the most lucrative sources of revenue for both the league and its franchise owners are television revenues. TV deals are one of the most attractive options for both the league, its franchise owners, its players, and their fans.
TV games are broadcast to millions of households and live sporting games remains one of the most popular forms of entertainment, even as more-and-more households are cutting the cable cord and moving to streaming services such-as Netflix and HBO Max.
But these tv deals are not cheap. For instance, for the 2016-2017 season, ESPN and TNT re-upped their NBA contracts at an approximate cost of $2.6 billion per year for 9-years.
Similarly, the NBA and its franchise owners engage in merchandise deals. These merchandise deals account for well over a billion dollars annually and include the sale of player jerseys and team specific outerwear and insignia.
And further, NBA franchise owners understand that recruiting elite players can fill their stadiums with fans. These fans not only spend on concessions but are more likely to be willing to spend on authentic merchandise and gear which proudly displays their favorite player and team.
NBA Players Work Hard to Make it to the League
The NBA, for a basketball player, is the pinnacle of their career. The countless hours spent in the gym, on the basketball court, and reviewing tape has all been done to lead them to the league. And while NBA players are paid handsomely, that pay is a direct result of multiple decades of hard work, perseverance, and commitment.
And for every player who does make it to the NBA, there are countless others who do not. NBA players are the epitome of basketball greatness and have worked tirelessly to reach the position they are in and the pay is meant to reflect that work and that commitment.