NBA Stars Won’t Become Billionaires Like MJ Because They’re Drastically Underpaid

03.02.15 3 years ago 18 Comments
Michael Jordan

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There’s an important distinction between being wealthy and rich: the former gives you power, agency and ownership, while the latter means you’ll live comfortably and your kids probably will, too.

We’ve heard a lot of people complain about Carmelo Anthony making close* to the maximum allowable when he signed a five-year, $124 million deal with the Knicks as a free agent this past summer. The same could be said for Kobe Bryant’s two-year, $48 million extension last season — particularly coming back from an Achilles injury then a fractured kneecap. Fans seem to think players should take a discount so their teams can afford to fill in the complementary stars and necessary role players they’ll need to be a true title contender within the relatively stringent guidelines of the NBA’s collective bargaining agreement.

But as news of Hornets owner and Hall-of-Famer Michael Jordan being the first billionaire athlete makes the rounds again today, following his inclusion on Forbes’ 29th Annual billionaire’s list, it’s worth wondering why there isn’t already a generation of billionaire NBA players. It’s easy: the owners don’t want to pay a true free market price for a star.

We always put the question back on whomever asks us about the seemingly gargantuan salaries NBA stars pull down: would you take a paycut to help your company flourish when you had no monetary incentive to do so? Of course you wouldn’t — that’s why companies offer stock; it’s the dangled carrot smart employers offer to maximize a worker’s potential. We’re all going to work harder if it directly affects our bank accounts.

Instead of this, NBA owners work a system where they can pay less than market value for a superstar, then ride that superstar to incredible profits. You know, like the nine-year, $24 billion TV-rights package that’s set to begin with the 2016-17 season.

Sure, there are all sorts of issues that will come with the new TV-rights money: chief among them, how it’ll affect the NBA’s yearly salary cap, since that number is derived by looking at the Basketball-Related Income (BRI) NBA teams make. With the influx of the new cash, there has even been talk of “smoothing” the drastic cap increase, further screwing NBA players out of the money they should be making when you look at their team’s return on investment. Simply put: NBA stars are severely underpaid.

This gets lost when you look at the average yearly NBA salary (now over $4 million a year), some of the max deals certain players have signed, or the $8.5 million the Magic are paying Channing Frye to put up stat lines like this.

LeBron James

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LeBron is a good starting place since he’s probably the most popular player in the NBA — and so makes the NBA the most from an individual standpoint. But how much would LeBron James really make on the open market? He’s got a player option this summer, so he could be a free agent again in July.

Slick haired ESPN moneyman Darren Rovell put the figure at $161.3 million over three years when James was a free agent last July. Deadspin put the total at over $44 million in LeBron’s last year in Miami — when he made only $19 million on a less-than-max deal.

So, mortgage-backed securities robber baron Dan Gilbert is getting a BIG deal when he pays LeBron James a little over $20 million this year. LeBron is worth at least twice that and maybe more if he was on a true open market. Yet that $20 million is the most LeBron can make this season under the NBA’s current CBA.

Yes, we’ve looked at this before, and if the NBA were an uncapped league, mid-market and small-market teams couldn’t compete. But we’re looking at this from the player’s angle, specifically an NBA star’s purview, since they’re the ones who are most severely penalized. The disparity between a capped and uncapped NBA is the same one that differentiates true wealth and just rich.

There’s only one African-American NBA owner today, Michael Jordan, and he didn’t gain his billion by what he was paid on the basketball court. In fact, Jordan was woefully underpaid for most of his career, preferring to fulfill his laughable early-career contracts then renegotiate.  But Jordan had Nike money coming in, which helped buttress the disparity between what he was worth and what he earned from Chicago’s notoriously frugal owner, Jerry Reinsdorf. Plus, MJ’s agent David Falk was smart enough to negotiate Jordan’s own brand as part of his second deal with Nike — after the Air Jordans had flown off the shelves. Jordan Brand now nets MJ over $100 million a year in royalties alone.

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