1. Rodney Fort's Sports Economics
Chapter 7  The Value of Sports Talent

2. Table 7-1 Details of 50 Top Athletes and Earnings, 2008
Sport
# in Top 50
Top Earner
Salary/Winnings
Total Earnings
Average Earnings
Golf 3
Tiger Woods
$22.9
$127.9
$68.7
Basketball 26
LeBron James
$12.5
$40.5
$22.5
Boxing 1
Floyd Mayweather, Jr.
$20.0
$40.2
Baseball 10
Alex Rodriguez
$29.0
$35.0
$21.1
Football 7
Peyton Manning
$17.5
$30.5
$20.5
Auto Racing
Dale Earnhardt, Jr.
$5.2
$27.2
$23.9
Notes: Salary/Winnings include bonuses. Total earnings includes endorsement income.

3. Figure 7-1 Randy Johnson’s Experience-Earnings Profile
Legend: Charting salary against experience for Randy Johnson (the data are in Table 7-4) generates his experience-earnings profile. It is common for all such profiles increase slowly at first, then rise quite rapidly, tailing off toward the end of a worker’s earning years.

4. Table 7-2 Average and Median Salaries in Pro Sports Leagues (2009 dollars) (slide 1 of 2)
Year
MLB
Average
Median
NBA
NFL
NHL
1988
$816,419
$418,275
1989
$928,576
$640,700
1990
$1,139,051
$287,288
1991
$1,521,713
$912,563
1992
$1,833,106
$665,000
1993
$1,858,988
$669,700
1994
$1,819,792
$702,000
1995
$1,764,147
$381,500
1996
$1,740,254
$521,900
1997
$2,022,230
$673,313
1998
$2,114,003
$712,313
1999
$2,466,003
$626,667
2000
$2,770,623
$1,001,300
$1,298,008
$596,812
$1,799,399
$1,123,750
2001
$3,140,547
$1,305,000
$4,205,421
$2,722,800
$1,656,222
$651,944
$1,983,227
$1,192,461
2002
$3,212,488
$959,438
$4,537,761
$2,632,518
$1,528,949
$634,621
$2,169,924
$1,219,750
2003
$3,291,557
$1,015,000
$4,294,075
$2,527,640
$1,738,428
$667,986
$2,239,329
$1,232,500
2004
$3,120,707
$861,625
$4,175,492
$2,514,160
$1,843,886
$713,793
$1,625,994
$966,830
2005
$3,222,349
$844,750
$4,013,907
$2,725,000
$1,739,966
$635,530
2006
$3,309,486
$984,210
$4,283,071
$2,886,887
$2,064,772
$760,280
$1,856,956
$1,043,252
2007
$3,468,819
$1,042,875
$4,534,432
$2,732,018
$2,023,299
$793,494
$1,986,983
$1,184,500
2008
$3,593,321
$1,064,250
$4,749,908
$3,065,700
$2,183,734
$921,294
$2,211,883
$1,340,213
2009
$3,579,403
$1,243,750

5. Table 7-2 Average and Median Salaries in Pro Sports Leagues (2009 dollars) (slide 2 of 2)
Growth
Rate
From
2000 on
2.40%
2.90%
1.80%
1.70%
6.70%
5.60%
2.60%
2.20%
Notes: Averages assume total payroll reports are for the 25 man MLB roster, 15 man NBA roster, 53 man NFL roster, and 23 man NHL roster.

6. Figure 7-2 Market Equilibrium
Legend: In a two-team league, equilibrium in the talent market occurs where marginal revenues are equal and determine the price of talent. It is easy to see that the imbalance of revenues between the two teams ( for all levels of winning percent) generates competitive imbalance since the larger market team has a higher winning percent in equilibrium, that is,. Further imbalance in revenues also generates payroll imbalance. Spending on talent by the large market owner is larger than spending on talent by the smaller market owner.

7. Table 7-3 Celebrity Pay, 2008 (slide 1 of 2)
Name
Pay ($mil)
Pay Rank
J.K. Rowling
300 1
Oprah Winfrey
275 2
50 Cent
150 3
Jerry Bruckheimer
145 4
Steven Spielberg
130 5
Tyler Perry
125 6
Tiger Woods
115 7
The Police
Jerry Seinfeld 85 9
Jay-Z 82 10
David Beckham 50 16
Phil Mickelson 45 20
Kimi Raikkonen 44 26
Kobe Bryant 39 33
LeBron James 38
Ronaldinho 37 36
Roger Federer 35
Alex Rodriguez 34 41
Fernando Alonso 42

8. Table 7-3 Celebrity Pay, 2008 (slide 2 of 2)
Jeff Gordon 32 44
Shaquille O'Neal
Dale Earnhardt Jr. 31 48
Kevin Garnett 29 52
Maria Sharapova 26 56
Serena Williams 14 73
Justine Henin
12.5 82
Annika Sorenstam 11 86
Lorena Ochoa 10 87
Vanessa Williams
4.5 98

9. Figure 7-3 Ticket Prices and Payrolls, Boston Red Sox (2009 dollars)
Legend: Adjusted for inflation, the average salary paid by the owner of the Boston Red Sox shows two significant episodes of decline. But ticket prices increased over nearly the entire period in the figure. The idea that rising salaries can cause rising ticket prices is not supported.

10. Table 7-4 Randy Johnson’s Pay and Performance (slide 1 of 2)
Year
Team
Wins
Losses
PCT
ERA
Pay ($2009)
1988
Mon 3
1.000
2.42
1989
Mon/Sea 7 13
0.350
5.54
$70,000 ($120,400)
1990
Sea 14 11
0.560
3.65
$150,000 ($244,500)
1991 10
0.565
3.98
$350,000 ($549,500)
1992 12
0.462
3.77
$1,392,500 ($2,116,600)
1993 19 8
0.704
3.24
$2,625,000 ($3,885,000)
1994 6
0.684
3.19
$3,275,000 ($4,716,000)
1995 18 2
0.900
2.48
$4,425,000 ($6,195,000)
1996 5
3.67
$6,025,000 ($8,194,000)
1997 20 4
0.833
2.28
$6,275,000 ($8,345,750)
1998
Sea/Hou
0.633
2.80
$6,000,000 ($7,860,000)
1999
Ariz 17 9
0.654
$9,700,000 ($12,416,000)
2000
0.731
2.64
$13,600,000 ($16,864,000)
2001 21
0.778
2.49
$13,350,000 ($16,020,000)
2002 24
0.828
2.32
$13,350,000 ($15,886,500)
2003
0.429
4.26
$15,000,000 ($17,400,000)
2004 16
0.533
2.60
$16,000,000 ($18,080,000)
2005
NYY
0.680
3.79
$16,000,000 ($17,440,000)

11. Table 7-4 Randy Johnson’s Pay and Performance (slide 2 of 2)
2006
NYY 17 11
0.607
5.00
$15,661,427 ($16,601,113)
2007
Ariz 4 3
0.571
3.81
$9,100,546 ($9,373,562)
2008 10
0.524
3.91
$15,100,546 ($14,949,541)
2009 SF
$8,000,000 ($8,000,000)
Lifetime
303
166
0.646
3.29
Notes: ERA is averaged across teams in 1989 and Lifetime includes partial 2009 performance not shown.

12. Figure 7-4 Ticket Prices and Payrolls, Boston Celtics ($2009).
Adjusted for inflation, the average salary paid by the owner of the Boston Celtics had some significant ups and downs early on. But ticket prices increased steadily over that time. The idea that rising salaries can cause rising ticket prices is not supported.
Notes and Sources: See Figure 7.3.

13. Table 7-5 Major League Payrolls, 2008 ($Millions) (slide 1 of 3)
MLB
Payroll
NBA
NFL
NHL
NYY
$209.1 NY
$97.1   
Oak
$152.4
NYR
$66.1
NYM
$137.8
Tor
$95.4
Dal
$146.4
Cal
$63.1
Det
$137.7
$93.2
Min
$133.4
Phil
$60.5
Bos
Clev
$90.8
$131.9
Otta
$59.8
ChiWS
$121.2
LAL
$80.7 NO
$131.5
Mon
$58.9
LAA
$119.2
$78.7
Pit
$128.8
Wash
$58.5
LAD
$118.6
$77.0
Ten
$126.0
$56.6
ChiC
$118.3
Mem
$75.8
Ariz
$122.1
$56.4
Sea
$117.7
Phoe
$75.4
Jax SJ
$55.8
Atl
$102.4
Orl
$74.9
Chi
$120.1 NJ
$55.7

14. Table 7-5 Major League Payrolls, 2008 ($Millions) (slide 2 of 3)
StL
$99.6
Phil
$74.4    SF
$118.8
Dal
$55.6
$98.3
Sac
$71.5
NYJ
$116.9
Edmon
$54.1
Tor
$97.8
Chi
$116.7
Van
$53.1
Hou
$88.9
Wash
$70.6
NYG
$115.8
Min
$52.9
Mil
$80.9
$70.2
Miam
$114.6
Colum
$52.3
Clev
$79.0
Ind
$69.6
Buf
$113.4
$52.2
$76.6
$68.8
Carol
$112.1
Colo
$51.9
Cin
$74.1 SA
$68.4
$112.0
$51.5 SD
$73.7
Atl
$68.2
$111.8
Bos
$68.7
Char
$68.0
$109.7
Flor
$51.4
Tex
$67.7
Den
$67.1
$109.6
Ana
$49.8

15. Table 7-5 Major League Payrolls, 2008 ($Millions) (slide 3 of 3)
Bal
$67.2 NO
$67.0   
Hou
$108.4
Carol
$49.1
Ariz
$66.2
Utah
$66.3 TB
$104.3
Tor
$48.8 KC
$58.2
Min
$63.5
Sea
$103.0
StL
$45.5
$56.9 GS
$63.3
Atl
$96.4
Nash
$44.2
Wash
$55.0 NJ
$62.0
Det
$95.8
$43.5
Pit
$48.7
LAC
$61.9
Den
$95.6
Phoe
$39.1
Oak
$48.0
OKC
$61.5 GB
$94.0 LA
$36.1
$43.8
Port
$56.2
Ind
$93.4
$34.3
Flor
$21.8
Miam
$50.0 NE
$92.7
NYI
$33.3
$90.7
$83.6
Max/Min
9.6
1.9
1.8
2.0
Max/Median
2.6
1.4
1.3

16. Figure 7-5 Ticket Prices and Payrolls, New England Patriots ($2009).
Adjusted for inflation, the average salary paid by the owner of the New England Patriots showed a number of periods of decline. But during those, there always was at least one significant increase in ticket prices. The idea that rising salaries can cause rising ticket prices is not supported. Notes and Sources: See Figure 7.3.

17. Figure 7-6 Ticket Prices and Payrolls, Boston Bruins ($2009).
Adjusted for inflation, the average salary paid by the owner of the Boston Bruins almost continually increased over time. But ticket prices did not. The idea that rising salaries can cause rising ticket prices is not supported.

18. Table 7-6 Compensation Packages for First-Round NFL Draft Picks, 2009 (slide 1 of 2)
Player
Position
Team
Years
Ave. Salary
(millions) 1
Matthew Stafford QB
Detroit 6
$12 2
Jason Smith OT
St. Louis 5 3
Tyson Jackson DE
Kansas City
$11 4
Aaron Curry LB
Seattle
$10
Mark Sanchez
N.Y. Jets
Andre Smith
Cincinnati $7 7
Darrius Heyward-Bey WR
Oakland $8 8
Eugene Monroe
Jacksonville 9
B.J. Raji DT
Green Bay $6 10
Michael Crabtree
San Francisco
(unsigned at press) 11
Aaron Maybin
Buffalo $5 12
Knowshon Moreno RB
Denver 13
Brian Orakpo
Washington $4 14
Malcolm Jenkins CB
New Orleans 15
Brian Cushing
Houston 16
Larry English
San Diego

19. Notes: Includes total package signing bonuses.
Table 7-6 Compensation Packages for First-Round NFL Draft Picks, 2009 (slide 2 of 2) 17
Josh Freeman QB
Tampa Bay 5 $7 18
Robert Ayers LB
Denver $3 19
Jeremy Maclin WR
Philadelphia 20
Brandon Pettigrew TE
Detroit 21
Alex Mack C
Cleveland 22
Percy Harvin
Minnesota 23
Michael Oher OT
Baltimore 24
Peria Jerry DT
Atlanta 25
Vontae Davis CB
Miami 26
Clay Matthews
Green Bay 27
Donald Brown RB
Indianapolis 28
Eric Wood
Buffalo 29
Hakeem Nicks
N.Y. Giants 30
Kenny Britt
Tennessee $2 31
Chris Wells
Arizona 32
Evander Hood
Pittsburgh
Notes: Includes total package signing bonuses.

20. Figure 7-7 Hypothetical Demands for Teaching and Athlete Services
Legend: Even though society is willing to pay more for teachers than for sports stars, as revealed by the higher demand for the former, supply also matters. Equilibrium in the market for teachers occurs with ST units of teaching services hired at a wage equal to WT. In the market for stars, the result is SS units of star services hired at WS. Since so many more teachers than stars are available at each possible wage, earnings by teachers are lower, that is, WT > WS.

21. Table 7.7 Matthew Stafford Contract Details
Year
Guaranteed
Bonuses
Discounted
No Option
Option
2009 $0
$3,100,000
$2,924,528
2010
$3,480,000
$3,097,188
$3,875,000
$3,448,736
$9,500,000
$8,454,966
2011
$2,921,875
$4,650,000
$3,904,230
$9,000,000
$7,556,574
2012
$2,756,486
$5,425,000
$4,297,108
$10,500,000
$8,316,983
2013
$2,600,458
$6,200,000
$4,633,001
$11,500,000
$8,593,469
2014
$2,453,263
$11,000,000
$7,754,566
Totals
$17,400,000
$13,829,270
$23,250,000
$19,207,603
$54,600,000
$43,601,086
Notes: The option bonus must be paid in any event. If Stafford fails to take 35 percent of the snaps in 2009, the “No Option” case holds. If he does, the “Option” case represents the highest pay to Stafford.

22. Figure 7-8 Men’s and Women’s Golf Lorenz Curve
Legend: The farther the actual Lorenz Curve bows away from the 45-degree line, the more unequally shared is the purse. The Gini Coefficient is the ratio of the area between the 45-degree line and the Lorenz Curve to the area under the 45-degree line. The closer the Gini Coefficient is to one, the more unequal the outcome. Gini Coefficients of and are very high, indicating unequal outcomes in both women’s and men’s golf purses.Notes: Men’s tournament is the Players’ Championship, Women’s tournament is the 2004 U.S. Open.

23. Table 7-8 Purses and Shares in Tennis and Golf Majors
Men's
Purse
Winner's Share
Women's
Tennis 2004
Australian Open
$19.0 million
$924,480
French Open
$8.3 million
$1.04 million
$7.56 million
$1.02 million
Wimbledon
$9.9 million
$1.10 million
$7.82 million
U.S. Open
$17.8 million
$1 million
Golf 2003
Masters
$6 million
$1.08 million
$2.1 million
$320,000
$3.1 million
$560,000
British Open
$6.2 million
$1.1 million
$1.6million
$240,000
PGA
$1.6mi1
Notes: Tennis purses for U.S. Open and Australian Open are the total for both men and women; separate amounts not reported. The French Open purses do not include mixed doubles, men's seniors, or per diem. Total: $17.6 million. Currency converted at current rates.

24. Figure 7-9 Fan Discrimination
Legend: Favored race players have an MRP that includes the race premium put on them by fans. As a result, relative to their MRP in the absence of such favored status, more of their services are hired in the presence of fan discrimination, SR > SA, and they are paid more, WR > WA.

25. Figure 7-10 Employer/Teammate Discrimination
Legend: Favored race players have an MRP that includes the race premium put on them by employers or teammates. As a result, relative to their MRP in the absence of such favored status, more of their services are hired in the presence of employer/teammate discrimination, SR > SA, and they are paid more, WR > WA. However, in this case, the employer bears the cost of the premium since fans do not share their preference and will only pay according to the actual MRP. In order to have favored race players, the owner pays a wage, WR, in excess of the value to fans give by Actual MRP. The owner’s excess payment is equal to the shaded area