Athletes Pay: One Slice of the Pie
- C&C
- Jul 31, 2021
- 5 min read
Updated: Aug 4, 2021
The American entertainment industry is a colossus the likes of which history has never seen. Those who profit in it are darlings of our attention. With our attention they garner the big bucks.
With social media, radio, and cable television, entertainers have multiple mediums on which to attract eyes and ears. Where there are eyes and ears, there are also wallets. Enterprising corporations, big and small, advertise to those eyes, ears and wallets.
Effective advertising is about reaching the right people at the right time, with a persuasive message. One way corporations achieve this trifecta of successful advertising is to blanketly broadcast their message to anyone who will listen. It's the shotgun method.
In the 20th century, television advertising became king. While Facebook and Google rake in the earnings from advertising on digital highways, television broadcasters like NBC and ABC do very well for themselves in their now traditional space. Whether for the Olympics or the Super Bowl, television advertisements continue to reach many people and continue to charge advertisers large sums. This is despite the fact that the DVR has made the televised ad all but obsolete.
The only time people actually watch television commercials is during the Super Bowl. The game can be crap, but the commercials can make up for the loss, generating a laugh or maybe inspiring a tear. Oddly, it is now tradition for corporations to throw their biggest and best attempts at hitting the advertising trifecta during the Super Bowl. Knowing this, television broadcasters charge top dollar for slots during the event. Of course, a ton of people watch the Super Bowl as well.
According to the New York Times, the National Football League’s Super Bowl drew over 91.6 million viewers in 2021 and 114 million viewers as recently as 2015. Accordingly, Statistica’s Christan Gouch reports that a 30-second ad slot during the 2021 Super Bowl cost an average of $5.6 million. If anyone is wondering, I am, advertisers paid about 5 cents for every second of each individual’s time during the 2021 event.[1][2]
With all that money flowing into the event (and others like it), how much are the entertainers paid?
The short answer is, a lot. That information is public.
In a consumer economy like ours, economic output drifts to the tastes of consumers. While not all economic output is so determined, the majority is. Entertainment is a highly democratic industry in which cheers, boos and eyes are votes. While cheers and boos are assigned different values per the athlete or actor, eyes and ears sustain more or less singular- though geographically dependent- values.
Good movies, music and sports are a priority for many Americans. The level of priority is reflected in their prices. Movie tickets cost $10. Sports tickets cost $40. Music concert tickets cost $80. Cable packages cost upwards to $1,200 a year and music festivals cost upwards to $380 for a weekend. The American consumer is willing to pay top dollar for good entertainment. Not just once, but routinely. As a matter of fact, DAILY.
Ticket sales, sponsors, merchandising, advertising, and television deals contribute to the earnings that make up the economic output of the entertainment industry. Those earnings are then sliced among the entertainers, stagehands, managers, and owners. In one case, the MLB generates over $10 billion a year. The best player in the game, Mike Trout, is currently on a 12-year contract worth $426 million. upon the news, few people even batted an eye. The same is true of the NBA's top three player, Stephen Curry, who just signed a 4-year $215 million deal. No one is terribly shocked by the sum.
Despite the size of these sums, sport, movie, and music stars are not the object of the public's consternation when the economy goes to hell.
In 2008, the term “the 1%” became synonymous with big banks and black suits. That representation has held over the last 13 years. But right before our eyes, entertainers make big money. It is all too banal to cast doubt on the utility of a 100 mph fastball, and this is especially true during a recession.
So I have two questions.
One, how many athletes make over $1 and $10 million?
Two, what proportion of those earning brackets is athletes?
First, we have to know how many American taxpayers make over $1 and $10 million. The IRS issues a report every year disclosing how many returns meet those figures. The most recent numbers are for tax year 2018. I isolated the data to individual income, excluding real estate, and found 607,541 and 26,517 returns showing earnings of $1-10 million and earnings over $10 million, respectively.
Spotrac.com provides lists of active athletes’ contracts in every major American sport. I took the lists for the MLB, NFL, NBA and NHL and counted the number of contracts that paid over 1$ and over $10 million. I would prefer lists from 2018, but unfortunately that would be too time consuming to assemble on my own. I thank Spotrac for doing what they do.
Before continuing, I would like to address the discrepancy between IRS data for tax year 2018 and 2020 and the contracts for 2020-21. It may be significant, but I don't think it is. However, I could make a prediction of $1-10 million and over $10 million tax returns based on the 5-year trend, see table 2, but for the purposes of a cocktail hour factoid, we will stick to “close enough.”
There are other major sports, but we can assume that the contracts front he big four North American sports make up the grand majority of those earning these figures. The table below shows how many athletes’ contracts (excluding endorsements) in each league meet the income brackets as differentiated by the IRS:
Table 1: Athlete's Contracts' [3]
From here on, it’s just simple arithmetic.
Athlete’s who make $1-$10 million, 2372, divided by the number of IRS individual income returns between $1-10 million, 607,541, equals 0.0039, or 0.39%.
Athlete’s who make over $10 million, 461, divided by the number of IRS individual income returns over $10 million, 26,517, equals 0.0174, or 1.74%.
For reference, of the 150,927,628 total individual income tax returns ("positive income") filed for tax year 2018, 607,541 and 26,517 represent 0.395% and 0.017% of all returns. Therefore, Athlete's are among the so-called one-percenters, as one percent of the one percent.
Well, there you have it!
Athlete’s from our major sports make up roughly 0.39% and 1.74% of all income earners making between $1-10 million and over $10 million, respectively. For me, it is a shocking sum. I thought that athletes would make up a far greater proportion of high income earners. I underestimated just how many high earners there are. Frankly, 607,541 is a tremendous figure!
Enjoy your next cocktail party.
Maybe, I'll see you there.
Table 2: IRS Individual Income Tax Data, "Positive Income", 2018 [4]
Footnotes:
1) Kevin Draper, “Super Bowl Ratings Hit a 15-Year Low. It Still Outperformed Everything Else.” February 9, 2021. New York Times: New York. Accessed 7/25/2021:
2) Christina, Gough. “Average cost 30-second Advertisement Super Bowl US broadcast 2002-2021.” February 11, 2021. Statistica. Accessed 7/25/2021:
3) https://www.spotrac.com/ Accessed 7/25/2021
4) Internal Revenue Service. "IRS Data Book, 2020." Publication 55-B: Washington, D.C. 2020. Accessed 7/25/2021:
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