MONEY PLAYS
Why professional athletes are making so much money
The supply and demand chain that fuels the incredibly profitable sports industry.
The supply and demand chain that fuels the incredibly profitable sports industry.
$1.1 billion for one season. That’s the offer that Saudi Arabian club Al-Hilal offered Kylian Mbappe in July to switch teams from Paris Saint-Germain.
The offer — the biggest contract in all of sports history — included a $776 million salary for the single season along with a $332 million transfer fee paid to PSG. While Mbappe did not ultimately accept the offer, the contract serves to show just how much money there is to go around in the sports world.
Sports is undoubtedly one of the largest industries in the world. Last year, the total revenue from the global sports industry was equal to almost $487 billion. Not millions — billions. The market is growing rapidly and estimated to be worth more than $623 billion by 2027.
Given this, it’s no shocker that the athletes themselves are making six-plus figures. LeBron James is currently signed to a two-year contract with the Los Angeles Lakers for $99,023,288. Bear in mind, this is not taking into account his Nike brand deal and so many more. According to Forbes, James’ net worth is estimated at one billion dollars this year.
It does anger some people to think that athletes are making more money in one season than most people can dream of in an entire lifetime. Doctors try to save people’s lives, environmentalists try to save the Earth and athletes are saving us from … mundane lives? What does that imply about our society and what we value?
On the surface, I understand how absurd and unfair million dollar salaries paid to athletes sound. But they shouldn’t come as a shock. Celebrities carry an insanely large cultural influence, and to accompany that, large sums of money.
The more people that go to see a movie, the more money the actors will make. The more a TikTok video gets, the more money the creator will make. The more likes an Instagram post gets, the more money the influencer will make. Now, I’m no expert in business, but based on my general knowledge combined with the one economics class I took, I know it’s all about supply and demand.
Regardless of a person’s occupation or day job, chances are they are consuming some form of sports media. Whether it is putting on the game after work, going tailgating with friends, or even hosting barbecues and watch parties on the weekend, consumers are the ones feeding into this massive industry. This is just the surface level of the ordeal — there are ticket sales, merchandise, advertising, title sponsorships, television rights … and the list goes on.
Sports is only such a massive and profitable industry because of the enormous global fan bases that love it. If there was not such a high demand for these athletes and their performances, the industry would not be turning over so many figures a year. Brands put big money into sponsorships and endorsements because they know how lucrative it will be for them long-term.
In the realm of collegiate athletics, thanks to name, image and likeness, student-athletes have the opportunity to tap into this money-making machine themselves — and accrue enormous value before even going pro.
Bronny James — LeBron’s oldest son — is starting his college career this year as a freshman here at USC. Bronny’s income started way before stepping foot on campus, though.
The freshman phenom already has deals with brands such as Nike and Beats by Dre. His NIL valuation is $5.9 million, according to On3 NIL, setting him at the number one spot on its NIL 100 Rankings of all college athletes — and all of this comes before his first college season has even begun.
While I believe the money being thrown around is insane, there are obvious and valid reasons why it happens. People consume sports in crazy amounts. Vis-á-vis, money goes around in crazy amounts within the industry.
So, the next time you find yourself frustrated thinking about how much more money athletes are making than you ever will, think about the last time you fed into the supply and demand chain.
Anjali Patel is a senior writing about the expanding landscape of business and legality of sports in her column, “Money Plays,” which runs every other Thursday. She is also an associate managing editor at the Daily Trojan.
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