Pro Athlete Salaries: Let the Market Rule

With the arrival of "Midnight Madness," colleges across the country are gearing up for an exciting season. But while fans of college basketball are warming in front of the television, fans of pro basketball are being left out in the cold, due to the current NBA labor dispute. Previously, the NBA had never missed a regular-season game due to any kind of work stoppage, but now all games scheduled for November have been canceled. The NBA had enjoyed a very rosy relationship with its fans, but now that may be jeopardized. But since this stoppage is not the result of striking players, the fans may return more quickly than it might seem.

That wasn't the case for Major League Baseball, where it took a three month home run chase three years after the strike to bring fans back. The fans' distaste for the strike developed because the players were seen as spoiled crybabies, with only money for a goal. The fans saw these players as overpaid, making well beyond what might seem necessary. But is that really the case? Or are pro athletes justified in making large amounts of money?

Often people will say something like, "They just shouldn't make that much money" or, "I can't see why they are paid so highly." Other times an athlete's salary will be contrasted with that of the average teacher's, or of a factory worker, showing a vast difference for seemingly far less valuable work. One recent article talks about the plight of concession employees or ticket takers, who aren't working because of the lockout. But these differences of income is not the sole fault of the players, though they sometimes hold out for weeks in order to haggle over salary. Nor is it the sole fault of the owners, even if they sometimes pay an athlete far more than market value in order to lure them to a certain team. Instead, if a large part of the blame goes to anyone, assign it to economics.

What should be measured in determining an employee's salary is productivity. Clearly, the players of the NBA are tremendous athletes. Since the NBA is currently the most prestigious pro basketball league, it will have the best players, who then receive the best salaries. "They get millions for playing a kid's game," the critics point out. "Yet the guy who cleans their showers gets just a few dollars an hour for filthy work." The situation must be thought of in terms of productivity. There are only a few hundred people in the entire world who can play basketball at such a high level. These people are more productive doing this than anyone else. If the star athlete and the janitor switched jobs, what would be the result? The shower would get cleaned just as well as it did before, but the quality of the pro sport being played would fall like a rock. The term for this is comparative advantage, and it's the foundation of all economic activity.

So what does this mean for conservatives? As advocates for a free market, conservatives should not see the salaries of these players as unfair, unequal, or greedy. They should be seen as compensation for very specialized talents. These players should be thought of in the same category of people such as Bill Gates, Warren Buffett, or the Forbes family. The players, like these businessmen, have very valuable talents, and should be compensated accordingly. There are very few people who can steer Microsoft to amazing progress and profits as well as Bill Gates has. That's why he's worth billions. Michael Jordan can do things virtually no one else can, and that's why he has a very large income as well.

Unfortunately, there is often a knee-jerk reaction to the announcement of the latest lucrative contract. But logically thinking, this is not necessarily the fault of the players. The owners all compete over the same pool of talent, driving up salaries. They must then pay these players via revenue from ticket and merchandise sales. So in reality, if fans are truly irritated with the escalating salaries, all they must do is stop attending games and buying NBA merchandise. The market should rule, instead of having some law or rule against high salaries. Arguably, the salary cap should be done away with, because salaries will only escalate to the point where no one can afford the ticket prices. But to declare players unfit to receive these high salaries is ignoring economic reality.