Income Inequality in the NBA

By Justen E. Rosenberg

The United States of America is a country that has seen the rise of capitalism and the direct effect it has on the economy and big business. Today, the United States has a large disparity in personal income. Due to the disproportion of wealth, the balance of the country’s societal class has shifted. As it appears, the rich are continuing to gain capital, while the middle class faces an uphill battle towards personal wealth prosperity.

Currently, the United States ranks in the 30th percentile in income inequality globally, meaning 70% of other countries have a better distribution of personal income and wealth. With the battle the middle-class faces, it comes to little surprise that the upper-income tier has grown the most in the financial and natural resources industries, along with a continued rise in top business executives and managers.

The National Basketball Association, or the NBA for short, is a prime example of how the capitalistic tendencies of the United States have influenced big business. A major business, the NBA is seeing record amounts of revenue, as the league racked in $5.18 billion in 2015. With revenue nearly doubling from 2001, when the league made $2.66 billion, NBA teams will see an explosion in their available cap in salary aggregated towards signing and maintaining players. This year alone, the NBA saw an 11 percent salary cap increase – from $63.1 million to $70 million for the 2015-16’ season. However, despite an 11 percent increase, these numbers are minuscule in contrast to the expected salary cap for the 2016-17’ season, which is projected to reach an upwards of 90 million dollars.

A new television deal with Turner Sports and ESPN is the reason for the large spike in annual revenue for the Association. The sides agreed to a nine-year, $24 billion media rights deal. Over the course of the contract, ESPN and Turner Sports will combine to pay the NBA an annual $2.6 billion – an 180 percent increase from the previous deal, which was signed in 2007. With a large increase in the cap, the NBA is about to experience – much like the United States – a continued growth in the disparity in the wealth among the stars and the average role player. For example, during the 2013-14’ season, Kobe Bryant of the Los Angeles Lakers held the league’s highest paid contract at $30.45 million, while the league minimum contract was $490,180. With an astronomical difference in salary, the NBA has created a culture much like the United States’ societal economy.

While Kobe Bryant announced his retirement following the 2015-16 NBA season, one player that will greatly benefit from the increase in the salary cap is Cleveland Cavaliers forward, LeBron James. James, who continues to sign contracts with the ability to opt-out after one year, is in line to see one of the richest contracts in NBA history, further separating himself financially from the non-stars of the league. With the cap projected to jump to $90 million next season, James can sign a max contract starting at just under 35% of the salary cap. The 35% is derived from his ten-year tenure in the NBA, which increases the percentage of his max-contract.

In 2017, the cap is expected to increase to $108 million. In this instance, if James opts out of his current contract this coming summer and signs another one-year deal, or a deal with the option to opt out after one season; the Cavaliers will gain access to James’ full bird rights. As the numbers project, if James were to sign a four-year max-contract this offseason, it will hold an estimated value of $125.3 million. However, if James waits one more season, he can sign a five-year max-contract worth an estimated $204.4 million. 

This would be a record deal as no contract in the NBA has exceeded $145 million, which was recently signed by New Orleans Pelicans power forward Anthony Davis. While the top percentage of NBA players continue to sign these astronomical contracts, the non-NBA star – the role players, sixth men and starters – continue to witness their star counterparts pull away in annual income. According to the NBA’s Collective Bargaining Agreement, teams must carry a maximum of 13 players on their active roster. If you multiply 13 by the number of NBA teams, 30, you have a minimum of 390 players on NBA active rosters over the course of a season. This brings me back to Kobe Bryant, who is still making the most money of any player this season. Bryant is one of just 11 players who are receiving more than $20 million annually. The 50th highest paid contract, which belongs to Ty Lawson, is just under half of what Bryant makes – $12.4 million.

While $12.4 million is still a hefty annual salary and nothing to complain about, the difference between the highest contract and the 50th is more than double. With a minimum of 390 players on active rosters during the season, the disproportion in annual salary only continues to grow from the top percentage of players. According to Basketball-Reference, the 390th highest paid contract belongs to Raul Neto of the Utah Jazz. Neto, who is listed on the team’s depth chart as the starting point guard, is flailing financially in comparison to his fellow teammates and players throughout the league. Neto, who is making a mere $1 million, is making 2500% less than Kobe Bryant, who is also a starting guard in the league.

The contrast in numbers in annual salary, such as a 2500% difference between said players, is a direct example of how capitalistic tendencies run the United States and big businesses such as the NBA. It is not just the NBA, however, as the disparities among salaries in professional athletes are seen in each of the countries major sports. With the continuous fall of the middle-class in today’s society, the same is said for the average professional athlete. While their counterparts continue to rack in $20 million contracts, the average NBA salary for the 2015-16’ season remains $4.4 million – nearly 5 times less than the 11 players who make $20 million or more. This is directly due to the fact that capitalism tendencies are continuing to diminish those who are not in the top one percent, not just in the United States, but in professional sports as well. 

 

 

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