Because my Mom is such a good cook, I can often be found eating supper at my parents’ house. On the menu last night was just homemade pizza, with a flat bread crust and ample amounts of pepperoni, peppers and other vegetables. It’s no wonder I’m a recovering fat guy.

So I’m watching the Blue Jays’ game with my Dad as we eat, and Travis Snider hits a routine ground out back to the mound. Snider puts his head down and hustles to first, but was still thrown out with plenty of time to spare. I was impressed with Snider’s hustle, so I went ahead and voiced my admiration with his hustle. My Dad was not impressed. A quote:

Well, I’d sure hope he’d hustle! Look how much he’s getting paid! In fact, every time a guy doesn’t run hard they should deduct 10% of his salary!

Oh Dad. Never change.

So what does that say about my Dad, besides a poor understanding of contract law? He’s squarely in the camp that thinks professional athletes are overpaid. In the past he’s told me that salaries for professional athletes should be capped at $100k, mostly because he came up with this number. I’m not sure why the number should be capped at $100k. I think he likes the roundness of it.

This post isn’t to bash my Dad. Many people share his opinion on athlete compensation. Some of them might even be reading this blog. Unfortunately, they’re all wrong. Athletes should get paid as much as the market will demand. Here’s why.

As someone who’s endlessly interested in economics, professional sports is a great proxy for capitalism as a whole. Thanks to free agency, professional athletes sell themselves to the highest bidder. From the athlete’s perspective, free agency is designed to extract money from the highest bidder. The team, meanwhile, has the exact opposite intentions, trying to acquire the best talent at the lowest price.

Most of the time, though, it’s fairly easy to value the services of a professional athlete, thanks to statistics. Sometimes statistics are inflated- maybe due to great teammates or because of one fluke year- but usually serve as a decent predictor of future results. If a baseball player has averaged a .300 batting average and 25 home runs over the past 5 years, chances are they’ll get close to those results.

What was the point of all that? Athlete salaries are one of the closest things I can think of to pure capitalism, especially in sports that don’t have a salary cap. (which is really only baseball I guess) There’s no government regulations. All that remains is pure supply and demand, the two forces that drive prices in a free market.

Let’s look at supply first. Being good enough at your sport to play professionally is really, really hard to do. Let’s take a look at hockey, Canada’s game. According to Hockey Canada, there are approximately 500,000 kids who play organized hockey in Canada. A quick search over at Hockey DB says that about 3000 players spent some time in the NHL since 2000. Approximately half of current NHLers are from Canada, meaning 1500 of those players are Canadian.

To summarize, 1500 Canadian kids end up spending time in the NHL. 500,000 play organized hockey. That means that any given kid has a 0.3% chance of making the bigs, even for just a cup of coffee. That’s 3 out of every 1,000 that ever make it. Out of those 1500 that do make it, maybe only half of those will end up being impact players. So in reality, only 1.5 out of 1,000 who ever play organized hockey will end up being contributors in the NHL. Those are pretty steep odds to overcome.

Meanwhile, we have normal jobs. I’m willing to bet that at least 25% of the population has the intelligence and work ethic to become a doctor or lawyer. Most professions can really be done by anybody. Obviously, there are limitations here. To be an engineer, you have to be good at math, and not everybody is. But a large chunk of the population has the multiplying skills to become an engineer. And frankly, any moron can get their major in communications.

Just kidding communications majors! Don’t kill me!

The point is, having the skills to become a professional athlete, even a poor one, is something that’s incredibly unlikely. You have to be outstandingly good at your sport to do it professionally. To be able to become a teacher, or engineer, or doctor, or whatever, you just have to be pretty good at the skills needed to do the job. Not everybody can do those jobs listed, but a lot more than .15% of the people who try end up succeeding.

Let’s face it, sports owners are usually pretty astute business people. Most are billionaires, and I can guarantee you they didn’t become stinkin’ rich by making foolish money choices. They know exactly what they’re getting into when they pay their athletes these millions. If they can get the right combination of athletes together, the team will be successful. If the team is really successful, they’ll go deep into the playoffs, maybe even winning a championship. The team wins, the owner makes lots of money and the players are paid what the market will bear. Is that why they’re overpaid?

I think that ultimately, the issue of player salaries comes down to your view of professional sports. If you view it as legitimate business that provides a valued product, then you’ll probably tolerate whatever salaries become. You’ll probably even shell out the cash for a ticket every now and again. If you’re the type of person who doesn’t care for watching sports and see no value in the medium, then you probably think salaries are too much. After all, why should someone get paid so much for playing a pointless game?

Like any job, professional athletes are paid what the market will bear. Complaining about it just makes someone look stupid. So just sit  back and accept those outrageous salaries. Except if they play in the CFL. No wonder everyone laughs at the CFL.


Tell everyone, yo!