Why NFL Stars Often Make Less Than Pretty Good MLB Players
If your retirement plan involves your kid becoming a millionaire sports star, you probably want them playing baseball or basketball, not football.
With the World Series all wrapped up and the NBA in the early stretch of its season, it’s time for the world to fully turn its attention to football. And that’s assuming the world wasn’t already paying most of its attention to football anyway.
Even with viewership dipping over the past few seasons, the NFL is still immensely popular. (Besides, NFL viewership is declining slower than viewership overall.) And then there are the numbers: the NFL saw a whopping 8.1 billion in league-wide revenue for the 2017 season. That’s an increase of 4.9 percent from the year prior! And once you account for local revenues on top of those league-wide numbers, total NFL revenue in 2017 topped $14 billion.
Okay, we don’t need to convince you that the NFL is a) popular and b) making money hand over fist. But you’d think that with all this money coming in, NFL players would also be raking in the cash. And yet, they’re not. Compared to normal people, sure, but when compared to other elite athletes, their salaries are downright paltry.
Outside of QB’s, NFL salaries lag behind the MLB.
Specifically, let’s look at the salaries in Major League Baseball versus the NFL. The average NFL salary for 2018 was $2.1 million. The average salary in the MLB, however, was $4.52 million, over twice as much!
And while starting NFL quarterbacks who sign an extension past their rookie contract are very likely to be making more than $20 million a year—with the average salary rising every time a new contract is signed—non-quarterbacks usually make far less. There are 16 quarterbacks making $20+ million this season, but only two non-quarterbacks with average annual salaries above $20 million: Khalil Mack of the Chicago Bears and Aaron Donald of the Los Angeles Rams.
In the MLB meanwhile, a whopping 35 players had an average annual salary of $20 million or above in 2018. For reference, Chicago Cubs right fielder Jason Heyward had a higher average annual salary this season than Russell Wilson, Ben Roethlisberger, and Cam Newton. And Heyward’s 2018 salary was higher than any non-quarterback in the NFL who wasn’t Khalil Mack.
And then there are the overall contracts themselves. The largest current contract in Major League Baseball is Giancarlo Stanton’s with the New York Yankees, a 13-year-deal worth $325 million dollars total. The largest contract in the NFL, meanwhile, is held by Atlanta Falcon’s quarterback Matt Ryan’s; it’s for five years and is worth $150 million.
Now, Matt Ryan’s contract does come with a higher average annual salary than Stanton’s: $30 million to $25 million, but the total value of the contract is still less than half—and only $94.5 million of that money is actually guaranteed, while Stanton’s $325 million is all guaranteed. Even accounting for the full $150 million value, Ryan’s top NFL deal would only be the 23rd largest contract in the MLB.
So what’s the deal? Ask any average person on the street and they’re likely to tell you that they care more about the NFL than they do the MLB. So why are baseball players raking in so much more dough?
The NFL is making bank, but so is the MLB.
Even if it often feels like Major League Baseball is less important culturally than it used to be—with the NFL and the NBA rising to take its place—it’s not terribly likely that MLB owners are that worried. Salaries for baseball players up, in part, because baseball owners are making a lot of money.
In 2017, MLB revenues cracked $10 billion for the first time, driven in large part by extremely lucrative media deals both league-wide and at the team level. Not only will national TV networks pay billions of dollars for the rights to air baseball games, but many teams have deals with local or regional networks as well that can net them hundreds of millions a year. Some, like the Yankees, even own stakes in those regional networks, making them even more profitable.
And profit-sharing in the MLB means that all this money isn’t simply getting hoovered up by the league’s most popular teams. A full 31 percent of teams’ net local revenue is shared evenly between all 30 franchises. That means that when the Yankees do well, the Tampa Bay Rays also benefit. More money around the league means more teams willing to shell out big bucks for players.
Of course, the NFL is also doing very well. As we mentioned previously, total revenue for the NFL topped $14 billion in 2017, with each team pocketing approximately $255 from league-wide revenues on top of their local earnings. Even with two more teams in their league, it would seem like the NFL franchises would have a lot more money to throw around than MLB teams.
Here’s where the differences really begin.
The MLB has fewer players and longer careers.
This one is pretty obvious. Major league baseball teams are allowed 25 players on their active roster, while NFL rosters total 53 players. Add in the fact that there are 32 NFL teams and only 30 MLB teams and the numbers add up. Using 25-man rosters, there are currently 750 major league baseball players. Meanwhile, there are 1,696 players in the NFL. That’s over twice as many!
The disparity isn’t so great, however, if you take into account 40-man rosters for the MLB, which include players who are injured or who are on major league contracts but are currently playing in the minors. Accounting for 40-man rosters, the total number of MLB players is 1200, which is only 30 percent less than the number of players in the NFL.
But it’s not just the number of players. Not by a long shot. In both leagues, rookies play on relatively cheap contracts, with the highest-paid players being the ones who are on the second or third deals. In the MLB, the average player has a career that’s 5.6 years long. In the NFL, the average player’s career is only 3.3 years.
Not only are there fewer players in Major League Baseball, meaning they all get a bigger piece of the pie, but baseball players are much more likely to make it past the end of their rookie deals—when they can really start making the big bucks.
MLB teams don’t have a salary cap.
This is a huge difference between the two leagues. The NFL has a hard salary cap, which means that no team can spend money on players above a certain dollar number each season. The MLB meanwhile does not have any salary cap, which means that the owners can spend as much as they like on their rosters.
Since NFL players are guaranteed a certain percentage of league-wide revenue via their collective bargaining agreement, the salary cap is determined by total league revenue. For the 2018 season, the NFL salary cap is set at $177.2 million. Teams are also allowed to roll over unused cap space from year to year.
The only limit that the MLB places on team spending is a luxury tax, which came in at $197 million for the 2018 season. Any dollar spent on salaries above that threshold incurs a penalty. These penalties increase the more you spend above the threshold, and they also increase for every consecutive year teams’ spend in the luxury tax. For more specifics, check out the MLB’s “competitive balance tax” glossary page.
Not only does the MLB have fewer players than the NFL, but their teams can spend more money on those players before they run into issues. Six MLB teams in 2018 had payrolls above the NFL salary cap. And while teams aren’t required to spend all that money, they still can spend it if they want to—whereas NFL teams aren’t even given the choice.
Better unions guarantee more actual money.
Here’s the funny thing: If you were to take the average MLB payroll in 2018 and compare it to the average amount that NFL teams spent against the 2018 salary cap, you’d see NFL teams spending much more on their players. The average MLB payroll was $139.1 million in 2018, while the average NFL team spent $144.4 million against the cap. So maybe this whole disparity really does amount to there being fewer MLB players?
Except it doesn’t. Because salary cap numbers don’t tell the whole story. In fact, neither do NFL contracts. Remember earlier in this piece where we mentioned how only 94.5 million of Matt Ryan’s contract was guaranteed? Yeah, here’s the dirty little secret about NFL contracts: The only number that matters is the guaranteed money. Everything else is fairy dust.
Contracts in the National Football League skew heavily towards the team’s advantage. After a couple of years, players can often be cut with minimal implications for the team’s salary cap. But in the MLB, players have far more leverage. A player who signs a 10-year, $250 million contract is almost certainly going to get all of that $250 million.
The difference comes down to the player’s unions. The Major League Baseball Players Association (MLBPA) has a long and storied history as a labor rights powerhouse. Under their first Executive Director, Marvin Miller, the MLBPA raised the league’s minimum salary from $19,000 to $326,00, established collective bargaining, and ushered in the era of free agency—the last of which is a major driver of player salaries in every sport.
Are you surprised to the learn that the MLB doesn’t have a salary cap? We wouldn’t blame you. Out of the four primary American sports leagues (MLB, NFL, NBA, NHL), baseball is the only one without a salary cap. That’s how good the MLBPA is. If owners wanted to institute one, they’d be looking at a major work stoppage.
The National Football League Players Association (NFLPA), on the other hand, has let their players down. The deal they struck with the NFL to end the 2011 lockout has been derided as a massive failure. In comparison to the NFLPA’s previous collective bargaining agreement (CBA), their current 10-year deal could be shifting as much as $10 billion from players to owners by the time it’s done.
Is an NFL lockout on the horizon?
If you’re looking for one reason above all others to explain why MLB players (and NBA players, for that matter) make so much more than their NFL counterparts, the strength of their unions is your answer. And don’t think NFL players haven’t noticed either. After their current CBA comes to an end in 2020, don’t be surprised if the 2021 season is delayed by a lockout—if it even happens at all.
To learn more about the financial side of sports and pop culture, check out these related posts from OppLoans:
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