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Rethinking Player Contracts in the Context of Percentages

Salaries of players continue to rise, causing many to lose sight of a player’s value. Viewing contracts relative to the salary cap could help

The beauty of sports is that we can all watch the same thing happen and have completely different opinions on what we witnessed. There are exceptions to every rule, however, and that exception is how we as sports fans react to and perceive player contracts. In a landscape where the salary cap of our favorite leagues continue to rise, it is inevitable that player salaries will continue to break records. In the NBA, we are not too far away from a player making $100 million per season and in the NFL, we are on the cusp of quarterbacks making $75 million per season. Despite this inevitability, we are often flabbergasted by the amount that teams pay players, especially if they are not elite players.

It is easy to understand why we gasp at every new contract. Most of us cannot fathom even making a middle of the road player's salary, much less the money that is paid to an elite player. We see how many millions the contracts are worth and are rendered speechless. The downside is that when a player is making more money, the scrutiny heaped upon them when things do not go well is bound to increase. This dynamic has made me wonder if we are going about the reporting of contracts all wrong. What if contracts were expressed in percentages relative to a league’s salary cap as opposed to a raw number?

Working With Percentages

This year the salary cap in the NFL and NBA are $255 million and $136 million, respectively. This number usually increases every season (in 2021 because of the COVID-19 pandemic the NBA remained stagnant while the NFL’s cap decreased), meaning that player contracts are always on the rise. If we go back to 1995, the amount of money that teams had at their disposal was much less than it is today. In the NBA, the salary cap was $15.9 million, while NFL teams operated with a salary cap of $37.1 million; needless to say, that is a far cry from what the teams have at their disposal today.

Sports leagues operate on a revenue sharing model, where the team owners and players have a split of the league’s profits. Currently in the NFL, owners and players have a 52/48 split of profits for example. Profitability comes from various sources such as media deals, ticket sales, and merchandise sales. To come up with a salary cap number, a league will total its team’s revenues and divide a percentage of the total to allocate to player salaries. As the cost of broadcasting live sports continues to increase, the profitability of a league increases, which in turn increases the amount of money that will be paid to players. It is a domino effect that leads to better compensation for your teams’ favorite players.

This ever-increasing cap is an important factor that fans often discount in their analysis of player contracts. A Dallas Cowboys fan might scoff at the fact that they are paying quarterback Dak Prescott $34 million per year and compare that to his predecessor Tony Romo who was making $18 million per season. On the surface, we can compare those two numbers and be forced to ask ourselves if Prescott is twice as good as Romo was for the Cowboys. The team’s success under both quarterbacks has been similar (Prescott has led the team to one more playoff appearance than Romo), which leads us to question why the Cowboys would be so foolish to pay Prescott so much?

This is why looking at the raw contract number is something that should be replaced.

If we instead look at a player’s contract in relation to the percentage of the cap that he impacts, we get a clearer picture of the true value of his contract. During Romo’s era, his salary accounted for about 14% of the team’s total salary cap. Dak Prescott’s salary, while a much higher number, only accounts for 13% of the Cowboy’s total cap this upcoming season. The NBA’s highest paid player this season is the Warriors Steph Curry, who makes over $55 million per season. That number on its surface is eye watering, but let’s add some context in relation to the cap. Curry accounts for 40% of the Warriors cap. But he is also the face of their franchise and a player that has won them championships, increasing their value exponentially. It is hard to argue that he doesn’t deserve the lion's share of the team’s available funds. 


By quantifying that Curry makes a certain percentage of the team’s cap as opposed to a raw number we can better appreciate the value that he offers his franchise. This metric can also help us to identify when a player is indeed overpaid as well. Bradley Beal, who was acquired by the Phoenix Suns this offseason, makes $46 million per year. Now on the surface, if we compare his salary to Curry, he makes $9 million less per year. We should all understand and accept that Steph Curry is a better player than Beal, and the $9 million number gives us little context. But when framed that he is the clear cut third best player on his team (after Devin Booker and Kevin Durant), accounting for 33% of the team’s available cap, it becomes clear that the value derived from his performance and role are not matching the commitment to his salary. By looking at the salary cap this way, we can take out the emotion of looking at player salaries that is all too easy of a trap to fall into.

The Power of Perception

One of my favorite sports movies is “The Replacements”, a 2000 comedy that features Keanu Reeves as a replacement player for a football team while its full-time players are on strike. The players that are on strike in this movie are positioned as rich entitled men that don’t have any passion for the game of football. They are framed as out of touch, such as complaining about the cost of insuring a Ferrari as a reason that they need more money. This caricature of the professional athlete is funny because it lines up with how a lot of people feel about athletes.

Any time a player complains about the pressures of being in the spotlight or the mental health toll that being a professional athlete entails, many people on social media start to roll their eyes. There is a perception that a person making as much money as today’s players make has no right to complain. It is a dehumanizing opinion, but one that casual observers of sports often hold. This feeling has only been worsened by the advent of legalized sports gambling. Indiana Pacers guard Tyrese Haliburton has mentioned feeling like “just a prop” for bettors, further adding to the sense that athletes only exist to entertain us and help us win a parlay on FanDuel or DraftKings.

While some of this sentiment comes from the idea of adults getting paid millions of dollars to play a kid’s game, some of it is rooted in the comparison of compensation across different eras. People will look at the fact that Michael Jordan only made between $2-4 million during the first Bulls three-peat and compare that to LeBron James making $51 million this season for a Lakers team that might not even make it out of the first round of the playoffs and use that as ammunition against LeBron. Whereas using percentages (37% of the cap for LeBron vs 28% of the cap for Jordan in this example) gives us a clearer picture of how important a player is in the grand scheme of roster building.

By altering the way that we view salaries in relation to the salary cap in the NBA and NFL, we are encouraged to think about the player and their fit for a team and if the negotiated contract was too much in the context of winning as opposed to turning to a talking point about how athletes are overpaid. They are overpaid because we as a content consuming public are invested heavily in their games. The NFL made $12 billion in 2021, with a viewership of 18 million people every year. People are invested in sports more than ever before and athletes are paid accordingly. By removing the unfathomable riches from the front of our minds we can have a better discourse on player value in the context of winning and team makeup, which is the analysis that should matter the most.

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