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Professional Sports Contracts Research Paper

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Does your jaw drop to the floor every time you hear the “new deal” a sports superstar got, like mine does? Players used to have second jobs, and now there are people like Giancarlo Stanton who is getting 325 million dollars over the next thirteen years and every penny is guaranteed. Is this trend good or bad? Who will be the first to sign a billion dollar contract? How can I get a piece of this money pie? All of these are great questions to take a bite out of but the answers might be tough to swallow. In 1975 a pitcher by the name of Catfish Hunter changed the game, after winning three straight World Series’ his contract was up and he became a “free agent.” Hunter was at the top of the game and got a five year, 3.75 million dollar contract …show more content…

What used to be considered a huge contract is now pocket change for superstar athletes. The “big four” professional sports leagues in America are the NFL (National Football Association), NBA (National Basketball Association), MLB (Major League Baseball) and the NHL (National Hockey League). Each of these leagues have their own unique rules and regulations on contracts. The biggest factor in professional sports contracts is the salary cap. The salry cap is a rule that limits teams to a certain amount of money on players’ contracts. The NFL has a salary cap of 155.27 million dollars. The NBA’s salary cap is per team is 70 million. The NHL’s is 71.4 million. The MLB, most interestingly, has no salary cap which has created an almost pay to win …show more content…

One of the most amazing parts of the huge contracts of the MLB and NBA is that every dollar the players sign for, is guaranteed for the duration of the contract. This can cause some problems, for instance, in 2008, Gilbert Arenas agreed to a six-year, 111 million dollar contract but due to bad play and injuries, Arenas was out of the league by 2011. Since Arenas’ contract was guaranteed, he was still earning 22.3 million (making him the 30th highest paid athlete in the world) until 2014 while not playing at all. NFL contracts can be just as large as the other sports (Aaron Rodgers’ contract is for five years, 110 million dollars with a 33.25 million dollar signing bonus with 54 million guaranteed) but not all of their money is guaranteed, in fact, it is usually about half of the total value that is guaranteed. Signing bonuses are basically bribes to the athlete that the team will give them more money up front. Some contracts are incentive laden, usually they are reserved for players with either a troubled past, or will be used as motivating factors. For example, if player “A” gets selected to the All-Star team he will get a $200,000 bonus. The true economic problem with professional sports contracts is not with the elite players that get payed hundreds of millions, it is with the average player that is in and out of their respective league within a few years. The

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