Sports Bubble

How salaries of Neymar, Kershaw, and Stephen Curry work


Are top stars in the world of sports and entertainment being overpaid?
Sports Bubble
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Recently, the public has focused their attention on the astronomical salaries and transfer fees European soccer players are commanding.

  • The French football team Paris Saint-Germain F.C. (shortened “PSG”) paid more than € 222M (approximately 300BN KRW) in transfer fees to F.C. Barcelona in exchange for Neymar, one of FC Barcelona’s top players and the face of Brazilian soccer, and opened the door to an “era of € 200M transfer fees”
  • This surpasses the record transfer fee for Cristiano Ronaldo when he was sold to Real Madrid for € 91M from Manchester United. Neymar’s deal is also twice that of Gareth Bale’s when he was sold to Real Madrid from Tottenham, which was worth € 100M, which at the time (four years ago) was the highest deal in history.
  • Neymar, with a contract which promises him a weekly salary of € 870,000 (approximately 1.1BN KRW), is now officially the highest paid athlete in the world.
  • PSG did not stop at Neymar. The team paid AS Monaco € 180M for AS Monaco forward and star of the French national team Kylian Mbappé, which ranks the deal at number two in history in terms of size. The key financier who has allowed PSG to bring in top players into their team is the owner Al-Thani, the current king of Qatar. He is worth an estimated 508 trillion KRW and is pouring his wealth into making PSG into a world class soccer team (like F.C. Barcelona/ Real Madrid/ Manchester Utd), even if it means paying top players 2-3 times the average market value.
  • Having lost Neymar just before the start of the season, F.C. Barcelona was looking frantically for a replacement and ended up signing Ousmane Dembélé - another star of the French national team and forward at Dortmund – for €150 M (approximately 140 BN KRW). Analysts have commented that Dembele was not worth the amount that Barcelona paid for him, but the urgency of finding a replacement pushed up the transfer fees.

In the summer of 2017 alone there have been three players whose transfer fees totaled more than € 100M each. This has (1) raised eyebrow all over the world. “Is there an inflation in the size of transfer fees?”. Put more simply, are these players overvalued relative to what they offer?

It is not just European soccer players who are being paid astronomical salaries – critics have spoken out against highly paid superstars of the MLB and the NBA as well.

  • Stephen Curry, the face of the NBA and the superstar point guard of the Golden State Warriors (shortened “GSW”), just finalized a five year deal worth $210M (approx. 230 BN KRW) with the team.
  • This deal means Curry will be paid an annual salary of $40.2M (approx. 46 BN KRW).
  • GSW’s costly move to keep Curry is understandable given Curry’s amazing track record. Curry is a two time MVP who led his team to the NBA Finals 3 times in the past 5 years. In two of those years, the Warriors became NBA Champions. In addition to the 5-year contract, Curry is making astronomical amounts through sponsorships and advertising deals.
  • In 2014, Clayton Kershaw of the LA Dodgers, a top star of Major League Baseball, finalized a huge contract with the Dodgers which will pay him $215M (approx. 230 BN KRW) over 7 years.
  • Kershaw (2) rakes in (an estimated) $30.71M annually, which is a record-setting number that tops the $30M mark which had previously been thought unreachable.
  • The team’s expensive decision to finalize Kershaw’s contract takes into account Kershaw’s outstanding public image and his reputation as the face of the MLB. Kershaw, who was just 26 years old at the time, had won the Cy Young Award, an honor only given to the best pitcher in the league, three times (in 2011, 2013, and again in 2014).

Korean athletes are also being paid huge sums of money to play. The media has focused on the possibly inflated values of these contracts.

  • Hyungwoo Choi, the best hitter of the baseball team Samsung Lions, became a free agent in late 2016 and signed a four-year contract with the KIA Tigers which includes a 4BN KRW signing bonus and an annual salary of 1.5BN KRW (totaling 10BN Won altogether), becoming the first player in Korea to make more than 10BN KRW.
  • Hyunjong Yang, with an impressive track record of 20 wins (end of 2017 season), is slated to sign a historical deal worth more than 10BN KRW. This is also the case for Jeong Choi, known as “the king of homeruns”.
  • The Hanwha Eagles are one of the top teams of the Korean Baseball Organization, and the 2017 team in total is paid 10.5BN KRW, opening the age of a team’s yearly salary surpassing 10BN KRW.

Famous celebrities and musicians are also earning astronomical salaries.

  • IU, one of the most successful musicians in Korea (signed to LOEN Entertainment) is earning her company more than 50BN KRW annually. She is being paid between an estimated 10~20BN KRW per year.
  • Top Korean celebrities earn on average 500M KRW for every commercial they appear in, and considering that they appear in 10-20 commercials a year, it is estimated that the annual payoff from doing commercials alone is around 5-10BN KRW for any given top celebrity.
  • For example, famed musician and actress Suzy, following the hit movie Architecture 101, did more than 30 commercials (each totaling about 700M KRW) and in total made an estimated 10BN KRW.

Three main issues are being raised with regards to stars in the sports and entertainment industries.

  • Astronomical salaries.
    • Are stars in the sports and entertainment worlds creating enough value to deserve the high salaries they earn?
    • Surely, the general public derives much pleasure and entertainment value from the stars, but is that worth paying them millions of dollars annually?
  • Income disparity between top stars and less popular players
    • In the world of sports, athletes of less popular sports categories are not earning much at all. Even players in top leagues and popular categories like basketball experience financial difficulties upon retirement.
    • The entertainment industry is no different. The top 1% account for more than half of the gross income, and research shows that 9 out of 10 celebrities only earn around 600,000 KRW ($600) per month on average.
    • Are popular sports categories inherently more valuable than less popular categories? Does a distributive system that rewards the top 1% most of the income while leaving the rest of the 99% percent in relative poverty a just system?
  • Public feeling demoralized
    • It is difficult for most people to earn more than 1BN KRW even if they have worked their entire lives. Surveys show that the rest of the people that comprise our society get demoralized seeing celebrities make 400~500M KRW per commercial they appear in
    • Moreover, whereas the upward movement of wages and annual salaries is slow, transfer fees and earnings of professional athletes increase by 20-30% yearly. This fact is hugely demoralizing for the general public. In consideration of the social ramifications, the question is, should there be a cap on the earnings of top stars in the world of sports and entertainment?

    At the same time, many have also voiced objections to the criticisms outlined above.

  • Stars worked hard to earn their money:
    • Well paid stars in the sports and entertainment industries have had to work their way up from the bottom, a most likely painfully difficult and risky journey that often lasts for more than 10-20 years. They endured countless failures and hungry nights to get to where they are today.
    • The constant public attention and invasion of privacy creates a lot of pressure for one individual to tolerate. Their so called “Golden Years” often never last for very long. Job security is low, with short career lifespans. For these sacrifices they make, stars deserve what they have earned.
  • There is a clear double standard:
    • The top 1% having 50% of the wealth is not a phenomenon limited to the world of sports and entertainment.
    • The top 1% control over 50% of the wealth in the global economy. Thus, it is unfair to single out stars for making huge sums just because they are more visible to the public eye. This is a clear double standard.
  • Stars live to serve the public at large:
    • The sense of unfairness and disparity felt by the public comes not from the sports and entertainment stars but the unfair distribution of wealth across society.
    • The public may feel hope and derive pleasure from seeing stars on television, but it is even more demoralizing for the public to see people born into wealth that they have not earned for themselves. Stars had to work for their money, whereas those (3) born with silver spoons in their mouths have done little to deserve their financial success.
    • When celebrities and athletes commit tax evasion, for instance, there are huge consequences to their public image, and it is front-page news that hugely impacts their careers. However, people like politicians often continue with their political careers unscathed despite committing similar crimes.
    • Celebrities give back to society, but politicians may use donations to (4) line their own pockets.
    • Then we may ask – is it fair to place a cap on the earnings of celebrities and athletes just because they create a sense of demoralization?

    What is the value that superstars in the sports and entertainment worlds provide for the general public? Do you think that their fame and huge salaries correspond to the value that they create for the world? What kinds of social problems may arise from a system that highly rewards top stars? Is it fair that they should be called out and criticized by the general public for what they earn?

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