CHAPTER TEN

Labor Matters: Athlete Compensation

INTRODUCTION

It is well known that professional athletes competing in each of the four major North American sports leagues receive lucrative compensation. In 2008 and 2009, average salaries across these leagues were $5.585 million in the NBA, $3.26 million in MLB, $1.9 million in the NHL, and $1.9 million in the NFL. What is not well known is how these salaries are determined. Professional athletes are often perceived as being overpaid instead of merely well paid. This reflects a misunderstanding of the relevant marketplace for athlete compensation. A comparison of athlete salaries to those of the average person is misleading. Instead, athletes should be regarded as entertainers when it comes ...

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