Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top player?

Discussion in 'Business and Media' started by pc4th, Nov 17, 2005.

  1. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    A few years ago, I always thought that the highest paid soccer players in the world would get paid about the same if not more than NBA, NFL, MLB's highest paid player, but I was wrong.

    NFL 1 Manning, Peyton $ 35,037,700 Indianapolis Colts
    (including signing bonus---the normal highest paid player is around $15-17 million with signing bonus. Not sure why it's $35 million a year for Manning)
    NBA: 1. Shaquille O'Neal (Mia) ..... $27,696,430
    MLB: Arod: $26 million a year

    Top soccer player: Around $11-12 million
    EPL: highest paid player is Rio with 5.5 million pound (around $10 million)

    United offer Ballack record £30m deal

    Maybe soccer doesn't make as much money as NBA/NFL/MLB that is why they are not paying elite players much, but that is not accurate.

    That leds me to believe that it is because of the transfer fees, elite clubs like Chelsea, Man U, Real Madrid, Barcelona do not have as much money to pay for salary.

    I don't know if I am correct or not, but there is no other explaination. Sure, soccer club has to develop talents, but so does MLB. The more I think about it, the more I am convinced that it is mostly due to the transfer fees.

    Just to make it clear: This is just about the top 2-3 soccer players in the world and why their salary is about half of their American counterparts.

    I am creating a poll to see if there is anyone out there that believe this is the case too.
     
  2. szazzy

    szazzy Member

    Apr 18, 2004
    Kansas City, MO
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    You do realize that many times the player makes a lot of money off the transfer as well. They're akin to NFL signing bonuses. If you're going to include those, you need to include the player's cut (before the agent's fee as you did with all the other figures). In terms of total dollars, it's not even close between soccer and any other sport. Players also have the opportunity to negotiate deals directly with the club for merchandising, advertising etc.

    Unfortunately, there is not much transparency many times in these deals. Information is often reported wrong on percentages, amount, length...basically everything. It will be hard to find anything too reliable.
     
  3. scaryice

    scaryice Member

    Jan 25, 2001
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    I think in the future we'll see a lot fewer transfer fees, and more free agent signings in soccer. If I'm Malcolm Glazer and I don't know a ton of soccer, I would wonder why we can't just wait until the top players' contracts run out and then sign them. Plus, the players will benefit more. I really think we're headed in that direction.
     
  4. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    Signing top talents on transfer instead of free. Why is soccer different?

    Ballack might be the first 'elite soccer player' to become a free agent. By elite, I mean the top 20-25 soccer players in the world.
     
  5. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    Yes, I am aware of that. However, the player cut of the transfer money is not that much. If it's a 40 million transfers and the player cut is 5%, the player only get $2 million. If it's 10%, that's $4 million. Sometimes, the player doesn't even get a cut.

    By being a 'free agent' the player will get bids from many teams (assuming the player is among the top 20-30 players). Since Real Mardid/Chelsea/Man U do not have to pay for the transfer fee, they have left over money to pay 'extra' for the salary. At least, that's the theory anyway.

    Here's an example of a transfer fee paying team vs. a non transfer paying team.

    Let's use Yankees and Real Madrid. Each has $200 million for their player budget.

    Yankees: all $200 mil on players salary (assuming 20 players, on average each would get $10 mil)
    Real Madrid: $70 million on transfer fees + $130 million on players salary(assuming 20 players, on average each would get $6.5 mil)

    Obviously, for players, the advantage is the Yankees model. $10 ml vs. $6.5 mil.
     
  6. SYoshonis

    SYoshonis Member+

    Jun 8, 2000
    Lafayette, Louisiana
    Club:
    Michigan Bucks
    Nat'l Team:
    United States
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    I think that it's virtually a no-brainer. If American sports teams had to pay the same sort of transfer fees, it just stands to reason that less money would be left for payroll. If the trend continues of the big-money players changing clubs on free transfers, the bidding wars will concentrate on salaries rather than transfer fees, and salaries will go up as a result.
     
  7. Beau Dure

    Beau Dure Member+

    May 31, 2000
    Vienna, VA
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    Manning isn't that high. In doing a bit of checking around this morning, most reports say his salary and bonus average out to $14.17 million, give or take a few $100K bills, over the course of the contract. Football contracts are oddly constructed -- signing bonuses are important in a sport that has a lot of career-ending or career-diminishing injuries -- but NFL players generally aren't making that much more than Rio and company.

    Baseball actually does have a significant number of people making more than Rio. We'll come back to that.

    Going by last year's numbers (http://asp.usatoday.com/sports/basketball/nba/salaries/top25.aspx?year=2004-05), Shaq appears to be $10 million ahead of everyone else. That means he's not leaving a lot of money for the rest of the Heat.

    I don't think we'd ever see something like that in soccer because it's impossible for one person to be as dominant as Shaq was a couple of years ago. Chelsea doesn't have a Shaq -- they have a lot of people getting paid a lot of money just to compete for a spot in the starting 11. I've seen Chelsea's total payroll given as 115 million pounds, which is wayyy more than the Washington Redskins' NFL-leading $117.9 million. And the Redskins are paying roughly twice as many players. Only the Yankees pay as much across the board.

    I think the higher-end salaries also are kept down by the fact that soccer is such a team game. Also, the NBA and NFL indisputably feature the best players in the world -- the Heat management knows that if they don't pay Shaq, they'll face him in their own league.

    Transfer fees are a factor, yes. But they're one of many.
     
  8. szazzy

    szazzy Member

    Apr 18, 2004
    Kansas City, MO
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    It's never 4 or 5% in soccer. 4% is the standard agent fee for the major sports in the US and some agents take that percentage in soccer from the basic salary. The traditional transfer cut for an agent for soccer is 10%. This is the minimum you should be figuring, as agents are taking at least this much money from the player. Sometimes players are receiving as much as 25-50% of transfer fees depending on the deal they arranged with the original club. Only in very rare cases (Robinho) do elite players forgo the transfer money they would receive.

    Image rights are the other major component you are leaving out. Beckham made about 2 million pounds a year from ManU in image rights. When he transferred to Real, that was raised to 50% of all image rights money. That would increase the 2 million number exponentially. His new deal is said to demand 100% of image rights. The team pays this directly in some regard to every player, so those deals should be included in salary.
     
  9. _chachi

    _chachi New Member

    Mar 15, 1999
    new jersey, usa
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    why is the ceo of bigsoccer getting paid less than the ceo of microsoft?
     
  10. DAGSports

    DAGSports New Member

    Sep 19, 2003
    Yeah, it's pretty complicated with agents fees/player cuts on transfers etc.

    Couple of notes on the American leagues:

    I've heard that Manny Ramirez and Roger Clemens were actually the highest paid players this year at around $20 million and $18 million, respectively. A lot of A-Rod's contract is annuitized, payments with some interest to be made after the deal is up. Texas is on the hook for most of it as they were desperate to trade him away (and the Yankees took advantage to demand that Texas take a monetary hit).

    As for Shaq and Kevin Garnett, their contracts are totally exceptional. Their contracts call for the maximum annual salary percent increases stemming from previous contracts that were signed prior to the 1998 lockout. The CBA that took effect in 1999 and mostly renewed last summer set maximum player salaries based on tenure in the NBA. I'm pretty sure that those maximums are at least $10 million less than what Shaq and Garnett make.

    But I am pretty sure that Shaq and Garnett's contracts were specifically grandfathered in, with the provision that their next contracts would be entitled to the new CBA's salary increases with the salary of the "old" contract in its last year as the baseline.
     
  11. Eliezar

    Eliezar Member+

    Jan 27, 2002
    Houston
    Club:
    12 de Octubre
    Nat'l Team:
    United States
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    It has been touched on in this thread, but...

    The NBA has 5 starters and 1 person makes up 20% of your team at any one time.

    MLB has 9/10 players playing at a time, but there are at least 5 more people (4 more starters and a closer) that are 'starters' and that means 14-15 total players.

    Football has at least 22 starters they have to pay.

    Soccer has 11 starters.

    Given all things being equal (that is club revenue, club payroll) then...

    NBA stars would make the most money.

    However, US leagues have CBAs that entitle players to a certain amount of the leagues income in salaries (or make it possible anyway). Also, US leagues are much more financially stable than European leagues. Teams have gone bankrupt in England (Leeds?) and elsewhere in Europe. When was the last time a US team in the big three sports went bankrupt?

    Because US leagues are more stable there are actually more teams able to compete for the same players. In Europe how many teams are realistically going to be able to sign Ballack? Maybe 10 total?

    In the NFL any of their teams (based on salary cap) would be able to sign him. MLB is kind of like Europe soccer in that the revenue gaps are massive and not any team can sign a player. Houston had less than half the payroll that the Yankees had, but Houston had Bagwell at ~16 million and Clemens at ~18 million. So almost any team will be paying 1 to 3 players a lot in MLB and then have a bunchy of cheap players (Houston probably had 2 starters making the minimum).

    Also, in soccer young players get paid a lot. In baseball some of the best players often get paid almost nothing. I remember when Houston had Berkman and Oswalt combining for $1 million a year. There are a lot of controls that keep the pay of young baseball players down until they are nolonger restricted. Because of those controls the teams have more money to spend on free agents and baseball player salaries tend to spike when they are free agent eligible. So pay isn't directly related to ability.

    Transfer fees work somewhat similar to the luxury tax in baseball actually.
     
  12. striker

    striker Member+

    Aug 4, 1999
    Aren't most (if not all) soccer player contracts in the top European leagues guaranteed contracts whereas most (if not all) NFL, NBA? or MLB? player contracts not guaranteed? That should be a big factor in determining salary.

    What are the payrolls for the biggest soccer, NFL, NBA or MLB team?
     
  13. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    To my knowledge, NBA and MLB contract are guarenteed. NFL contracts are not.

    NBA: If it is not guarenteed, Seattle would have cut Vince Baker many many years ago. He was crap and was making around $14 million a year. I think for the most part, the contracts are guarenteed.

    Also, if we assume that top NBA team makes about 1/2 of top soccer team [which is about right since LAkers make $170 in revenue, Man U makes around $315 million] and it has about 1/2 less players, then we could say the two are comparable in their ability to pay for players.

    However, the NBA has 40 players that is making more money than the English Premier League top earners (Rio Ferdinand's $10 million).

    I believe this is due mostly to the transfer fees. Without it, the world's elite soccer players would get pay more. How much more? Maybe a 30-50% increase.
     
  14. DoctorD

    DoctorD Member+

    Sep 29, 2002
    MidAtlantic
    Club:
    Philadelphia Union
    Nat'l Team:
    United States
    On a simplistic level the large number of teams in Europe is the reason. Consider that G-14 teams perform on the same level as the NBA, NFL, and MLB. Then a Coca-Cola league team would be - what - a AA minor league team? But Bobby Convey makes far more than any minor leaguer. So there's less money for the Rio Ferdinands of the world.

    The EC has approximately the same GDP and population as the US. For European soccer players to make the same salaries as US professional athletes, Europe must adopt similar league structure: a restricted number of first-division teams; no promotion or relegation. The best players benefit by making more money. The owners benefit by making more money. The fans benefit by getting to support a team that has a higher skill level than their local team.

    Its Economics 101. Unfortunately, Pedro, Hans, and Pierre value local and nationalistic identity and rivalries over the "economies of scale" that fewer teams would offer. (Although that doesn't stop them from illogically complaining about "quality").
     
  15. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    Why does Chelsea, Real Madrid, AC Milan Manchester United's player budget has anything to do with the 'large number of teams in Europe'?

    The only relevant fact is that the Manchester United, Real Madrid, Chelsea, AC Milan, Juventus has about the same 'player budget' as teams like Yankees and Red Sox, NY Mets. Yet, the elite baseball players on those teams get paid a lot more than the elite soccer players on Man U, Real, Chelsea...etc. The only reason I can think of is that for elite soccer team, a player budget has to be split between player salary and transfer fee. Without transfer fees, all the player budget would go toward salary.

    It's not about promotion or relegation or GDP or population etc. It's about the team's ability to bid and pay for players. And this ability comes from their 'player budget.'
     
  16. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    Fact: Manchester United would have saved $36 million a year over the last 5 years if there is no transfer fees*

    Fact: Chelsea would have saved $135 million a year over the last 3 years if there is no transfer fees*

    *Assuming all the top 20-30 soccer players in the world all become 'free agents.' That saving will probably end up in bidding for these elite free agents. Thus, the salary of these 20-30 soccer players in the world will increase, significantly.



    Here's the net loss in transfer fees for Manchester United https://www.bigsoccer.com/forum/showthread.php?t=268343

    2005:
    Total IN: (Park, van de Sar, Foster): 7.06 m
    Total OUT: (Neville, Kleberson): 6 m
    Net loss: 1.06 million pounds

    2004:
    Total IN: (Rooney): 20
    Total OUT: 3.85 + undisclosed
    Net loss: N/A: probably around 15 million pounds

    2003:
    Total IN: 52.39
    Total OUT: 29.75
    Net (loss): 22.64 million pounds

    2002:
    Total IN: 37.5 m
    Total OUT: 2 m
    Net loss: (35.5 m)

    2001:
    Total IN: 50.1
    Total OUT: 18.2 + undisclosed number for Andy Cole to Blackburn
    Net loss: N/A. Probably around 30 million pounds unless Andy Cole commanded a really big transfer fee.


    that's 104 million pounds or around $180 million for 5 seasons. $36 million a year in net loss from transfers.

    If Manchester United gets all these players for free, they would have $180 million extra. Most of it would probably go to the players under the 'free agency' market. How? By bidding with the like of Chelsea, REal Madrid, AC Milan, Juventus. An elite player on a free is very attractive for the sole reason that teams don't have to pay a transfer fee.


    For Chelsea.

    https://www.bigsoccer.com/forum/showthread.php?t=268344

    2005
    Total IN: 56.51
    Total OUT: 6.82
    Net Loss: 49.69 million pounds

    2004:
    Total IN: 89.525
    Total OUT: 17.01
    Net loss: 72.515 million pounds

    2003:
    total IN 115.77
    Total OUT: 0

    Net loss: 115.77 million pounds


    236 million pounds in net loss from transfer fees for 2003, 2004 and 2005.
    That's about $405.68 million (with the current exchange rate of 1.71899).
    That's $135 million a year in net loss for transfer fees.

    Imagine how much money Chelsea would save if they get all the players from free agency like American sports.

    Of course, in order for that to happen, Essien wouldn't come to Chelsea until 2007, Robben 2007 Shaun Wright-Phillips 2007 Didier Drogba 2006 (or whenever their contract runs out). However, they would get 'free agents' whose contract runs out in 2004, 2005 for example.

    However, by playing out their contract, their salary would increase significantly because they will go on a free.

    The other big spender, Real Madrid, also has a huge net deficit on transfer fees. Probably the same thing for Juventus, AC Milan. However, Arsenal is an exception.

    BUt on average, Real Madrid, Man U, Juventus, Barcelona, AC Milan would probably lose on average 25-30 million dollars a year on transfer fee.
     
  17. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    This is news to me. FIFA actually proposed to end transfer fees 5 years ago?

    http://www.soccernet.com/england/news/2000/0903/20000903whufclufcrio.html

    However, this piece is most interesting.

    In order to get paid as much as American sports counterparts, all these elite players has to do is do a 'Ballack'. Play out their contract and become a free agent. Of course, there are some risks like injury or not playing well a few months before becoming a free agent. But these same risks also take placed in NBA, MLB too.

    Why haven't it happened more and more? I don't really know. One theory is that their agent get a 10% cut from transfer fees. No transfer fees = no $. However, I don't buy this.
     
  18. Beau Dure

    Beau Dure Member+

    May 31, 2000
    Vienna, VA
    To repeat:

    I do see your point, and yes, perhaps transfer fees are one factor holding down the salaries of the top players. But a bigger reason, as others have noted, is that good soccer teams need to pay many more players a lot of money. An NBA team can be competitive with three big-budget players, five guys making a little less than the league average and seven scrubs. Chelsea is paying, what, 15 really big salaries and 10 somewhat big salaries? And the money is Europe is spread so far down that teams below the EPL, Serie A, La Liga and the Bundesliga can pay their players quite well.

    The other point I'd make: Transfer fees aren't the European equivalent of free agency -- in the post-Bosman era, free agency in Europe is pretty much the same as it is here. Transfer fees are instead the equivalent of trades. If the New York Knicks want Carlos Boozer to play for them right now, they can't just offer him a contract. They have to offer the Utah Jazz one or more of their players. In fact, you sometimes see players -- especially in baseball -- traded for cash, though it's rare and it usually involves journeymen.

    When a player is transferred, he often signs a new deal. (Someone please correct me if I'm missing something in the fine print.) So soccer players actually have an option to get a raise in the middle of a contract. That doesn't usually happen in U.S. sports unless they renegotiate for some reason. If Shawn Wright-Phillips played for the Baltimore Orioles under a five-year, $10 million contract, he wouldn't have many options for getting a raise in Year 4. But in England, he can be transferred to a team that pays him more. (Haven't been able to verify that he got a raise upon his move from Man City to Chelsea -- can anyone chime in?)
     
  19. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    No, it's partly because our leagues are cartels, and partly because of differences in revenue.

    The lack of pro/rel means that there are fewer teams than the market would naturally allow, and therefore the payrolls of those teams are bigger. If I can use a hockey example...the Rangers have been one of the biggest spending, yet suckiest teams. If they had ever been relegated and forced to sell off their high earners, that would have flooded the market. Look at the Orioles...they've had a few relegation-worthy years recently while having a super high payroll. Same thing...if the O's had ever gotten relegated, they would have flooded the market, driving down player salaries. Pro/rel allows more players to earn a living at a sport, but a less opulent one.

    Also, in basketball, teams have 41 home games. In baseball, they have 81 home games. In football, the TV package is phenomenal. Apples and blankets.
     
  20. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    Do you have any evidence for this assertion? Cuz I don't think it's true.
     
  21. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    The money wouldn't disappear. It would just go from Team A to Team B. And except for baseball, Team B has pretty much the same outlook as Team A, and would plow it into player salaries at THEIR team.

    Transfer fees pretty much only would work in a stratified, multiple level, pro-rel system. They wouldn't work, or at least they'd work in a completely different way, in a cartel system.
     
  22. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    Actually, if in the first line you mean "soccer" players, they ALWAYS sign a new deal. ALWAYS. Without exception.
     
  23. DoctorD

    DoctorD Member+

    Sep 29, 2002
    MidAtlantic
    Club:
    Philadelphia Union
    Nat'l Team:
    United States
    I prefer the term "regulated monopoly" to cartel.
     
  24. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    115 million pounds in total payroll = $200 million. Yet, Chelsea probably spend $70 million of that payroll on transfer fees and the rest ($130 million) on salary. Without transfer fees, Chelsea would have $200 million to spend on players (they might not spend all $200 million on player salary, but probably more than $130 million).

    As I already posted, on average the elite teams (Man U, Chelsea, Real Madrid, AC Milan, Juventus, Barcelona) has a $25-30 million net loss on transfer fees each year. If they get the same players on a free instead of transfer fees, they would have a $25-30 million saving each year. What would these clubs do with the $25-30 million in saving? Probably compete/bid for elite free agents.

    Chelsea has a 236 million pounds in net loss from transfer fees for 2003, 2004 and 2005.
    That's about $405.68 million (with the current exchange rate of 1.71899).


    Assuming Chelsea spends about $150 million each year on salary, their player budget over the last 3 years is $150 x 3 = 450 million + 405 million in net loss on transfer fee = $855 million. Each season, Chelsea spends about $285 million for player (salary and transfer fee). Without a transfer market, the millions would go toward the player and not other soccer clubs (like PSV for Robben or Lyon for Essien).
     
  25. pc4th

    pc4th New Member

    Jun 14, 2003
    North Poll
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    Re: Why is the top soccer player getting paid a lot less than NBA, NFL, MLB top playe

    For the elite clubs, the money WOULD disappear. As I already posted, elite clubs like Man U, Chelsea, Barcelona, Real Madrid has a net deficit of around $25-30 million per year. Would Miami Heats, Yankees and Red Sox still paying the same amount of money for their highest paid player? I doubt it. If they have a $180 million budget, a net loss of $30 million in transfer fee would reduce their player salary budget to $150 million a year.

    Transfer fees can take place in baseball (from Japan, Korea, Venezquela, Cuba, Puerto Rico) but it is very rare. Why? MLB abolished transfer fees for the most part. Need commissioner's permission for special circumstances.

    What about the NHL? I don't hear a lot of transfer fees in that sports. Especially with European players. Would the NHL's top 2-5 players get the same amount of money today if the team paying them has to spend $5-10 million in transfer fees out of a $39 million total player budget? I don't think so.
     

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