The Top-Paid US athletes

Sports Illustrated released its annual listing of top-paid athletes today. For some, the findings are no surprise. For example, Tiger Woods holds on to the top spot, raking in more money than Phil Mickelson, LeBron James, and Floyd Mayweather Jr (ranked second, third, and fourth) combined. Also, NBA players made up 26 of the top earners (counting Amaré Stoudemire who was mistakenly listed as a baseball player).

However, the data leads to some interesting findings. Here are three observations:

The difference between low salary and high salary was small ($24.7 million, with a mean average of about $16.1 million and a standard deviation of $5.1 million) compared to the differences between endorsements (with a range of $104.9 million, a mean average of about $9 million and a standard deviation of $16.8 million). So while these top athletes’ salaries are relatively uniform, the amount of endorsement money they get is not.

This is illustrated more clearly in the following table.

The range in players’ endorsement money isn’t that surprising. What is more interesting is the relationship between race and endorsement. In a 1996 New York Times article David Falk, Michael Jordan’s agent, said “Very few companies call for athletes, and even fewer call for black athletes.” To see if that still held true, I divided the top 50 earners into two categories: Caucasian in appearance or not Caucasian (the second category includes Hispanic athletes like Alex Rodriguez). What I found was good news for those of us who hope for racial equality in sports: the mean salary for the Caucasian group was smaller than that of the non-Caucasian group. ($8.7 million vs $9.2 million). Moreover, when the top-sponsored athlete was removed from each category (Tiger Woods and Phil Mickelson) the sponsorship dollars still favored the non-Caucasian group ($5.9 million vs $6.1 million).

The above numbers seem to show that the business of sports has lost some of its racial baggage, since endorsements and salaries are higher for non-Caucasian athletes. But that’s not the whole story. If we start with the premise that salaries are a good indication of a player’s worth to a team, at least within his league (and I use “his” because a woman hasn’t yet broken the top 50 mark for earnings), then it should follow that the more talented athletes should rake in the greater share of endorsement dollars. But a closer look at the numbers shows that Caucasian and light-skinned athletes make more sponsorship money as a ratio of their salaries than non-Caucasians. Just look at the chart.

The ratio here is endorsements/salary, so a higher ratio indicates a greater amount of endorsement money over salary money. What we see is that, on average, a greater percentage of the Caucasian group’s total earnings come from endorsements. For an example of this, take two NBA players: Jason Kidd (white) and Jermaine O'Neal (black). Both make an identical salary, yet Kidd pulls in exactly twice as much money in endorsements.

Fifty data points is still a relatively small sample size, and the salary indicators point to an equal playing field, but these numbers should be a reminder to sponsors who use athletes in their marketing that the disparities that David Falk bemoaned may not have disappeared.