Today millions of Americans will come home to watch the annual NFL Draft. The dreams of hundreds of athletes will come true today, and fans will anxiously be waiting to see who the next star of their time might be. The NFL Draft is an entertaining, lighthearted event, but Americans might want to take a few minutes to reflect on what the draft says about income inequality in America. In many ways the draft represents America, with the top earning a whole lot, and the bottom earning very little to none.
First, it is worth noting that every draftee will automatically find himself in the top one percent if he signs an NFL contract. The NFL league minimum for 2012 will be $390,000. The minimum income of the top one percent of income earners in America is $386,000. However, many of the draft picks will be cut and signed to practice squad contracts which pay them much less than the incomes of the top one percent.
There is also inequality, deserved or not, within the draft itself. The top pick will likely earn more than 60 times as much the last pick, or Mr. Irrelevant as he has become known. Even a second round pick will see dramatically less money than a first round player who was selected just 20 spots before him.
None of the top draft choices will make enough to be part of the top .01 percent. The top .01 percent has incomes starting at $11 million per-year, and the top .01 percent makes an average income of $31 million per year. Last year the first overall pick, Cam Newton, agreed to a four-year contract that guarantees $22 million over that time, putting him well below this group’s minimum threshold. Nearly all the NFL owners are part of the top .01 percent. In 2009, the average NFL team owner earned a profit of $33 million, and profits have gone up since that time.
All of the first round picks will soon become very wealthy members of the top one percent. The top one percent will have incomes starting at $386,000, with an average income of $717,000. Derek Sherrod, the last first round pick from last year, signed a contract guaranteeing worth $6.6 million over four years. Of course, if Sherrod and players like him lose their jobs and fail to invest their money wisely they could quickly drop out of the top one percent later in their lifetime.
All these salaries will dwarf the incomes of the bottom 90 percent of Americans. The average American makes a salary of just $36,000, which means every player drafted today will make at least ten times the average American if he signs a contract. The top picks today will earn well over 100 times as much as the average American.
Finally, NFL salaries have risen at a much greater rate than for most Americans. In 1980, the average NFL player made just $78,657, which means there salaries have more than tripled over the last three decades. NFL players are all part of a union, and have effectively used the power of collective bargaining to increase their incomes. Most of the American population is not unionized, and the salaries for the bottom 90 percent have risen only about 25% since 1980, not even enough to keep up with inflation.