Olympics, Nike, Shawn Johnson discussed on Freakonomics



It's easy to see professional athletes as fortunate beyond belief getting rich for playing the game, they love yada, yada. But that as we've been learning today is a very simplistic view of a complicated economic ecosystem for one thing. It's easy to focus on the handful of athletes at the very tippy top of the pyramid at the exclusion of the thousands of athletes below them. You don't make money unless you succeed at the Olympics. That's Shawn Johnson. She won one gold and three silver medals in gymnastics at the two thousand eight Olympics, how the majority of Olympic endorsements work. Is you sign an Olympic endorsement such as a Coca Cola. Mcdonald's. A Nike Adidas Under Armour before the Olympics, even starch, but the way these contracts are structured is these athletes aren't paid any money up front. The only way they earn money is by winning medals. So if you sign. Sign a deal with Nike. That's say a million dollars you go to the Olympics. And you don't win a medal. You don't earn any money. And when you're talking about thousands and thousands of athletes who have reached the pinnacle of their sport by just qualifying to the Olympics. The fact that they aren't getting compensated for their journey. That's gotten them to that point. I think is is pretty extreme extreme perhaps. But also, very similar to another population of amateur athletes, all the college football and basketball players who are very very good. But not quite good enough to have a pro career. And if you are that good and lucky then you're drafted by a protein. Remember, they choose you. You don't choose them. And now you're looking at a rookie contract with predetermined wages for your first several years if last that long if not the team can cut you loose, which means you're downside is unprotected. At the same time that you're upside is limited. You're basically stuck at a way below market paycheck for your first three years at a minimum Victor Matheson, an economist at college of the Holy Cross and president of the North American association of sports, economists is that made up for by the fact that you get to make these huge free agent contracts later..

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