UFC, NFL, Lauren Murphy discussed on Weekend Edition Saturday
Athletes as fortunate beyond belief from 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 blow 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 Coca Cola McDonald's and Nike Adidas Under Armour. The Ford the Olympics even start by 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 a deal with Nike that's same 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 pro team. 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 in amendment. That's 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. Yeah. But only a few last long enough to actually make it to free agency. Russell Wilson the Seattle Seahawks quarterback did make it that far. Actually, he did. So well in his first three seasons at Seattle gave him a contract extension worth nearly ninety million dollars before what would have been his final season under his rookie contract. But during this first three seasons he averaged under. Million dollars a year despite leading team to two Super Bowls and winning one. And what if Wilson instead had played major league baseball, which he maybe could have he was drafted by the Colorado Rockies and played some minor league ball in baseball Wilson would have had to put in six years of major league service to become a free agent. Interestingly the average career length to major league baseball is five point six years. Also, interesting rookie NFL contracts are for four years and the average NFL career length the typical player plays about three seasons. This presents a paradox a clash of incentives the gives the leagues and teams much more leverage than the athletes as Victor Matheson sees it this also helps explain why a players strike would be very hard to organize and I'm working for Verizon on the lines fixing. Telephone poles. I might be willing to sit out and lose my salary for an entire year. If I can get a ten percent higher salary for the next twenty years. I'm working for them, you know, those numbers kind of work out. But if you're if you're a major league baseball player if you're an NFL player you can't afford to lose even one season because there's almost no increase in pay the could justify you losing one season of your very very short career. And so the owners have a huge advantage over that they will not make that money back like it's just physically impossible Dominique Foxworth again. He was on the NFL players union executive committee during its last collective bargaining negotiation in two thousand eleven with the length of a player's career. And how much money they could stand to make in a season. It's really not in their best interests like mathematically logically. If you go through the numbers, it's not in their best interest to actually withstand. Lockout or to initiate a strike. And as a matter of fact, teams themselves have stopped uh striking completely all of the last major interruptions in pro sports in the United States have not been strikes, although they look like it to the fan lockouts. Right. They'd been lockouts. Yeah. This is the owners actually going on strike and not paying the not paying the players rather than the players refusing to work. That's what happened in the two thousand eleven NFL negotiations. The NFL locked out the players for one hundred and thirty two days, although it was during the off season. So barely affected the run of play the owners and the players union finally agreed on a ten year deal which saw the players share of revenue fall from essentially fifty fifty two somewhere in the high forties. Although the players did gain some other concessions like funding for retirement and fewer practices. The most recent NBA NHL collective bargaining agreements. Have similarly resulted in a smaller share of revenue going to the athletes that said those are huge rich leagues that generate many millions of dollars for even average players. It can be a lot harder to make a living in some other pro sports. Yeah. It's a pretty typical fighter story to be broke and trying to make it, you know. Lauren. Murphy started fighting in mixed martial arts matches in two thousand ten she's currently top ranked flyweight fighter in the UFC or ultimate fighting championship. There was a time when I was coming up before I was signed to the UFC where I was traveling a lot to train I was sleeping on people's floors. I was sleeping in their guest bedrooms. I would like house sit and dog sit for people at the gym. It's hard to come up in fighting because you spend all your time training. You don't have a lot of time to work. You know, if you're if you're trying to decide what what sport to go into man, stay away from UFC because they're making a lot of of revenues, but not much of that is going into the athletes in the big team sports. Matheson told us roughly half the revenues are designated for the players, although as we just noted that share has been shrinking a bit in the UFC. Meanwhile, that share is much lower the amount going to the athletes there's about ten or fifteen. Fifteen percent of revenues the chief operating officer of the UFC Lawrence. Epstein disputes that figure the fifteen percent number. I don't I don't think that's accurate. I mean, there certainly is some fluctuation in the percentage of revenues that goes athletes, but the reason for that primarily is that we have a variable revenue stream model in our in our company, meaning the UFC distribute some of its fights via pay per view. Whereas the big team sports have bigger more reliable TV contracts still salary data for USC athletes is hard to come by since the company is privately held and the athletes are not unionized, which means there's no collective bargaining agreement. The really has all the control they can cut you on one loss. They can cut you after two losses. They can keep you around for as many as they want. They can renegotiate your contract. You know, there's just. They have a lot of power that said Lauren Murphy is not much of a critic of the UFC her career may not be all that lucrative. But it is a career and maybe more important it's given shape to her life sports in Murphy's case fighting it can have that effect on people, and that's part of the draw. I struggled with depression and I struggled with addiction. And I kinda just became your your typical high school dropout teenage mom in a small town. And it's just changed my life in ways that I never could have even dreamed of back then in a small town in Alaska in just her third. UFC fight Murphy earned a fifty thousand dollar bonus for taking part in the fight of the night of fairly subjective award bestowed by UFC management to the two fighters who delivered the most impressive performance on a given nights card that bonus changed my life. Life. I've paid off a bunch of student loans at that. And I got out of debt and. It was really a life changing experience for me Murphy's bonus was a great stroke of fortune as for her guaranteed pay the UFC. That's a different story fighters. Get paid for two things making weight and winning figures vary, but the most Murphy's ever gotten was twelve and twelve twelve thousand dollars from making weight twelve thousand dollars for a win which obviously is also not guaranteed. What is guaranteed is that Murphy will train five to six hours a day for months and the NFC fighters get on average just two point three matches per year. I've only made about fifteen thousand dollars in the of C so far this year. But you know, my dream was to see how far I could take this. And for me at least. You know, if I wanted to be in a profession to make a lot of money, I would have been a lawyer or a, you know, a doctor or something like that it might have more to do with the fact that this is a fairly new sport that may be still trying to find its way Victor Matheson again, but that's way, less than you're making elsewhere. Now, do you anticipate that changing if we were talking five or ten years, you have see is is making a lot of money and they've been growing really fast. Do you think that the athletes will eventually get the leverage to get that share up to thirty fifty sixty percent of revenues? Well, we did not see that happen in any of the other individuals sports Intel we had those athletes joined together in some sort of important way. The athletes unions for players associations as they're often called negotiate not only pay scales. But also work conditions schedules health and safety and various benefits. In other words. They do what labor unions have always done, the NFL players association is in fact, a member of the AFL CIO, the big federation of unions that include the American federation of teachers and the American federation of state county and municipal employees here again is damore Smith executive director of.