Shohei Ohtani, the Japanese baseball star, is signing a $700 million 10 year contract… is this too much? Are professional sports stars paid too much?
Let’s discuss this on today’s episode of Thinking in English!
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Vocabulary
- Contract (Noun): A formal agreement between two parties, specifying terms, conditions, and obligations.
- Before joining the team, the athlete carefully reviewed and signed a binding contract.
- Endorsements (Noun): Public support or approval, especially by a famous person or celebrity, often for products or services.
- Shohei Ohtani makes millions of dollars in endorsements.
- Two-way Player (Noun): A player in sports, like baseball, who excels in both offensive (batting) and defensive (pitching) skills.
- Ohtani is the first successful two-way baseball player in over 100 years.
- Valuable (Adjective): Having considerable monetary worth or importance.
- Sports stars can be very valuable.
- Pitching (Noun): Throwing the ball in baseball with the aim of getting the batter out.
- The pitcher’s powerful pitching technique proved challenging for the opposing team.
- Supply and Demand (Phrase): The fundamental economic principle determining the price of goods and services.
- In a competitive market, prices are often influenced by the balance of supply and demand for a particular product.
- Salary (Noun): Fixed regular payments made by an employer to an employee.
- Ohtani’s salary could be as high as $70 million a year.
The Biggest Contract in Sports History
Have you ever heard the name Shohei Ohtani before?
I assume many of you, especially those of you in Europe, probably don’t know much about the Japanese baseball player.
Yet last week, Ohtani signed what might be the largest ever contract in professional sports history. The Los Angeles Dodgers, the iconic Californian baseball team, has signed Ohtani onto a $700 million 10-year contract.
While some professional footballers (like Lionel Messi and Christiano Ronaldo) probably earned more per game, Ohtani’s $700 million deal is the largest ever contract in North American professional sports and probably the most valuable anywhere in the world.
It is the largest contract is baseball history. Mike Trout, Ohtani’s former teammate, signed a $426.5 million deal – significantly less than Ohtani’s new contract.
It is also larger than Lionel Messi’s previous record-breaking contract with Barcelona.
Moreover, Ohtani also broke Major League Baseball’s record for endorsements and sponsorships last year – earning an estimated $40 million a year through his partnerships.
Ohtani is not the only sports star earning an incredible amount of money.
The average Premier League footballer in the UK earns around $4,000,000 a year; the average NBA (basketball) salary is $10,000,000; and the average golf star on the PGA tour earns around $1.5 million a year.
None of these figures include partnerships, sponsorships, returns on investments, or non-sport related income.
When we compare the massive amounts of money earned by professional sports stars with the average incomes in their countries, it looks like they are massively overpaid.
But are they really? Are sports stars overpaid?
Let’s discuss this today!
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Who is Shohei Ohtani?
Shohei Ohtani is an international baseball superstar.
The 29-year-old, born and raised in the northeast of Japan, is the best baseball player in the world, the biggest sports star in Japan, and now has the largest ever contract in professional sports.
Since entering high school, experts had been predicting greatness from Ohtani. At the age of 17, he was already able to pitch (throw the ball) at 99 mph or 159km per hour.
When Ohtani graduated from high school, he originally planned to move to the USA and the major leagues straightaway. However, after negotiations with the Japanese team the Hokkaido Nippon Ham Fighters (who promised Ohtani that he would be allowed to pitch and bat) he decided to stay in Japan.
After spending a few years in Japanese baseball, every single Major League team in North America tried to sign him in 2017. Eventually, he signed with the Los Angeles Angels.
He won the Rookie of the Year award in his first season and then, after struggling with injuries for a few years, won the Most Valuable Player award after a record-breaking season in 2021.
And he again won the award in 2023.
The Best Player in Baseball History?
He is often described as the best player in baseball history and compared to the legendary Babe Ruth who competed 100 years ago.
This is because he can do something that no other major league professional baseball player has done for 100 years. He is a two-way player.
The concept of a two-way player in sports can be a little strange for fans of sports like football (soccer) or rugby. So let me try to explain.
In some sports, especially North American sports, players tend to specialise in a certain skill. In American Football, players specialise in offensive or defensive roles – they have completely different teams on the field depending on if they are attacking (trying to score) or defending (trying to stop the opposition scoring).
In baseball, a two-way player is a player who can both bat the ball (so hit the ball with the bat) and pitch the ball (throw the ball).
This is exceptionally rare in baseball.
In most baseball teams, the pitcher is a specialised role. In the American League (one of the two leagues that make up Major League Baseball), pitchers have not needed to bat in games since the 1970s.
And when they do bat, they tend to perform significantly worse than their teammates.
Ohtani, however, can do both. In fact, he can not only do both, but is one of the best pitchers and one of the best batters in the MLB. In 2021, he was the first ever player selected to the All-Star team as both a pitcher and a batter.
This is why some people have described him as the best player ever or as a unicorn – an exceptionally rare creature! Before Ohtani in the 2021, the last player to be a regular pitcher and batter in the same season was Babe Ruth in the year 1919.
Sports Star Salaries
Now you know a little about Ohtani, let’s take a look at his and other sports star salaries.
Ohtani has now signed the biggest deal in Major League Baseball history and will become one of the highest paid sports stars ever.
His deal is worth $700 million over 10 years, which is about $70 million a year.
This is 62% higher than the previous top baseball players annual salary, and twice as high as his earnings last year.
However, his contract is actually a lot more complicated than this. He has chosen to take just $2 million a year for the next 10 years, deferring $68 million a year until at least 2034. This is to help the Los Angeles Dodgers keep their current wage bill lower and allow them to sign more players.
Ohtani is also one of the most marketable sports stars in history, earning millions in sponsorships and endorsements every year.
In any case, this will put Ohtani amongst the highest paid athletes ever.
According to the 2023 Forbes Highest-Paid Athletes list, footballers Christiano Ronaldo, Lionel Messi, and Kyllian Mbappe are the best paid stars when you combine both on the field and off the field earnings.
Basketball stars Lebron James, Stephen Curry, and Kevin Durant, Boxer Canelo Alvarez, golfers Dustin Johnson and Phil Mickelson, and tennis player Roger Federer are also in the top 10.
Some of these, like the golfers, make the vast majority of their income from winning tournaments and playing sports.
On the other hand, Roger Federer, the tennis star, earned $95.1 million last year according to Forbes, with just $100,000 coming from playing tennis and $95 million for his off-the-field businesses.
When it comes to the top athletes and sports stars in the world, we are talking about almost inconceivable amounts of money.
I’m from the UK where the average salary for a full-time worker is about $44,000 USD (£35,000). It would take 1590 years of working full time to earn the same as Shohei Ohtani’s yearly $70 million. In fact, it takes Ohtani about 5 hours to earn $44,000 USD.
This is a staggering amount of money. So much higher than doctors, teachers, nurses, politicians, and senior public servants.
Are Sports Stars and Athletes Paid Too Much?
Is this fair? Or are professional athletes paid too much?
I want to take a look at both sides of the debate. Let’s start with arguments that sports stars are overpaid.
Arguments in favour of professional sports stars being paid too much:
Professional athletes often earn significantly more than essential workers, teachers, and healthcare professionals. This income disparity is seen as unfair, especially when considering the societal contributions of other professions.
While sports provide entertainment, some argue that their impact on society is not as critical as other professions. Teachers, doctors, and emergency responders, for example, contribute directly to the well-being and functioning of society, yet their salaries are comparatively lower.
Doctors and nurses are the key to keeping people alive and healthy, yet a professional golfer will often earn more in one day than a nurse will in an entire year.
Even professional players on minimum salaries will still earn way more than the average person. For example, the average player in League Two of the English Football League (this is the 4th division of English football, below the Premier League, Championship, and League 1) is thought to earn £2000 a week which is over twice as much as the average UK salary.
Another argument is that, in many cases, public funds are used to build stadiums for professional sports teams. Critics argue that the high salaries of athletes, combined with publicly funded facilities, contribute to an uneven distribution of resources.
West Ham, for example, in the English Premier League play in the old Olympic Stadium from the London 2012 Olympics and while they do pay rent, they have received a lot of public funding and support!
Is it fair for these teams to take so much public money while paying such high salaries?
During Covid, many professional sports teams in Europe and North America took loans and grants from governments designed to help business survive, but continued paying high salaries to players – is this fair?
And finally, some argue that excessively high salaries for athletes can send the wrong message to society, emphasizing financial success over other values such as education, hard work, and community service.
Arguments against professional sports stars being paid too much:
On the other side of the debate, many economists point out that athletes’ salaries are determined by market forces. If the revenue generated by sports leagues, teams, and endorsements justifies high salaries, then critics argue that it’s a fair outcome. It is driven by supply and demand in the entertainment industry.
Professional athletes often dedicate their entire lives to their sport, honing their skills and maintaining peak physical condition. The argument here is that their extraordinary talent, hard work, and commitment warrant the high salaries they receive.
Athletes have a limited window to earn money from their playing careers due to the physical limits of sports. The high salaries compensate for the short duration and potential long-term health risks associated with a professional sports career.
Let’s take the example of quarterbacks in American football. This is the star position, and the average quarterback in the NFL is paid around $5 million a year. However, the average quarterback career length is around 4 and a half years.
Athletes are considered part of the entertainment industry, and high salaries are not uncommon for actors, musicians, and other entertainers. The argument is that athletes should be compensated at a level consistent with the revenue they generate for their teams and leagues.
Is Ohtani Being Paid Too Much?
So, after looking at both sides of the argument, do I think Shohei Ohtani’s $700 million contract is way too high? Is he being paid far too much?
When I started writing this episode, I was fully planning to say… yes – he is being dramatically overpaid.
$700 million is a staggering amount of money which I don’t really think anyone will ever deserve. I guess from a moral or ethical standpoint, I think that is maybe too much money!
However, things started to change when I researched Ohtani’s contract. It seems like Ohtani might actually be worth $700 million…
From an on-the-field perspective, Ohtani is one of the best players in history. With him in the team, the Dodgers are more likely to win tournaments and games, and thus earn more money!
If he can bring great success to the team, he will of course be worth a big contract. If a team can make the end of season play offs, or even win the national championships, they will earn up to $100 million extra.
If you look at players with similar performances to Ohtani, they are often earning $300-400 million contracts. And that is not taking into account the fact Ohtani is like having 2 of the best players in the world as he is a two-way player.
But it is off-the-field that Ohtani brings an immense amount of value.
He has an ideal image – he doesn’t drink or smoke, doesn’t care about money, and focuses exclusively on playing baseball.
While living in Japan, Ohtani stayed in the team dormitories despite being the best player in the country and gave his parents entire control over his finances.
In 2017, Ohtani was paid just $500,000 a year by the Los Angeles Angels despite already being valued at $200 million (this was due to the MLB’s rules about international player salaries).
If he had waited until the age of 25 to move to America, he would definitely have been earning hundreds of millions straightaway, but he wanted to play in the MLB so badly that he sacrificed that massive salary.
When Ohtani was pitching, the Los Angeles Angels experienced an 11% average increase in attendance during his first year. Just taking into account ticket prices and the average spent on food and merchandise by baseball fans, Ohtani earned the Angels $2 million extra in his first 5 games for the team.
You are probably not convinced that Ohtani is worth $700 million, but maybe the next fact I will tell you might change your opinion.
The economic impact of Ohtani during the 2023 season has been estimated at $342 million. One man, in one year, contributed $342 million to the economy.
How? Millions of dollars in merchandise and shirt sales. Higher ticket sales. Thousands of people travelling from Japan to see him play. Millions of dollars spent by Japanese companies advertising in games he plays in. Games being streamed live on Japanese TV.
Japan is a baseball obsessed country – it is the most popular sport in Japan. And they love Ohtani.
One economist has suggested that Ohtani, alone, attracted 600,000 fans who travelled to watch him play in 2022. That would be over $40 million in ticket sales… not including food and merchandise sales.
He has the highest selling shirt in baseball, and millions is made by selling products featuring his image or name.
In Japan, every single Los Angeles Angels game last year was shown on TV because Ohtani was playing. There was even a stream that only showed Ohtani… even if he was sitting on the bench waiting for his turn to play.
Having the Japanese audience can double, if not more than double, the amount of people watching a baseball team play.
And this brings massive opportunities for Ohtani’s team to sell ads and sign sponsorship deals with Japanese companies.
Many people have compared signing Ohtani to the signing of Lionel Messi by Inter Miami – it will bring massive amounts of interest, media, and money to wherever he goes.
While I think many sports stars are probably paid far too much, Ohtani may actually be worth it!
In addition to the immense value he brings on the field, off the field he is perhaps the most valuable and financially influential person in baseball history. $700 million might seem like a ridiculous number, but if Ohtani can stay healthy for the next 10 years he will bring his new team significantly more than that number in winnings, ticket sales, sponsorships, endorsements, TV deals, and more!
Final Thought
In the world of professional sports, the debate over whether athletes are overpaid is ongoing.
Shohei Ohtani’s recent $700 million contract with the Los Angeles Dodgers has sparked discussions about the staggering sums earned by sports stars.
While the figures may seem astronomical compared to average incomes, Ohtani’s exceptional skills, both on and off the field, raise questions about the true worth of such contracts.
As we weigh the arguments on both sides, Ohtani’s economic impact, valued at $342 million in a single year, suggests that, in some cases, the enormous pay checks may indeed be justified.
What do you think? Are professional sports stars paid too much?
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