From a GM's perspective, of course, it's all just a game. They have a certain budget, in some circumstances they can plead for extra budget if they pull certain levers, but ultimately they're just optimizing a resource and trying to bet on certain roster construction or scouting and projections. Players are "worth" what you think they do for your on-court success near and long term, the alternative uses for that money, etc. There's really no benchmarking to the rest of the real world.
From an outside perspective, though, I think about it relative to the greater entertainment landscape. And entertainers are both labor
and "the product", frankly that could be a definition of the industry. Anyone who gets paid because someone else will pay to watch them do their thing, whatever that thing might be, is an entertainer. And entertainers are either owners who get whatever profits they generate (think bands doing a tour), or close enough that they get a percentage, basically get a commission like a salesperson - hollywood actors, for example, where the stars with top billing usually get a percent cut. How do you properly compensate someone whose performances brought in $100M? When the top salesperson or trader at Goldman Sachs brings in $100M, nobody blinks at them making $20M. Companies who think their top salespeople are replaceable, who move to cap commissions or play games with comp structures, see a rapid exodus of talent and clients. So it makes sense to me that if your performances bring in that amount of incremental cash, you have a claim to some share of it.
But what about replaceability? There's only one Madonna, or Ed Sheeran, or Rolling Stones, etc. Fans of a famous band or singer will pay to see them, but might not pay the same for any marginally-less-famous act that comes through. The experience isn't interchangeable for the customer. Down one rung, lots of people will go see a movie because Star X is in it, and sometimes they'd be nearly as enthusiastic if it were Star Y (because the plot / trailer / genre matters), but reputation gooses sales considerably. So movie stars are a
little replaceable, but their presence (and work) still create a big share of the value. Same with authors. But how replaceable are athletes in a team sport? Can the next-guy-up do just about as good a job? As the Tampa Bay Rays can tell us, you can get someone willing to work for replacement-level MLB wages who is nearly as good - who can win some games and as part of a team can look professional out there. But I guess what the fans are really paying for is winning. They want to watch a winning team, and will pay way more if they think they're going to watch a winner. So the utility curve, the willingness-to-pay curve, probably ends up revolving around the old $-per-WAR metric, or whatever equivalents there are for other sports.
So all of the NBA's 51% share of basketball-related money going to players gets concentrated to those 450 players on the 30 rosters, of whom 1/3 are starters, and another 1/3 of whom are basically on league-minimums anyway - your replacement-level guys, in theory. So the minute there's some NBA player who has any sort of market demand, who can move the needle for them, the amount of money those teams can throw at him is absurd. And it's exacerbated by the max-salary situation, where Lebron or Giannis or Jokic should be making $70M, so because they can't, that excess money usually gets spent on someone who isn't, strictly speaking, worth it.
Part of it I think is how many jobs all that money is spread around. In individual sports, you eat only what you kill. Roger Federer makes $100M, and ATP Rank #500 probably
loses money flying to tournaments every week. The NFL has 1600+ roster spots (over half of whom are starters), another 500 reserve / practice-squad spots, and there are a couple of other leagues (CFL, new startup spring leagues) that are trying to meet the market demand. But that's a decent number of pro players to spread the money around, and all but a handful are pretty replaceable. Global soccer (football) has so many pro leagues in every country that it's actually a lot more egalitarian. The average pro soccer player probably makes like $50k / year. No one player can make you an instant winner the way it can in basketball. And for every top star at the fanciest clubs making $X, there's 10 players down a rung making 1/10th X, and 100 players down several rungs making 1/30th X. The money is fragmented among lots more leagues and clubs and players, and it's a very gradual slope downward. With basketball, though, the difference from the NBA vs every other pro league is staggering, it's like an order of magnitude.
Shane Larkin was the
#2-earning player in the Euroleague last year, at $3.7M; only a dozen or so are above the NBA's minimum-salary cap hit of $1.7M. Average salary in Liga ACB in Spain is $200-500k, but it's
actually rare for a player to make even $100k a year overseas. If you're a basketball player by trade,
1% chance you're in the NBA making an absolute killing
2-5% chance you're making a very good living by normal standards but not dwarfing the income of well-educated professionals
20-30% chance you're making a comfortable middle-class salary as one of the average players in a top-10 or top-20 league
60-70% chance you're scraping by on <$2k / month, have at least one other job, and it was probably not a great career decision for you
Kinda reminds me of the pay structure of drug empires from Freakonomics, but that's a fraught comparison. What else does it resemble to me? Entrepreneurs starting a business. Nobody but the most committed socialists think it's completely unfair that a few rare entrepreneurs make a fortune building a great business. And that's partly because they know that for every one media-attention-worthy superstar company, there's dozens of people making a very good living, hundreds who are comfortable and stable but not rich, and a bunch of people (like me!) who tried to start something and failed, and would've been better off working for someone else. There's luck involved, of course, but most people recognize that to a certain extent you make your own luck, and the people at the top of this pyramid had something rare and valuable that most of us don't. Being a genius programmer or marketer, or being a 6'6" brick shithouse with a great 3-point shot, are things not many people are born with, and that's OK in the eyes of most.
I get that the visual and aesthetic difference between Grant Williams vs an average D-1 player who goes overseas and makes $80k / year feels like not much. You watch and you think:
That is really worth 200x the money? I suppose one could look at an average salesman and a legendary salesman like Ross Perot and not see a ton of difference on the surface. But those differences manifest into such a huge difference in value to the people who are ultimately the customers of his services. It's still hard for me to believe, but that's how I've made my peace with it, at any rate.
