Many people complain that athletes make a disproportionate amount of money. But what if they are actually underpaid—to the tune of $20 million?
At least a few sports economists are making that very argument, saying salary caps deprive professional athletes of earnings, and don't accomplish what they set out to do.
The term underpaid is used loosely, obviously, as it has to be when talking about multimillionaires who earn hundreds of times more than the average wage earner. Still, experts argue that athletes' salaries are being artificially suppressed due to caps that distort what their skills may be worth in an open market.
Like rent control or usury laws that put a ceiling on the price that consumers must pay, sports watchers say caps on pay create an artificially low market price for professional athletes compared to the marginal revenue product they provide. In other words, salaries could in fact be a lot higher, given the ways individual players contribute to their teams and the intangible benefits they bring to their respective geographic areas.
The average salary for a National Basketball Association player is more than $5 million—the richest among professional sports. However, Vanderbilt sports economist John Vrooman estimates that a well-known player such as Kevin Durant is in fact "probably being paid about half of what he is worth to the Oklahoma City Thunder."