Most athletes dream of working and making it to the professional level, where playing does not only result in getting bragging rights or scholarships but can be a way for you to earn and sustain yourself and your family. Imagine having a contract of $160 million with $126 million guaranteed and $66 million paid upfront, this was the case for 28-year-old Dak Prescott who made it onto Forbes as the highest-paid NFL player of all time in 2021. Let us know ‘Who Pays NFL Players?’.
Who pays NFL players?
Before officially getting signed to any team players do get into negotiations with teams. In most cases, a player is represented by an agent while a general manager will represent the team, with each party coming up with reasonable demands and the best terms of the agreement that each party stands to benefit from.
Nfl players are therefore paid by the teams they play for, guided by the terms and conditions set during the negotiations.
These payments include base salaries, bonuses, guarantees and incentives.
The payments should also be within the collective bargaining agreement(CBA) that stipulates the distribution of league revenues between players and team owners, health and safety standards that should be maintained and benefits for each player in the NFL.
How team owners make money to pay the players?
The 32 teams in the league generated an estimated $17.19 billion in the 2021 season ranking, doubling and tripling Major league baseball (MLB) came in second with $9.56 billion and the English premier league(EPL) at $6.2 billion.
The success of the league can be attributed to the league’s control of mainstream media such as television where cooperatives pay millions annually for the rights to air games, the league’s tax exemption status up until 2015 and ownership status where 31 of the 32 teams are privately owned the exemption being the Green Bay Packers who are a publicly held non-profit cooperative with over 300000 shareholders as of 2022.
The revenue generated comes from;
Media broadcasting deals
The NFL currently has contracts with 5 major American media cooperatives; CBS, ESPN/ABC, NBC, Fox and Amazon with the 2023-2033 contract terms having an estimation of $110 billion that will be paid out for the rights to air NFL games during the official season and events such as the super bowl that attract more viewership compared to normal programming, for 2014-2022 four media cooperatives paid out an estimated $39.6 billion.
Money paid out annually by these cooperatives is split equally between the 32 teams regardless of the team’s ranking, ensuring that each team has a consistent source of revenue and can financially manage to compete in the league.
Different brands partner with the NFL by paying the league and getting the rights to advertise and market themselves not only to the thousands of fans in stadiums but also to the millions of viewers watching. In the United States alone it is estimated that the viewership for each game stands at 17 million.
During the 2021 season, it is estimated that the NFL made an estimated $1.8 billion in revenue from sponsors, with the biggest being Verizon which pays over $300 million annually while smaller companies such as Diageo pay out 30 million per year for hard alcohol rights.
The teams advertise by wearing company logos and through the billboards in the stadiums again splitting the revenue equally between the 32 teams.
The NFL has 30 stadiums with the total carrying capacity of each stadium being over 60 thousand fans per game generating over $10 million in tickets per game. This money will however be used to pay taxes, entertainment and administrative costs lowering the profit which will be split between the two teams playing 60% will go to the home team while 40% goes to the visiting team.
Concessions and parking
During each game, each team’s fans are not only spend on tickets but also on parking fees, food and beverages. Revenue generated goes to local teams who can split profits with stadium owners. The revenue generated from this can therefore vary from team to team with the determinant being how well a team can market itself to have a loyal fan base that is willing to spend during games.
The NFL negotiated merchandise contracts with clothing company Nike and online retailer fanatics who make NFL-related sportswear and oversee distribution to major retailers. It is estimated that such contracts bring in $ 2 billion annually. Revenue generated from such contracts is split between the teams, players, manufacturers and retailers, the league receives 11-15% of the revenue and shares it among the players
A player’s contract
All NFL contracts are about how much a team is willing to put out to have a specific talent. Although millions of dollars are usually agreed upon when being signed to a particular team only a percentage of the money is guaranteed.
Most players usually have a four-year contract with an option to extend to the fifth year. Under each contract will be the
- Signing bonus
- Guaranteed amount of money the player will receive. If a player signs a 4 million contract with 50% of the money being guaranteed it means he’ll receive 2 million within the first year of signing the rest will be paid out over the remaining amount of time in the contract. Getting over 60% as the guaranteed amount ensures your less likely to lose if the team cuts or trades you before the end of your contract.
- The amount of time you’ll be playing with a specific team.
Each year the league makes its profits in billions, NFL players, therefore, have to negotiate for contracts that will not only get them the base salaries but also guarantees, bonuses and cover their medical expenses, especially for injuries sustained while playing.
Each player’s professional career is estimated to last about 3 years due to the intensity of the sport and the rate at which medical conditions force players out of the field. Capitalizing on the education requirements set before joining and making the most of having contracts that give you more money can set you up for several years after retirement before venturing out to something new.