In a week when WNBA players have been publicly complaining about being underpaid, Golden State Warriors guard Stephen Curry dropped a bombshell. The two-time NBA Most Valuable Player said in an interview that players in the league are underpaid. This seems ironic considering that the average NBA salary is $12 million per year. Curry himself is expected to make $60 million this season. So fans can’t help but ask, what right does he have to claim that players are underpaid when they are among the highest-paid athletes in the world?
In fact, he is referring to – and also mentions – equity. This is the difference between the rich and the wealthy. Robert Kiyosaki’s book Rich Dad Poor Dad is about entrepreneurs rather than investors. NBA players have income, but they still have to work to earn it. Curry, on the other hand, means owning a stake in the company behind the team. These are two very different things. The latter provides ongoing income without actually working.
Currently, NBA players receive half of the league’s revenue, while WNBA players receive about a quarter. That may seem like a lot, but it’s actually spread out among hundreds of players. The other half is shared between the league and the team owners. However, the team owners have other important sources of income, such as ticket sales, TV broadcast revenue, sponsorships and other contracts. The league is even allowed to use players to endorse brands that compete with the ones they endorse. The players can’t do anything about it.
Of course, the Warriors shooter’s comments are not without precedent. Michael Jordan had his own brands in basketball and golf, which brought him huge residual income. This meant that he could earn huge income in perpetuity. Curry himself has some experience in this area. When he signed with Under Armour, he received a part-ownership of the company, which he held for far longer than his playing career. Magic Johnson decided to become a part-owner of the Los Angeles Lakers in case he retired. Jordan and Johnson built investment portfolios that allowed them to easily make more money with their own money. This is called equity.
Another issue is taxes. In some states in the United States, wages (such as those of NBA players) can be taxed at rates of up to 50%. For example, California has the highest tax rate in the country. However, through a corporation, taxes can be minimized or even reduced to zero. There are many ways to hide income or make tax-free donations.
However, there are also some complexities and limitations to equity allocation. First, there is a limit to the number of shares a company can hold. There have been more than enough NBA players over the past 75 years to use up all the shares of all the teams. Second, many players have a short lifespan for their teams. Third, it doesn’t make sense to give employees a permanent stake in a company if they can be traded at any time. It simply doesn’t work. All of this means that the current situation in the NBA and WNBA will continue. Female players rarely get a seat at the table with the big players.
