An analysis of the USA Today Salaries Database for the National Football League (NFL) reveals that the share of total team payrolls in 2008 going to the highest-paid 20 percent of players ranged from a high of 69.8 percent for the Indianapolis Colts to a low of 49.2 percent for the Tampa Bay Buccaneers, and averaged 59.5 percent for all NFL teams (see chart above). That compares to an NFL average of 56.3 percent in 2000 for the share of team payrolls going to the highest-paid 20 percent of players.
For the entire U.S. population, the top 20 percent of American households earned a 50 percent share of total income in 2008 according to the Census Bureau, slightly higher than the 49.8 percent share of income for the top fifth of households in 2000.
In other words, there is significantly greater income inequality in the NFL than in the general U.S. population, both in terms of the share of income going to the top 20 percent in 2000 (56.3 percent for the NFL vs. 49.8 percent for the entire U.S.) and 2008 (59.5 percent vs. 50 percent), and also in terms of the increase over time for the top quintile’s share of total income (56.3 percent to 59.5 percent for the NFL between 2000 and 2008 vs. 49.8 percent to 50 percent for the general population).
What can we learn from the significant income inequality in the NFL?
Rising income inequality in the NFL has not come at the expense of either the lowest-paid or the median-paid player. The minimum NFL salary increased by more than 22 percent between 2000 and 2008, from $241,300 to $295,000 in inflation-adjusted dollars. Further, the median inflation-adjusted NFL salary increased by more than 52 percent between 2000 and 2008, from $601,775 to $930,600.
In other words, despite the increasing income inequality in the NFL, all players (lowest-paid players, players earning the median salary, and those earning the highest salaries) were better off in 2008 than in any previous year. Likewise, even poor and middle-class Americans are better off today than ever before, despite the fact that income has become more concentrated, and the share of income going to the highest-paid 20 percent of American households has increased from 43.6 percent in 1967 to 50 percent in 2008.
The lesson from the NFL is that rising income inequality over time, whether it’s in professional sports or in society as a whole, is a natural and expected outcome of competitive labor markets and the expanded opportunities that come from larger and increasingly competitive global markets. And those same competitive forces that lead to greater income inequality in both the NFL and the overall economy over time also help to make all NFL players and all Americans better off year after year, just not at exactly the same rate.