Why Do We Cheer for NBA Stars But Not for Bankers?

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LeBron James after losing in the NBA Finals on Sunday.

There was something dramatic and striking about the Dallas Mavericks’ victory over the Miami Heat in the NBA Finals on Sunday. No, it wasn’t the caliber of play – which was high – nor the sight of the vaunted Miami “Dream Team” falling just short of their pre-ordained championship season. Rather, it was the stark contrast of the multimillionaire players of a multi-billion dollar league arousing not the animosity but the passion of millions of fans who are almost certainly not faring as well.

The median salary for an NBA player is among the highest in professional sports, at around $3.5 million a year. While NBA franchises don’t command the price tag of a baseball team, a football team, or global soccer clubs, they still have a hefty value of nearly half a billion dollars. And they attract billions in advertising revenue, with the finals this year commanding about $450,000 for a 30-second spot, which may be less than a comparable spot for the Super Bowl but ends up being more total revenue when you consider that it is recurs for a minimum of four finals games and in this year’s case, six.
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While there may be occasional articles complaining about pay scales in the NBA and in professional sports in general, what’s most surprising about the economics of sports is how little animosity these salaries generate. Yes, Alex Rodriguez has spent years repairing his reputation after the Texas Rangers awarded him a massive contract. And yes, the New York Yankees (along with AC Milan, Manchester United and the New York Knicks) are sometimes reviled because of the sense that they are attempting to buy championships with bloated payrolls (though that has been an abject failure in the case of the Knicks). And the looming strike by NFL players does risk alienating fans, who are happy to support their multimillionaire stars but on the sole and not unreasonable condition that they actually play the game.

But sports stars and the sports industry do not generate the animosity that the banking and finance industries do, though sports is arguably a questionable allocation of capital that benefits very few individuals. The short answer – and a good one – is that professional sports leagues have never come close to imperiling the material lives of people around the world and have not, to the best of my knowledge, participated in a massive wave of foreclosures that pushes millions from their homes. Sports leagues have not plunged any particular country into generalized economic malaise, nor have they been accused of being too big to fail.

Still, they are a call on capital, and they soak it up. The same might be said of the entertainment industry, of course, but few Hollywood stars are vilified for the paychecks either.

Yet even before the recent financial crisis, Wall Street and the financial industry have always labored under accusations of greed and selfishness whereas sports stars and movie stars have mostly escaped such opprobrium. NBA stars act as beacons of hope, however rare, that you can go from the rags of poverty to the halls of wealth based on skill and hard work. They preserve in America part of the dream that even those who start from modest circumstances can become wealthy. And because their activities are seen as socially benign, they do not come under the same scrutiny nor generate the same animosity that the financial industry has and does.

Still, it is worth noting the disconnect and the differing standards, as 7-foot-tall Dirk Nowitski of the Dallas Mavericks, earning $17 million a year, celebrates a victory embraced by billionaire owner Mark Cuban, while a trio of Miami players led by LeBron James earning $15 million each look on in dismay. It’s impossible to imagine a similar scene of Goldman Sachs investment bankers being cheered on as they snatch an IPO from their rivals at Morgan Stanley. The economics, however, have more similarities than most of us would care to admit.