A Tale of Two Gaps

A Tale of Two Gaps
Untitled Document

A Tale of Two Gaps

a look at the compensation GAP Between rookies and top veterans in the NBA AND NFL

With the new NFL CBA and rookie wage scale and the already established NBA rookie wage scale, we wanted to take a look at the difference between the two leagues in how they are compensating their incoming players via the draft, but also how compensation compares for the veteran superstars of each league as well.

The NFL's new CBA states:
"'Rookie Salary' for a Drafted Rookie means the highest amount of earnable compensation for which such player and Club have contracted in each year of his Rookie Contract regardless of whether any or all amounts are earned or considered 'likely to be earned' as set forth in Article 13, excluding only (A) the Fifth-Year Option..."

2012 NFL first-round rookies have signed four year contracts with a fifth year club option.
Note: the fifth pick in the 2012 draft, Justin Blackmon, has not been signed which signifies the gap in the NFL portion of the graph.

The NBA has an established rookie wage scale per the CBA:
"Each Rookie Scale Contract between a Team and a First Round Pick shall cover a period of two (2) Seasons, but shall have an Option in favor of the Team for the player’s third Season and a second Option in favor of the Team for the player’s fourth Season."

2012 NBA first-round rookies have signed two year contracts with club options in years three and four, except Anthony Davis and Austin Rivers have signed three year contracts with a club option in year four.
Note: the twenty-ninth pick in the 2012 draft, Marquis Teague, has not been signed which signifies the gap in the NBA portion of the graph.

All graphs use the average annual value (AAV), contract amount divided by contract length, for an accurate and consistent comparison.

Original Rookie Contract Comparison

On average, NFL first-round rookies are making 27% more than NBA first-round rookies.

The average first-round rookie will make approximately $2.7 million a year in the NFL as compared to $2.2 million in the NBA.

Full Rookie Contract Comparison

A comparison of full contract details assuming all options were to be picked up by clubs and nobody is to be wavied. After calculating full contract details, on average NFL first-round rookies are still making 16% more than NBA first-round rookies.

The average first-round rookie will make approximately $2.7 million a year in the NFL over four years as compared to $2.5 million in the NBA over four years.

What is interesting is that Anthony Davis will make more as an average (5%) than Andrew Luck as a number one overall pick, while all other NBA rookies will make on average less than NFL rookies over the life of a full contract.

Top 30 Comparison

Even though NFL first-round rookies on average are getting piad more than NBA first-round rookies, it is shown below that the NBA compensates their stars much more than the NFL does. On average the top NBA players are getting paid 19% more than the top NFL players.

Final Thoughts

The first thing that jumps out is that Andrew Luck will on average earn less than Anthony Davis, but in looking at the Full Rookie Contract Comparison graph the first three NFL draft picks compensation does not seem parallel the NBA's graph trendline as all of the other picks seem to do so. Those first three picks are being underpaid by comparison, and therefore, the NFL's rookie wage scale is doing a disservice to the top draft picks.

It is interesting to see that the NFL has determined a formula in which it pays its first-round rookies more on average than NBA first-round rookies, but in turn NBA superstars are getting paid much more than NFL superstars. By this comparison you can see that the NBA wants to push compensation to the superstar rather than rookies. They'd rather put 20%-30% of their cap into one player, where as the NFL owners tend to only spend approximately 10% of their cap on one player.

For obvious reasons, the NFL tends to not spend superstar money because of the hard-cap in place, while the NBA has a soft-cap. If the NFL payed 20%-30% of their cap to one player, their team as a whole would be crippled from competing each season, limiting the type of talent and amount of players they could attract to their team. Also, the NFL has 3.5 times as many players per team than the NBA. More positions on the field/court makes for more players needed, which also effects how the NFL has to spread their money out.

Therefore, the NBA gap between incoming first-round rookies and top veteran players is larger than the NFL gap. This goes to show that the NBA is a superstar league (allocating money into one or two people per team) where as the NFL is a team-oriented league (allocating money across the team to benefit the team).