It’s Only Money

Social Security used to send me a statement listing my earnings and how much I paid into SS every year since I entered the work force. Totaling my earnings from 1966 to 2010, I earned less than $900 K. Of course, a dollar in 1966 is not a dollar in 2010 or 2024. My earning power over that span was clearly more than $1 million. That 1966 dollar was good for five McDonald’s hamburgers, one fries and a small soda, or, alternatively, 3 gallons of gasoline.

What if I had concentrated my talents on basketball instead of engineering? Of course I would also have had to be much taller and more athletic, but that $900 K over 44 years pales in comparison to pro basketball contracts announced yesterday.

Jayson Tatum of the Boston Celtics signed a 5 year $314 million contract extension. That’s a cool $62.8 million per year. That’s $1.2 million per week. Jayson will earn more in one week than I did in 44 years. If Jayson puts one year’s salary in a 5% interest-bearing account, $3.14 million will flow into that account every year whether he works or not.

Jayson is not alone. Donovan Mitchell of the Cleveland Cavaliers signed a 3 year deal for $150.1 million. Poor Donovan will have to get by on less than $1 million per week. He will have to ask Jayson to pick up the check if they go out to dinner.

The minimum salary in pro basketball is $1 million per year. The twelfth guy on the roster, the guy who never takes off his warm-ups for the entire game, is a millionaire every year. How can pro basketball afford this?

It turns out that owning a pro basketball team is a better investment than Trump Bibles or Sneakers. Fresh off winning the NBA championship this summer, the Boston Celtics are for sale. The owners bought the team for $360 million back in 2002. They expect to sell it for upwards of $4 billion this year. The Phoenix Suns, Milwaukee Bucks, and Dallas Mavericks all sold for $3.5 to $4 billion last year and they are not World Champions.

Any investment that increases in value by a factor of 11 over 22 years allows you to overpay your employees. The $314 million that the Celtics owe Jayson Tatum today is a mere 8% of the franchise value. If they paid Jayson the same $314 million back in 2002 it would be 87% of what they paid for the whole shebang.

Clearly, I chose the wrong gene pool and the wrong career.

By Ed Dufton