How Much Are Athletes Worth? More if They Drive Revenue and Build Loyalty

Derek Jeter’s recent contract negotiations with the New York Yankees have been contentious. As of this past week, Jeter and the Yankees have agreed to a $56 million deal that will carry him through the 2014 season. Is Jeter worth this much money? Are pro athletes’ salaries overinflated?

A championship caliber player like Jeter is clearly valuable because he not only adds to his team’s prestige, but he also wins fan loyalty, which in turn sells tickets and merchandise for his organization. As some might argue, sports aren’t necessary for society to function. Without professional leagues, we can find amusement elsewhere. But sports are actually important in the abstract. Something as simple as a double play can elicit great emotions, make us marvel at the extent of human faculties, and reveal our inherent love of competition. It’s because of these visceral responses we willingly spend billions of dollars a year to wear another man’s name on our shirts or dole out small fortunes to watch people throw a ball around.

Put the heroism and amazing feats of strength aside for a moment, and you realize a team is merely a business looking for consumers. Athletes are employees whose salaries are determined by how productive they are and how much fan satisfaction they engender. If an employee works harder than his co-workers and generates greater revenue for his company, shouldn’t he be entitled to more competitive pay?

Employee loyalty is another valuable asset, as any hospitality consultant will tell you. Jeter has played his entire 15-year career with one team. This is why some analysts were surprised that the Yankees took such a hard stance on negotiations with their iconic shortstop. It seemed the Yankees didn’t see the value in a player who is heir-apparent to a dynasty that includes men named Ruth, Gehrig, Mantle, and DiMaggio.

The Yankees are, of course, a business, and they must evaluate their employees on more concrete aspects like age and experience. Jeter is now 36, and, statistically, he’s been on the decline in the past few seasons. For this, the Yankees can justify a pay cut. However, any organization, be it a hospitality company or a sports team, that’s obsessed with being the best shouldn’t let top talent get away. Luckily, owners aren’t the only ones who ascribe worth to a player. Fans value a player’s loyalty to a team and intangibles like the legacy he will leave. Tom Verducci of suggests that the best thing to do for a player with brand value like Jeter’s is give him a 15 percent raise so the team benefits from his legacy. For the sake of the bottom line, Jeter cannot be paid more than the extra revenue his presence generates, but he should seek as much as he can get, as his presence does build one of the most valuable attributes of any organization: brand loyalty.

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