Relative NBA Salaries

Hayesfan · Jan 11, 2008

http://myespn.go.com/blogs/truehoop/0-29-26/Big-City-Living-is-Not-Cheap.html

TrueHoop reader Ryan emails:

Due to my economics and finance background, I was randomly thinking about the drastic difference in cost of living between cities around the country, mostly because I'm currently trying to find housing in the ultra-expensive California Bay Area. I did a little research using CNN Money's Cost of Living Calculator and the huge salaries of some NBA players make them the perfect example for how different prices are. Consider the following:

* When Kevin Garnett was making roughly $28,000,000 with the Minnesota Timberwolves, it would take approximately $49,000,000 a year for the same quality of life if he was playing with the Warriors and living in San Francisco.
* A rookie making the minimum, I believe around $450,000, it is a big advantage to be playing in a smaller market with a relatively low cost of living. That much money in Charlotte, NC, for example, goes as far as $1,018,382 would if you were a rookie living in Manhattan and playing for the Knicks. That's a huge difference considering it could be the only NBA contract you ever get. Also, turns out it is a HUGE incentive/bonus to get a 10-day contract from a team that is not in LA, Bay Area, New York, Boston, Dallas, Houston, and other big markets.
* When Baron Davis moved from New Orleans to Golden State, assuming he was making about $13,000,000, all of a sudden his new salary ($13,000,000 San Francisco/Oakland dollars) was equal to making only $7.2 million back in Louisiana. That's like an indirect $5.8 million pay cut. Ouch!

I read an article a while back about foreign players complaining about the weak US dollar hurting their salary in terms of their country's currency ... but just now realized this same concept holds some weight with players moving between cities! It makes me wonder if the CBA will ever include mandates for cost of living adjusted salary caps or veteran/rookie minimum contracts.

I'm thinking there might be some mitigating factors. For one thing, this calculator is driven by stuff like housing, utilities, transportation, and healthcare. Those things are probably a much smaller portion of Baron Davis's budget than yours or mine, so maybe the hit to his pay is exaggerated. (I guess we should really run this calculator not on the total amount a playermakes but on the amount he spends locally. Even low earning players are likely putting a good chunk of money into stuff that has nothing to do with where they live, like retirement savings, a house for the parents back home, etc.)

Also, that real estate Baron Davis has to shell out for in San Francisco is also an investment, and it's quite possibly a more lucrative one than a house in New Orleans or a less pricey market. In addition, endorsement income and other business opportunities are said to be more valuable in big cities.

But I think most players have long assumed that they would end up richer if they played for a major market team, and that seems way less clear when you factor in the cost of living.

And we haven't even talked about state and local taxes, which are a big reason why more players like living in tax-light Florida instead of, say, tax-heavy Canada.
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thelasik · Jan 11, 2008

Interesting stuff. Thanks for posting.

baller4life315 · Jan 11, 2008

When Kevin Garnett was making roughly $28,000,000 with the Minnesota Timberwolves, it would take approximately $49,000,000 a year for the same quality of life if he was playing with the Warriors and living in San Francisco.
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I'm 24-years-old and i'm sure before my time is up i'll see the day where NBA players are making this much money.

Nice find.

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Relative NBA Salaries

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