From College Athlete to Multimillionaire
You've been treading water in the same job for years, and finally the position of your dreams opens up. In walks a 21-year-old kid with no college diploma and takes it. To add insult to injury, the new recruit gets a salary of $10 million or more—higher than almost anyone else in the entire industry. The scenario might sound bizarre in the corporate world, but it happens every year in the National Football League.
On Apr. 28, the Oakland Raiders will likely use their No.1 pick in the 2007 NFL Draft to select either JaMarcus Russell, the Louisiana State University quarterback known for his size and mobility, or Calvin Johnson, a strong and dexterous wide receiver from Georgia Tech. But for Russell or Johnson, both 21, the fun doesn't end after their name is called and they don a silver-and-black jersey in front of hundreds of roaring fans. Because some time in the next few months, they will sit down to sign a multiyear contract they can rest assured will be worth upwards of $50 million.
Top Picks Get Top Dollar
The recruiting process is guided by regulations in the NFL Players' Assn.'s decades-old collective-bargaining agreement with the NFL. The agreement allows teams with higher draft picks to spend more on their top picks. And each year, a sliding scale nudges up the total amount allotted to the rookie pool. Almost by rule, the No.1 draft pick becomes one of the highest paid players in the league.
Last year, a big batch of superior rookie talent resulted in four huge paychecks. In the top three picks, the Houston Texans drafted defensive end Mario Williams and signed him to a six-year contract worth up to $54 million, the New Orleans Saints drafted running back Reggie Bush and signed him to a six-year contract worth up to $54 million, and the Tennessee Titans drafted quarterback Vince Young and signed him to a six-year contract worth up to $58 million. With the No.10 pick, the Arizona Cardinals snapped up quarterback Matt Leinart and signed him to a six-year contract worth up to $50.8 million.
These twentysomethings are locked into contracts worth some 15 times as much as the average NFL salary of about $580,000, and not all that far from the highest-paid players in the league—like Atlanta Falcons quarterback Michael Vick, who makes $23.1 million a year.
They Still Have to Earn It
Because of the dollar increase in the rookie pool, this year's No.1 pick will sign into "a contract comparable to the top veteran free agents in the NFL," says Liz Mullen, who covers athlete representation issues for the SportsBusiness Journal. The exact amount of the increase has not yet been determined by the NFL.
It may look like young football players are rewarded more for their promise than for their laurels, but performance incentives account for a big chunk of this paycheck. In the contracts of all four of the top earners in last year's Draft, only about half of their $50-some million is guaranteed—the other half has to be earned by meeting expectations of playing time, winning games, and other factors.
This is also true of basketball, where the average salary is $2.7 million—about five times higher than football. Big paychecks are handed out in the weeks following the NBA Draft, but even bigger ones go to those who prove their dominance in their first few years on the court. LeBron James of the Cleveland Cavaliers, Carmelo Anthony of the Denver Nuggets, and the Miami Heat's Dwyane Wade, all top five picks in the 2003 Draft, are three of the hottest players in pro hoops—but they aren't among the top earners because they're all finishing out their starter contracts this season.
The best players from the 2002 Draft, on the other hand, last year became eligible for free agency and contract renewal. Utah Jazz forward Carlos Boozer currently leads that crop with his $11.6 million salary. James, Anthony, and Wade are poised to break the eight-figure stratosphere next season when their new deals kick in. But until then, 25-year-old Joe Johnson of the Atlanta Hawks (a 2001 draftee) is the highest-paid basketball player of his age or younger—he earns $12.7 million.
Even golf, a sport which typically rewards older, more experienced players, is now creating baby-faced multimillionaires. At 25, Mexican-born Lorena Ochoa is the top young earner of her sport. She was the LPGA Rookie of the Year in 2003, and in 2006 banked $2.6 million and was named LPGA Rolex Player of the Year.
Early Success Pays Off
Ochoa is one of the many surprising faces on BusinessWeek's list of Highest Paid Althetes 25 and Under. For each of the nine major sports—basketball, football, tennis, soccer, Formula One, baseball, NASCAR, golf, and hockey—we compiled salary figures from leagues, agents, player's associations, and published reports. The top three earners in the most recently completed season who were 25 or under at press time made the list.
Early success in the pros was one thing all of these athletes had in common. Formula One driver Fernando Alonso shook up the racing world when, at age 24, he became the youngest F1 champion ever—his current $20.4 million salary is proof. And it wasn't enough for Vince Young to snag a $58 million contract with the NFL's Titans—he proved his value by throwing for 2,199 yards, 12 touchdowns, and winning the Associated Press' honor of Offensive Rookie of the Year.
Likely draftees JaMarcus Russell and Calvin Johnson can safely start to decide how to spend their first few millions. But if they want it to last, they will have to make a big impact from their very first kick-off.
Click here to see a slide show of the highest-paid athletes 25 years old and younger.