Is Stephen Curry Really Worth $201 Million? Of Course He Is!

The aftermath of an entertainer, especially an athlete, receiving an enormous contract worth more than average Americans will see in their entire lifetimes often causes some pretty opinionated responses. Thus, it was no surprise that this was the case when Golden State Warrior’s point guard Stephen Curry received a new contract for five years totaling 201 million dollars. This is currently the richest deal in NBA history. To earn this type of payday, Curry has won two MVP’s and two NBA Championships over his past three seasons.

As it turns out, the Charlotte Observer’s Scott Fowler is not so thrilled about Curry’s new deal. A recent article of his is entitled “Is Steph Curry really worth $201 million? Is anybody.” Fowler makes a number of statements in the piece disapproving of the contract. Let’s take a look at these claims in order to debunk the totality of his argument.

Let’s start with this: No human being on the planet needs to be making a guaranteed $201 million over five years, including Steph Curry.

Of course, “needs” is a relative term. If the true necessities of life can be reduced to food, water, clothing and shelter, then anything outside of basic subsistence is something that an individual does not “need.” Although I don’t profess to know how much how much Scott Fowler is paid by the Charlotte Observer for his services, I’m quite certain that he makes enough to afford things that he doesn’t necessarily “need” for his survival. Therefore, someone living an impoverished life in a third world nation would view his comfortable, middle class life in America the same way that he views the life lived by Curry. So if Fowler can legitimately criticize Curry’s contract on the grounds that it enables him to make much more than he “needs,” then it would also be legitimate for a third world resident to criticize the amount that Fowler is paid given that he is comparatively compensated as a sports journalist to a degree that also enables him to live far above an individual living at the subsistence level in an underdeveloped country. Fortunately for Fowler, those who make so much less than he does do not have the means to go online and criticize him for his comparatively lavish salary.

When some public school teachers are fortunate to make $40,000 a year, no athlete needs to average $40 million (which, at that rate, would fund 1,000 school teachers a year).

What Fowler has done here amounts to choosing a popular, presumably underpaid profession that garners sympathy from the public and highlights the massive gap between their salaries and the salary he is demonizing. A closer look at both teachers and star athletes in popular, American sports shows why this gap appropriately exists. After all, the number of people willing to spend money on tickets to watch a teacher perform his/her job would not be enough to fill a sports stadium. In addition, there isn’t a market for televised teaching to the point that advertisers are willing to spend money to put commercials on during a televised teaching session. Since the athletes are the ones that people are paying to see and advertisers are willing to spend money in order to advertise to those who watch via television, it makes sense that those athletes should be compensated for the revenue that they bring in. In fact, due to the NBA “max salary” format and the league’s salary cap, one could argue that the game’s best players are actually underpaid.

This criticism gets even more absurd when considering that the owner of NBA teams (in Curry’s case it’s Joe Lacob) is worth more than any of the team’s players. If NBA stars like Curry weren’t able to make this much money, then their wealthier owners would get to keep more of it. In addition, money isn’t zero-sum. Simply because Curry receives a gargantuan contract for his abilities, that doesn’t mean that teachers or other professions have less as a result. In fact, given the amount of taxes that Curry will pay on his new salary, he will be sending more money to the local educational system (not that there is any connection whatsoever between spending on education and student performance).

Lastly, let’s not succumb to the myth that the state can simply “take” from someone who makes an “unfair” salary and just give it to someone that society feels deserves it. We’ve seen this through anti-poverty programs where it takes the government many times more dollars to actually spend on those programs than what actually reaches the intended target. So it then looks highly unlikely that this same government could seize a huge portion of Curry’s income and seamlessly distribute it among teachers (despite The Ringer’s Michael Baumann claiming that we would be better off if we did this). Sorry, but the track record of the state strongly suggests otherwise.

So don’t be upset at Curry, Lacob, the NBA or anyone else for this situation. NBA players are justly compensated for the audiences they attract and the value that they create. Teachers are not undervalued or underpaid as a result of large athlete contracts. The quicker we realize all of this, the quicker we can stop this misguided blame for society’s ills.

New Los Angeles Stadium to Attract Big Events and Bigger Cronyism

After more than two decades without a professional football team, the city of Los Angeles is about to land their second NFL franchise in as many seasons. After the Rams relocated from St Louis before this past NFL season (they had played in LA previously from 1946-1994), the San Diego Chargers have followed suit and made the same move for 2017. The big draw for these teams, other than Los Angeles being the second largest city in the nation, is that there is a new stadium being built that both teams will share as their own. That stadium will be located in Inglewood, CA (an LA suburb) and is set to open in 2019. The NFL has also selected the stadium to host the 2021 Super Bowl.

Although developers and city officials claim that the stadium will not rely on public funding (an extreme rarity in the world of sports), it turns out that’s not 100% accurate. The plan would eventually recoup tens of millions from Inglewood taxpayers through reimbursements once it opens. The tax breaks obtained by the developers could also total as much as $100 million after the plan is put into place. So it’s not quite the exclusively private endeavor that the state officials would have the taxpaying public believe.

The claim that sporting events cause a significant increase in economic success to a certain area has been met with high levels of skepticism for quite some time. This is partly because of would-be patrons of local businesses avoiding the large crowds that these types of events bring. But even if the boost in local economic activity is true, the NFL has fewer games to host than any other professional sport. Despite two different teams playing in the new Inglewood stadium, that’s only 16 home games every calendar year (perhaps 1-4 more including playoffs). So how does the stadium generate revenue for the other three hundred forty plus days of the year?

The NFL isn’t the only sport eyeing the brand new LA stadium for future plans. The International Olympic Committee (IOC) will announce in September of this year which city will host the 2024 Summer Games. Los Angeles is one of the five cities currently in the running. The new stadium looks to play a key role with the opening and closing ceremonies, as well as other events that may end up being held there. If LA is selected, the Inglewood stadium may end up being the deciding factor.

The economic increases surrounding a city landing the Olympic Games are arguably even less of a cause for excitement than the NFL. The combination of the IOC taking half of the income generated, the infrastructure spending seemingly always going over budget and the lack of the ability to find a use for the newly built facilities after the Olympics end results in mostly lousy financial returns. Cities often end up buried under a mountain of debt with little to show for it. There is not much reason to believe that Los Angeles would be any different in this regard.

All of this reinforces the San Diego voter’s decision during this past election to reject tax increases in a ballot measure directed at raising funds for a new stadium. While knowing it could spell the end for professional football in their city, the voters still refused to go along with the plan. Considering the lack of evidence for a significant economic benefit from the would-be stadium, it appears as if the San Diego electorate did indeed make a wise decision. Keep all of these things in mind in 2019 when people start praising the wonders of LA’s new stadium complex.

Government Unable to Know or Prove Intent

Professional golfer Phil Mickelson is back in the news again in regards to a 2014 federal investigation into an insider trading case. It appears that Mickelson owed high stakes sports gambler Billy Walters a considerable amount of money in July of 2012. As a result, Walters advised Mickelson to buy stock in Dean Foods Company as a result of an inside tip received by Walters’ longtime friend and top Dean Foods director Thomas C. Davis. The purchase netted Mickelson $931,000 after he sold the stock less than one month after purchase. The Securities and Exchange Commission (SEC) has now ruled that he must return the entire $931,000 plus another $105,000 in interest. Davis and Walters are named as co-defendants in the SEC’s civil suit while Mickelson is named only as a relief defendant. No further legal action will be taken against the golfer commonly referred to as “Lefty.”

Insider trading laws are typically difficult to assess. In this particular case, Davis appears to be the individual who provided the non-public information and Walters appears to be the one who received it. Mickelson is involved as a result of being a third party to the initial infraction having been told information illegally obtained but not actually receiving it from the original source (Davis). This is the reason for the more lenient status in the case for Mickelson and the harsher status for the other two men.

Many have wondered why Mickelson hasn’t been considered for a harsher sentence in this case. His being a sports celebrity, along with having considerable wealth, paints a perception of someone able to beat the system as a result of these advantages. But if Mickelson had already owned stock in Dean Foods and had been told not to sell by the same inside source, would the SEC still be able to file charges against him? Could they really prove that the golfer’s inaction in deciding to keep ahold of the stock he had was the result of this illegal tip? Of course not, because only positive actions can be ascribed to information no matter if it is legally obtained or not. This is one of the major problems in attempting to crack down on insider trading.

Another problem with insider trading enforcement is that it only seems to penalize those who succeed in the aftermath of their transactions. Had Walters been wrong about the Dean Foods stock and the value of it plummeted rather than increased, how would the SEC be able to levy any kind of penalty against Mickelson? After all, there would be no “ill-gotten gains” to return as a result of the purchase and selling of this stock. But if the activity of obtaining inside information is cause for legal action, then penalties for this activity should apply equally regardless of the result.

This isn’t the first time Mickelson’s finances have made headlines. In January of 2013 he eluded to the possibility of moving out of California due to the increase in state income tax for high income earners that accompanied a federal tax hike which targeted the same group. Mickelson then walked back these comments by saying:

“My apology is for talking about it publicly, because I shouldn’t take advantage of the forum that I have as a professional golfer to try to ignite change over these issues.”

However, his concern over the high tax rate appears to be real considering he sold his Rancho Santa Fe, CA home in early 2015.

Mickelson’s apology for discussing his personal financial matters publically highlights the fact that when higher taxes (or other unpopular government policy) cause individuals to move from a state, those motivations are typically not discussed in a public forum. For every public figure or celebrity whose state of residence may cause some degree of popular interest, many more individuals who possess varying amounts of wealth are certainly making decisions on where to live for many of the same reasons. While many factors play into the decision to move to or from certain states, tax rates are undeniably a major factor in weighing the costs and benefits of where to reside. Mickelson’s longtime rival and California native Tiger Woods admitted that he moved to Florida at the start of his professional golf career due (at least in part) to the Golden State’s high tax rate.

Mickelson’s insider trading case and his desire to move out of a high tax state show the inability of government to regulate self-interested financial decisions. Just as the government cannot punish stock market inactivity or insider trading that nets financial losses, they also aren’t able to know how many people are choosing to not live in their state as a result of harmful tax policy. Mickelson happened to have acted on his inside information in a way that caused suspicion and benefitted financially from his transaction. He also disclosed his motivations to move from a state in a way which criticized tax policy. It stands to reason that many times both insider trading and state migration due to taxes happen with relatively no knowledge being given to either the government or the public. The state at all levels is unable to legislate against intent despite its best efforts.

Louisiana Budget Crisis Highlights Benefits of LSU’s Resistance to Subsidies

The budget crisis in Louisiana is so bad that it apparently threatens the upcoming college football season. This is according to the state’s new Democratic governor John Bel Edwards. The current yearly budget deficit has reached $940 million. The situation is so dire that higher education in the state faces the realistic possibility of running out of money and taking college sports with it.

Even though all Louisiana state funded colleges are faced with this harsh reality, the focal point of much of the public’s scorn is directed at the possibility of no LSU football this coming season. Much of the old south is Southeastern Conference (SEC) country and college football commands more attention there than even professional sports. Thus, the emotion that comes with the threat of not having LSU football looms much larger in the minds of many Louisianans than the threat of cancellation of other school’s athletics or even the possibility of academic shutdown on campuses. In the land of the SEC, college football will grab headlines over most other issues. This is especially true when its very existence is being threatened.

Upon closer inspection of Louisiana’s state budget, one can see that a major culprit for the deficit has been corporate giveaways. Under former governor Bobby Jindal’s predecessor, money given to the six largest recipients of government subsidies totaled $200 million. But under Jindal, that amount grew to $1 billion. Combine this with the state’s 400 other handouts, plus the raiding of rainy day funds to cover shortfalls and you have a recipe for a budget disaster.

So in order to put Louisiana’s fiscal house back in order, Governor Edwards has proposed one of the largest tax increases in state history. Taxes on cigarettes, alcohol, rental cars and other items are due to be increased as a part of the governor’s proposal. But given that Edwards is facing a legislature controlled by Republicans, many of these tax increases appear unlikely. A bipartisan compromise will probably be reached combining some tax hikes with some spending cuts.

But of all the things to threaten to shut down, why did Edwards target higher education and college sports? The answer lies in an old political trick called Washington Monument Syndrome (or sometimes Mount Rushmore Syndrome). This is a phenomenon where a government facing some sort of revenue shortfall or budget crisis will cut government funds which cause the most visible pain. Once the public witnesses this pain, opinion shifts in a direction that the government desires it to shift to. In this case, the state’s governor wants to pass certain tax increases. If he doesn’t get what he wants, college football could be cancelled statewide. In the state of Louisiana, few actions would cause more pain and public outcry than the cancellation of a college football season. Thus, a public official will use this to threaten the people he supposedly serves in order to pass his desired legislation.

The peculiar thing about LSU specifically is that they are one of only seven Division One programs which don’t accept state subsidies (the others being Texas, Ohio State, Oklahoma, Penn State, Nebraska and Purdue). In fact, LSU’s athletic program generated so much revenue last year that it transferred over $10 million to the school’s academic program. Clearly LSU football can survive without taxpayer money, since they do so already. Again, cancelling of the state’s biggest college football program is simply a scare tactic used to further a political agenda. After the aforementioned compromise is most assuredly reached between Edwards and the legislature, politicians from both parties will probably point to LSU’s football team taking the field in the fall as some great political achievement even though the school’s athletic department didn’t need or spend their money in the first place.

As for the rest of the state of Louisiana’s higher education system, this sad state of affairs is an unfortunate lesson in what can happen when government assumes control of an institution. The competency of that institution will be subject to the whims of those who control that government. Any budgetary failings of public officials who dole out this money will inevitably affect those that are so reliant on it. If college were independent of government, then the influx of money would not be based on an appropriation from a government but the ability to provide a service (education in this case) to the public. After all, there is no imminent crisis in Louisiana regarding the sale and purchase of food, electronics or automobiles. This is because people generally spend their own money on these things without intervention from the government. If education were treated like any of these things, then it would be independent of government failings and different educational institutions would be sinking or swimming based on their own merits. But sadly, these colleges and universities will likely not learn their lesson and continue to look for funding from the very organization that is causing their current laundry list of problems.

Will Money Taxed from Pacquiao’s Super-Fight be Enough for the IRS?

As probably all people who at least casually follow sports know, Floyd Mayweather and Manny Pacquiao will finally be squaring off against one another on May 2. Many sports fans wanted the fight to first take place as far back as six years ago. But hey, better late than never, I guess.

What a lot of sports fans don’t know is that Pacquiao has been engaged in his own fight against both the IRS and its Filipino counterpart, the Bureau of Internal Revenue (looks like other countries have tax collecting monstrosities just like we do). The Philippine (where Pacquiao is from) Government levied a tax evasion case against him and is attempting to obtain the equivalent of 75 million US Dollars from the boxing champion. Meanwhile, the IRS has slapped on a federal tax lien for $18.3 million in allegedly unpaid taxes for 2006 through 2010. Pacquiao claims that a treaty between the US and the Philippines prevents his money from being taxed twice.

In his last fight, Pacquiao faced Chris Algieri in Macau, China rather than a popular US bout destination. As a result, he was able to save millions of dollars since his earnings were not subjected to the 39.5% US income tax rate for top tax earners. The combined tax rates of the Philippines (20%) and Macau (12%) still leave the fighter with a bigger payday than the one he would have had if the fight occurred on US soil. Pacquiao’s desire to avoid taxation does cause one to wonder why he campaigned for Harry Reid in 2010. Guess everyone is a conservative when it comes to their own money.

Perhaps the man known as “Pacman” would ideally want his fight with Mayweather to occur overseas as well. But given the enormous payday for both fighters, ($120-150 million for Mayweather, $80-100 million for Pacquiao) those concerns may have been dismissed. Consequently, the US government will be able to extract the full top tax bracket amount from each fighter as a result of the fight taking place in Las Vegas.

Given the amount of money that the US Government is about to receive from Pacquiao, it brings to mind the usual claims made on behalf of the state as to why taxes are collected. I’m sure that we are all familiar with these claims. But remember, Pacquiao is not an American citizen. His home is in the Philippines. So when assessing the government claimed reasons for wealth confiscation, consider the following questions while keeping in mind the amount of money Pacquiao will be giving to the US Government and that same government’s claim that what he has given isn’t enough (hence the $18.3 million lien).

• Will Manny Pacquiao ever receive Social Security? (I realize that he likely won’t need it since he’s a multimillionaire, but still).

• Will any of Manny Pacquiao’s five children ever go to a school receiving money from the US Department of Education?

• How often does Manny Pacquiao drive on an American road?

• Is a top priority of the US Military the defense of the Philippine coastline? (not that it should be). Or to put it differently, do Filipino Citizens feel safer as a result of the actions of the US Military?

• Will Manny Pacquiao or his family be able to receive Medicare or Medicaid at any point during their lives?

It isn’t difficult to see that Pacquiao’s return on investment for his American taxes is pretty horrible. He may as well have sat in a room with the IRS and said “I’ll have the biggest fight of my career here in the states and you can take 39.5% of my earnings while I derive virtually no benefit from the money you take from me.” Will the IRS then back off their harassment of the prize fighter as a result of this decisively one sided deal? My guess would be no.

If Pacquiao’s tax troubles haven’t caused you to feel sorry for him since he can get through it more comfortably due to being wealthy, consider that the IRS routinely harasses those who have far less wealth he does. And if one of the world’s highest paid athletes won’t be able to negotiate his way out of this harassment, what chance could the rest of us possibly have?

Government Does The Worst Kind Of Gambling. But Of Course, It’s Legal When They Do It.

NBA Commissioner Adam Silver sparked some significant discussion back in November when he came out in support of legalized sports gambling. He submitted an article to the New York Times where he proposed that wagering on professional games should be legalized and regulated. These comments made him a revolutionary voice among other sports commissioners both past and present. So much talk was initiated by Silver’s opinion that ESPN devoted their entire February 2015 magazine publication to the debate by titling it “The Gambling Issue.”

Part of Silver’s reasoning for his new position stems from a desire to better eradicate some of gambling’s shadier characteristics rather than a support for every consequence that gambling may entail. In the aforementioned ESPN the Magazine issue, he is quoted as saying:

“One of my concerns is that I will be portrayed as pro sports betting…But I view myself more as pro transparency. And someone who’s a realist in the business. The best way for the league to monitor our integrity is for that betting action to move toward legal betting organizations, where it can be tracked. That’s the pragmatic approach.”

Of course, libertarians and other liberty minded people know this argument all too well. It is the argument they use to support the legalization of other vices that the government has criminalized. Their support for ending the drug war (for example) is more about taking power away from drug cartels and drug dealers through the same transparency Silver describes rather than championing actual drug use. Yet uninformed people will no doubt label Silver as “pro sports betting” just as they label those who advocate drug legalization as “pro drug use.”

But when one thinks about the audacity of a government preventing its citizens from engaging in voluntary wagers of their own money, it becomes easy to see the hypocrisy at play. First of all, Merriam-Webster’s Dictionary defines “gamble” as “to play a game in which you can win or lose money or possessions.” And of course, no one gambles with money or possessions quite like governments do. It’s easy to see why they do this. Since all money government has it obtained from other individuals, it is less likely that government will behave responsibly with it.

The examples of these failed state supported gambles with public money are numerous and seemingly never ending. Senator Tom Coburn (R-OK) publishes his annual “wastebook” detailing the ridiculous programs the federal government spends money on. On the state level, boondoggles like California’s high speed rail, Seattle’s highway tunnel and Pennsylvania’s incinerator are only some of the more glaring cautionary tales.

Add to all of this the fact that the money spent to build the stadiums where the sporting events take place is often seized via taxation from the public. And so many times those subsidies are not even worth the return on investment.

So it’s not just that government gambles away money that initially belonged to other people. It also prevents those people from gambling on sports with their own money despite the fact that the facilities containing the sporting events are paid for by those same taxpayers. Perhaps it’s time for members of government to enter a gamblers anonymous program.