Which Sport Has The Best Guarantees?

It's Saturday, July twenty fifth. I was watching highlights the other day and one of those "breaking news" contract announcements came across the screen, something like "$200 million deal" with the graphic and the dramatic music, and it got me thinking about something I've never fully understood: how do sports contracts actually work, and which sport is the best one to play if you're purely trying to maximize how much money you make? Because you hear numbers like Patrick Mahomes signing for $500 million or Shohei Ohtani signing for $700 million and those sound like roughly the same universe of money, but when you dig into how those contracts are actually structured, they're completely different deals. One of them is almost entirely guaranteed, meaning the player gets paid no matter what happens, and the other one mostly isn't, meaning the team can walk away from most of that money if the player gets hurt or underperforms. The headline number is the same. The actual money is not. And once you understand the differences between how the NBA, NFL, MLB, and NHL (National Hockey League) pay their players, you start to see that the sport you play matters almost as much as how good you are at it. The single most important word in any sports contract is "guaranteed," and it splits the four major American sports leagues into two categories that couldn't be more different.

In the NBA, contracts are almost entirely guaranteed. If you sign a four-year, $100 million deal, you're getting that $100 million whether you play every game, sit on the bench with an injury, or, in the most extreme case, refuse to play entirely. Ben Simmons is the example everyone points to. He signed a five-year, $177 million fully guaranteed contract with the Philadelphia 76ers, then refused to play during the 2021-22 season, citing mental health reasons. The Sixers withheld about $20 million in salary, Simmons filed a grievance through the National Basketball Players Association (NBPA), and they eventually settled. He was then traded to Brooklyn and didn't play a single game for the Nets initially either. The guaranteed nature of his contract meant Philadelphia couldn't just cut him and stop paying. They were locked in.

MLB contracts work the same way. Fully guaranteed. When Shohei Ohtani signed his $700 million deal with the Dodgers, that money is his regardless of injuries, performance decline, or anything short of a criminal conviction that triggers a morals clause. MLB has no salary cap, which means teams with deep pockets can spend without a hard ceiling, and the players association, the Major League Baseball Players Association (MLBPA), has historically been one of the most powerful labor unions in American sports, having secured fully guaranteed contracts decades ago.

The NHL is also fully guaranteed. Every player on the roster receives the salary in their contract even if injuries, buyouts, or poor performance occur.

And then there's the NFL, which is the outlier. Most NFL contracts are not fully guaranteed, and this is where the headline numbers get misleading. When you hear that a quarterback signed a "$500 million contract," most of that money is theoretical. The truly guaranteed portion, the money the player receives no matter what, is often a fraction of the total. NFL teams can cut a player and walk away from the remaining years of a contract with relatively limited financial consequences compared to the other leagues. The guaranteed portion is further divided into categories: guarantees against being cut for poor performance, guarantees against being cut while injured, and guarantees against being cut for salary cap reasons. Each can be structured differently, which means two NFL contracts with the same headline number can have wildly different actual values depending on how the guarantees are structured. The guaranteed money question explains why some contracts are safer than others, but it doesn't explain why NBA players earn more on average than athletes in any other league despite the NFL generating significantly more total revenue. The answer comes down to how many players split the money.

An NBA team has 15 players on its roster, and there are 30 teams, which means roughly 450 players in the entire league share the revenue. The average NBA salary is around $10.8 million per year, the highest of any major sport. The NFL generates about $20 billion in annual revenue, more than any other league on the planet, but that money is split across 53-man rosters on 32 teams, which means roughly 1,700 players share the pot. The average NFL salary is about $2.8 to $3.2 million, less than a third of the NBA average despite the NFL making significantly more money overall. MLB sits in between with 26-player rosters across 30 teams and an average salary around $4.9 million. The NHL has 23-player rosters across 32 teams with an average salary around $3.5 million.

So if you're a parent watching your kid play sports and you're thinking purely about financial odds, the math looks like this: the NBA has the fewest roster spots (about 450 total) but the highest average salary and fully guaranteed contracts. The NFL has the most roster spots (about 1,700), which means more players can earn a living, but the average pay is lower and most of the money isn't guaranteed, plus the career is shorter and the injury risk is the highest of any major sport. MLB offers a middle path with guaranteed money and longer careers, but you might spend years in the minor leagues making almost nothing before reaching the majors. The NHL pays well with guaranteed contracts but generates less revenue than the other three, which keeps the ceiling lower.

MLS is a different tier entirely. The average salary is around $660,000, and outside of the designated player spots that allow teams to sign stars like Messi at salaries that don't count against the cap, most players earn modest wages by professional sports standards.

And then there's a tax angle that makes the geography of where you play almost as important as the sport you play. Professional athletes pay income tax in every state where they play a game, which is known as the "jock tax," and the story of how it started is peak pettiness. After Michael Jordan's Chicago Bulls beat the Los Angeles Lakers in the 1991 NBA Finals, California taxed Jordan and his teammates for the income they earned during the games played in LA. Illinois retaliated by passing its own jock tax targeting visiting California athletes, a law that became known as "Michael Jordan's Revenge." Other states saw the revenue opportunity and piled on, and today 21 states and several major cities levy a jock tax on visiting athletes. The way it works is a duty days formula: if you spend 10 out of 200 working days in New York, about 5 percent of your annual salary is taxable by New York at New York's rates, even if your home team is in Texas. And Texas is the key word there, because Texas has no state income tax, which means a player on the Dallas Mavericks or the Houston Texans pays zero state tax on their home-game income while a player making the same salary on the Knicks or the Lakers pays 10 to 13 percent to the state on every dollar earned at home. Over a ten-year career at $5 million per year, that difference can add up to $5 million in taxes. Teams in no-income-tax states actively recruit using this advantage, because the same contract is worth meaningfully more in Dallas than it is in New York. The one thing that can blow up even a fully guaranteed contract is off-field behavior, and this is where it gets interesting because each league handles it differently.

Most contracts include some version of a morals clause or behavioral provision that allows a team to void or restructure a deal if a player gets into serious legal trouble. Criminal convictions, domestic violence charges, and violations of league substance abuse policies can all trigger these clauses, though enforcing them usually involves arbitration through the players association and is rarely straightforward.

The more common concern for players is what happens if you get hurt doing something that isn't related to your sport. Contracts typically distinguish between injuries sustained during team activities and injuries sustained during personal time. Many NFL contracts include lists of prohibited activities like motorcycling, skydiving, recreational skiing, or riding ATVs. If a player gets hurt doing one of those things, the team can potentially void the injury guarantee. NBA and MLB contracts have similar provisions but they're enforced less aggressively because the contracts are fully guaranteed and the unions are stronger.

The practical reality is that voiding a contract is rare and messy regardless of the league. Teams almost never want the public relations hit of refusing to pay an injured player, and the players associations will fight any attempt to claw back guaranteed money through grievance procedures and arbitration. But the clauses exist, and players who do something reckless off the field are taking a risk that most fans don't think about when they see a highlight of an NBA player jet skiing in the offseason.

The strength of each league's players association is what shaped all of these differences over decades of collective bargaining. The NBPA and MLBPA fought for and won fully guaranteed contracts. The NFLPA, despite representing players in the highest-revenue league in the world, has historically been the weakest of the four major unions, which is why NFL players have the least financial security of any major sport. The union's leverage in negotiations determines how the money flows, which means the person who did more for an NFL player's financial future than any individual athlete wasn't a quarterback or a wide receiver, it was the labor lawyer who negotiated the collective bargaining agreement.

And even with all of this money, a lot of players end up with nothing. A widely cited Sports Illustrated report estimated that roughly 60 percent of former NBA players experience serious financial difficulties within five years of retirement, and 78 percent of former NFL players face financial stress within two years. Those numbers are from 2009 and the leagues say they've improved their programs since then, but the stories keep coming. Delonte West, who played for the Cavaliers and made over $16 million during his career, was filmed panhandling at a gas station a few years after leaving the league. He's battled addiction and homelessness since. Mark Cuban personally reached out and got him into rehab in 2020. Vin Baker, a four-time NBA All-Star, made close to $100 million and lost it all. The leagues now offer pension programs and financial education, and MLB actually has one of the best pensions in professional sports: a player needs just 43 days of service to qualify, and after ten years, they're fully vested at $68,000 per year starting at age 45, or up to $220,000 per year if they wait until 62. But the gap between what these athletes earn during their careers and what many of them have afterward is one of the strangest financial puzzles in American life. The thing that changed how I think about sports contracts is how different the same number can mean depending on the sport. A $200 million NBA contract is $200 million in your bank account no matter what. A $500 million NFL contract might be $150 million guaranteed with the rest contingent on you staying healthy, performing well, and not getting cut. The NBA has the fewest roster spots but the highest average salary and the strongest guarantees, and that combination exists because the players union fought for it over decades. The next time you see a contract announcement with dramatic music and a big number on the screen, the question worth asking isn't how much the deal is worth. It's how much of it the player actually gets to keep.

Stay informed, stay curious, and we'll see you Monday.