UpdateSport logo
Advice

How Sports Agencies Make Money

Sports agencies are the backbone of professional sports and in most leagues there is no way around their involvement. This has contributed to the current market for sports agents to be among the most lucrative in the business and the massive growth in the industry that can be seen in most leagues across America and overseas. So much so that when you think about some sports betting and casino fun on an online casino Canada and the USA likely come to mind if you’re specifically looking to bet on sports.

Here are a few of the ways sports agencies make money from the financial side of the sport:

Free Agency Costs

This is by far the biggest player in most leagues and particularly in the NBA, which has the largest presence of agents in the entire world. Drafting a player to the team is always expensive but free agency is where the real costs arise, and it makes the majority of the contracts now signed in the NBA a pure profit for the teams.

Usually only one player will be signed to a contract by an NBA team and this makes the signing of free agents by the teams so much cheaper. That’s because every NBA player is free to decide to sign with any other NBA team, and the player’s team will usually pay just a percentage of the signing bonus to the new team for signing a new player. This is the great equalizer as virtually every NBA player can work out free agency contracts and it makes the players much more of a valuable commodity.

In the NFL and MLB the signing of a free agent does not mean the team is off the hook on paying any salary, but in the NBA the players only have to pay the franchise and not the team. The salaries in the NBA have just been constantly rising in recent years, mainly due to the contracts in place to NBA players. This has made free agency contracts much cheaper for teams as well, and with no salary cap in the league, teams can use their deep pockets to sign a very good player.

Overall, many teams lose a huge amount of money on free agents and sign far less than the money available to them to make any sort of profit. Most teams do not even get any return on investment on a player signed to a free agent contract, especially when it is a borderline star or just a big name. Free agency costs teams a lot of money and by the time the free agents are making a good return on investment the owners are no longer making a profit as they have paid a large salary for the player. It’s a rare deal for a team to make money on a free agent, which is a very bad scenario for the players.

Late Draft Picks

In most of the NBA the teams have the right to keep draft picks after being in the league for six seasons. Most teams who retain the right to a late pick will often give it to the other team who missed out on the pick, which is quite fair, as the players in that situation are much more likely to end up making an impact in the league than the players in the team’s late first round or second round picks.

Leave a Reply