CPA Exam Review News Blog

Winning the Super Bowl doesn't pay as much as you think

Posted by Dr. Phil Yaeger on Feb 12, 2018 2:21:53 PM
You would think that making it to the all-time goal of your profession would reap some serious rewards, but you'd be forgetting a few things about the NFL. One of which is the NFL Players Union negotiated post season pay for all players. This is great news for players like Geno Grissom, the Patriots third-string Left Defensive End, as he will, for once, be making as much as Tom Brady. So if the Patriots had won The Super Bowl, Geno and Tom would have both gotten checks cut for $112,000. However, since they lost they'll get half of that, a mere $56,000.

This is where things get interesting. Since the Super Bowl was played in Minnesota, every player from both teams will be subject to pay the 9.85% income tax. This tax is based not on their income while in the state, but from their yearly salary. So players already know roughly what they will be paying in taxes before the game. Again, this isn't quite as much of a hit to Geno's $660,000 salary as it will on Tom Brady's $20.5 million salary. Not to mention players aren't just taxed on game day. Due to the “jock tax” players can be taxed for each day they are in the state practicing or working by making appearances or at media day. If a player retires and doesn't have projected income for the rest of 2018, they are taxed only on their earnings from the 7/35 “duty days” (NFL players annually work and are taxed on roughly 200 duty days”) already having taken place in 2018. If they do play in the following 2018 season, Minnesota will get to apply their 9.85% rate to 7/200 “duty days” and the resulting income of the additional 165 days.

This is how star players can end up losing money or making a couple of thousand dollars if they lose the big game as has happened recently to players like Peyton Manning and Cam Newton. The good news for those same star players is the incentives in their contract for making it to and winning the Super Bowl are quite lucrative. The pay for winning or losing the Super Bowl is really meant, as negotiated by the players union, to make sure all players get a slice of the Super Bowl pie. The real money comes from negotiating larger contracts (i.e., Nick Foles can probably look for an increase on his $4 million contract after winning), picking up sponsors (here's looking at you Ugg Boots), and increased the type of fame which guarantees money for appearances long after retirement.

Other interesting side notes from this year's Super Bowl: Patriots backup QB Jimmy Garoppolo was traded to the San Francisco 49ers but did play for the Patriots for more than eight games. This qualifies him to earn the same Super Bowl winnings as players on the team. However, he will not be in Minnesota working, so he's not subject to pay any taxes as he has no “duty days.” Therefore, he's making more than Tom Brady will make by actually playing in the game. Lastly, if you really want to make the big bucks in the big leagues, you should ditch the NFL altogether. Eagles players took home about $191,000 for the entire playoff run, and Super Bowl win. Their champion counterparts in Major League Baseball, The Houston Astros, took home $438,901.57 for winning their playoff run and World Series.

Tags: Insider, Accounting News, AICPA