Leave it to Rochdale Securities Analyst Dick Bove to cast a gimlet eye on the financial pay debate brewing in Washington. Bove is critical of the U.S. government, pointing out that sports stars earn more, on average, than bankers. And since sports leagues are generally exempted from federal antitrust law, "One might argue that sports leagues are government sponsored oligopolies. As a result of restraining trade in this fashion, government allows sports figures to earn incomes at the peak of American industry. One might also argue that by establishing trade restraints in this sector, government believes that entertainment should be valued more highly than the financial and productive sectors of the economy where restraint of trade is illegal."
To reach this conclusion, Bove compared the pay of the top 15 sports figures and the top 15 executives of both financial and non-financial firms. Bove says that the average total compensation of the top 15 ahletes was $40 million per year (median $31m); "the top non-financial executives received $39 million on average (median $30 million) and the top 15 financial executives received an average of $30 million (median $21 million)." He says the average NBA player makes $5 million per year and the average MLB player makes $3 million. "The average employee for Goldman Sachs is estimated at $800,000 this year."
With Washington spoiling to put pay restraints on bankers, Bove says the government apparently "believes that allocating funds to [the financial] sector is not as productive for the economy as, say, being a shooting guard for the Los Angeles Lakers, or a third baseman for the New York Yankees."
Of course, when Babe Ruth was asked why he made more than Hoover, he responded, "I had a better year than he did."