It doesn't pay to be Cabrera

FOR THIS YEAR'S Money Issue, I wanted to look beyond who makes the most money in sports and ask what makes money -- what factors drive off-field compensation? As you might expect, likable stars with googols of Google mentions take home a lot of endorsement money, but for various reasons, a lot of stars don't get what they should.

Working with Jeff Phillips, a principal at the Parthenon Group consulting firm, and Tyler Williams, a graduate student in economics at MIT, I studied the 125 highest-earning athletes in 2012 to see how much money they commanded in endorsements and sponsorships. We then used multiple regression analysis to isolate the impact of various key factors on off-field earnings, incorporating data from nine sources, including MLB.com, CelebrityNetWorth.com, Sports Illustrated and Golf Digest. Three things jumped out from our findings.

For one, it pays to play an individual rather than a team game. If everything about two highly paid athletes is the same except their sport, our model predicts a tennis player will make 79.6 percent more endorsement money than a baseball star and that a golfer will earn a whopping 224.8 percent more. Makes sense. Golf and tennis both showcase individual achievement and have affluent audiences to boot. Tiger Woods made $77 million last year, far more than any other athlete, because he dominates a sport whose fans buy Rolex watches (which he endorses). There is, however, a way for team-sport athletes to break into that kind of mass appeal: Winning a championship MVP boosted endorsement power by 32.5 percent.

Further, across all sports, endorsement money accelerates to the top: Our model estimates that being one of the two best players in a sport amped endorsements by 47.6 percent. This is evidence of what economists call the superstar effect, which I wrote about in last year's Money Issue. As technology keeps improving, fans around the globe have more access to sports. In turn, these fans -- and the companies trying to appeal to them -- want to spend their money on the very best players, not just the merely good or even the pretty great. Across popularity-driven businesses from movies to music to sports, the biggest acts are drawing increasing shares of spending and attention. And no-doubt Hall of Famers such as LeBron James (about $40 million in 2012 endorsement income) and Jimmie Johnson ($6.7 million) earned even more last year than our model projected, while not-quite-top-shelfers like Rory McIlroy ($11 million) and Victoria Azarenka ($3 million) made less.

There was one stunning negative conclusion from our findings. While an athlete's race was not significantly related to off-field pay if that athlete was white or black, being Hispanic cut endorsement earnings by 42.6 percent. To some extent, this reflects the lagging popularity of the world's biggest sport in the world's biggest market: Soccer standouts such as Lionel Messi ($19.1 million in endorsements) don't have much drawing power in the U.S. But Miguel Cabrera (a paltry $200,000) just won a Triple Crown. Where are his ads? What about Felix Hernandez ($600,000), a Cy Young–winning pitcher with a cool nickname? I think many companies believe American fans (white or black) are reluctant to identify with Latin stars -- and have been since the days when Topps issued "Bob Clemente" baseball cards. I also think the first athlete who gets the chance to prove the suits wrong -- imagine Pablo Sandoval hawking Panda Express! -- is going to generate a bundle of cash for his sponsor.

Finally, our stat lines generated one peculiar outlier: Serena Williams is a great, famous athlete in a lucrative individual sport who ought to be making nearly $20 million a year in endorsements, according to our model. But last year, she took in just $9.3 million. I'm speculating here, but while it didn't hurt athletes in our universe to be black and actually helped them to be female, in the real world, it probably doesn't help to be both. As a woman, Serena isn't an aspirational role model for most male sports fans. And unlike many high-earning female athletes, she doesn't use her sex appeal to come across as either pleasing or playful to men either. Basically, she sells one thing: her indomitable talent. That's enough to make her a lot of money but only half of what she deserves.

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