As Super Bowl LI nears, much has been made of Texas being a state without an income tax. The common refrain is that Super Bowl LI is a tax-free Super Bowl.
Not so fast. Taxes have a way of extending far and wide, and that is true for Super Bowl LI.
Although Texas has no state income tax, Patriots and Falcons players who are residents of states with income taxes will still be taxed by those states. This means Tom Brady, who reportedly is a resident of Massachusetts (5.1% state income tax rate), and Matt Ryan, who reportedly is a resident of Georgia (6% state income tax rate), will not receive tax breaks while in Houston. Only Patriots and Falcons players who are residents of states without income taxes—Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington or Wyoming—avoid taxation while in Houston. This means many, and perhaps the vast majority, of Super Bowl LI players will still be subject to state income taxes.
The reason Super Bowl LI players face taxation stems from the general principle that states of residence can tax you wherever your employment takes you. While the Super Bowl entertains fans and sponsors, Patriots and Falcons players are there to work. They’ll also have to satisfy various contractual obligations reserved for players who appear in the Super Bowl, such as making themselves available to speak with the media at specific times.
Not only are most Super Bowl LI players being taxed for their labor, but many of them have also received lower pay during the playoffs than during the regular season. During the regular season, NFL players earn starkly different salaries to account for their varying talent, experience and market value. Take Ryan, whose 2016 cap hit of $23.8 million is nearly $8 million more than that of the Falcons’ second-highest paid player, Julio Jones ($15.9 million), and more than $20 million more than most of Ryan’s other teammates. Similarly, Brady’s 2016 salary cap hit of $13.8 million far eclipses that of his Patriots teammates. It makes sense that Ryan and Brady earn the most, and in a market-based economy, they ought to: They are their teams’ superstars.
Yet during the playoffs, these superstars earn the exact same pay rate as their much less marketable teammates. This is a consequence of Article 37 of the collective bargaining agreement. Article 37 generally stipulates that players on playoff teams earn the same pay rate during the playoffs. For Brady and Ryan, this means they are paid much less for their playoff labor than for their regular season labor. Consider that each of them earned $27,000 for winning their respective divisional round games and an additional $49,000 for winning their respective conference championship games. The winning quarterback of Super Bowl LI will receive another $107,000, while the loser will get $53,000. For 99% of the population, those figures would represent fantastic earnings. For Matt Ryan and Tom Brady, whose combined 2016 salary cap figure was $37.6 million? Not so much.
Teammates of Ryan and Brady who earn much less, however, do relatively well under the playoff pay system. After all, the exact same pay figures mentioned for Brady and Ryan in the preceding paragraph are true for the vast majority of Brady and Ryan’s teammates (for several reasons detailed by former NFL agent Joel Corry, a relatively small group of players are not eligible for the same pay in the conference and Super Bowl games). To illustrate how playoff pay can represent a pay raise consider Patriots cornerback Jonathan Jones. His 2016 regular season cap hit was $450,000, or about 3% of Brady’s cap hit of $13.8 million. Yet he gets paid the same as Tom Brady for his playoff work. This means that if the Patriots win Super Bowl LI, Jones would, like Brady, earn a total of $183,000 playoff pay. Such a figure would mean that Jones would earn, from three playoff games, about 41% of what he earned during the entire regular season.
There’s nothing intrinsically wrong with superstar players and (relatively) low-paid players earning the same pay during the playoffs. It certainly doesn’t appear that Ryan, Brady or any of their star teammates care: Their focus is on winning and the acclaim and satisfaction that would go along with becoming Super Bowl champs. Plus, 10 of the star players in Super Bowl LI will receive additional pay for earning spots in the Pro Bowl game (a game these 10 players could not play in due to Super Bowl commitments). In addition to Brady and Ryan, Vic Beasley, Matt Bryant, Devonta Freeman, Dont’a Hightower, Julio Jones, Alex Mack, Devin McCourty and Matthew Slater will each receive $45,500 (the midpoint of the winning share and the losing share from the Pro Bowl).
Still, given the substantial revenue that the NFL generates from playoff games and given that NFL player fines are not discounted during the playoffs, perhaps pay for all playoff players should be higher. That is one of many topics that the NFLPA might consider raising in its next CBA discussions with the NFL—though those discussions won’t occur for a while, with the current CBA running through the 2020 season. Until then, it’s one for all and all for one when it comes to playoff pay.
Michael McCann is SI's legal analyst. He is also an attorney and a tenured law professor at the University of New Hampshire School of Law.
Robert Raiola is the Director of the Sports & Entertainment Group of the CPA and Advisory Firm PKF O’Connor Davies.