During a segment on SportsCenter entitled "Salaries," Darren Rovell sits down to break down the payroll deductions as well as other taxes that affect how much money NBA stars bring home after their large contracts with the league. Using LeBron James as an example, the analysts show all that happens to a player's money before they receive their big payout. He says, "The escrow is taking away ten percent of their salary -- is automatically taken away because they agreed to the collective bargaining agreement, that they get fifty-one percent of revenue share."
There are often times as is the case with LeBron that millions are taken out for deductions. "We looked at the whole time, and for the most part these guys are getting the haircut of forty-five to fifty percent," says Rovell. He then goes on to explain financial literacy and why some athletes go broke because they spend based on the initial contract number before taking into account all these deductions, which really depend on what state you live in.
Looking at Bron's gross pay from the NBA which is set at about $33 million. He loses ten percent to the NBA escrow which accumulates to about $3.3 million. Then his federal tax deduction estimates to a little under $12 million, with about $2 million deductions as a resident of the state of Ohio. His agent gets about $1 million, and then only $18,000 goes into his 401K.
Watch the video above to learn more about the deductions these stars face.
