While Congress grapples with legislation to prolong defined benefit pension plans including those in ailing industries, there is at least one industry whose retirement program is quite healthy.
That industry, or game depending on your point of view, is professional football. Yesterday the National Football League (NFL) and the NFL Players Association announced that they had reached agreement on increases in benefits for retired and current players. These increases will cost approximately $120 million per year, bringing the annual cost of NFL player benefits to $700 million per year. Retired players now receive nearly $60 million per year in retirement benefits.
So I got to thinking which group of professional athletes has the best retirement plan. Is it the NFL, the National Hockey League (NHL), the National Basketball Association (NFL) or Major League Baseball (MLB). The answer is none of the above.
According to Business Week Online, PGA Tour Members have the most lucrative retirement plan of all professional athletes. Nick Price is quoted in the article saying that golfers now in their mid-20s who have a career like his could have $30-$40 million in their pensions. Someone like Shaquille O’Neal, on the other hand, could have $55,000 a year in pension benefits if he plays 15 years.
The difference is in how the respective retirement plans are funded. The retirement plans for players in the NFL, NHL, NBA, and MLB are all funded through television revenues. The PGA retirement program works like a deferred compensation plan.