Who will get greater bonuses — a dropping Super Bowl group or the typical Wall Street worker?

That quantity may depart some well-heeled monetary professionals feeling fairly chilly, too, about their very own year-end efficiency pay. The common 2022 bonus on Wall Street was $176,700, based on a yearly report from the New York State Comptroller’s Office.

Each 49er will get $45,500 for his or her first-round bye; $50,500 for successful the divisional playoff spherical; $73,000 for successful the convention championship; and $89,000 for being on the dropping group on the Super Bowl. (For context, 49ers quarterback Brock Purdy has a four-year, $3.7 million contract with a yearly wage averaging simply over $930,000, based on Spotrac.)

Meanwhile, every Kansas City Chiefs participant is slated for $338,000 in bonus pay. That’s $50,500 for his or her Wild Card win; $50,500 for the divisional spherical; $73,000 for the convention championship; and $164,000 because the successful Super Bowl group. Players on the group’s lively roster, inactive record or injured reserve on the time of the sport are all paid the total quantity, the settlement states.

In the world {of professional} sports activities, six-figure sums are small potatoes. Super Bowl MVP Patrick Mahomes is working beneath a 10-year contract value $450 million, based on Spotrac.

“This is not even chump change for him,” stated Alan Johnson, managing director at Johnson Associates, a financial-services compensation consulting agency.

It could be chump change, however no less than it’s assured. NFLers can rely on the bonuses outlined of their settlement with the league, whereas Wall Street bonus quantities may be whipsawed by the markets.

In 2022 — a yr when inflation and rising rates of interest roiled markets — the typical Wall Street bonus of $176,700 marked a 26% decline from the earlier yr, when the typical year-end payout was $240,400, based on the New York State Comptroller’s Office. In 2022, the $33.7 billion vat of cash for bonuses fell from $42.7 billion a yr earlier, the workplace stated.

The inventory market made a comeback in 2023, however the not too long ago concluded yr isn’t wanting so scorching for Wall Street bonuses, based on Johnson.

The 2023 bonuses getting paid out in 2024 are projected to remain flat or decline, based on Johnson’s agency. For instance, folks in investment-banking advisory work may even see a 15% to 25% year-over-year drop within the worth of their money bonuses and fairness awards, based on the agency.

Johnson’s agency analyzes totally different bonus figures from a tighter vary of monetary professionals than the Comptroller’s Office does.
By his rely, a yearly bonus within the vary of $300,000 to $500,000 is frequent, Johnson stated. Seven-figure bonuses “are not common” and reserved for the highest 5% to 10% folks at a agency, he stated.

Wall Street bonuses aren’t simply icing on the cake of finance jobs: They typically characterize a big chunk of a Wall Street worker’s compensation. For lower-level staff with bonuses within the $300,000 to $500,000 vary, their bonus may very well be 50% of their pay. For Wall Streeters with a seven-figure bonus, that could be 60% to 80% of their pay, he stated.

While six-figure bonuses could not add a lot to the entire compensation of superstars like Mahomes, a rookie NFL participant making the league minimal of $795,000 ought to take pleasure in a noticeable bump of their pay from a postseason bonus.

Johnson sees pay parallels between the soccer subject and the C-suite. Each profession may be short-lived with cutthroat competitors and many burnout.

Careers within the excessive finish of monetary providers can usually finish in an individual’s early 50s, he stated. It’s secure to say a football-playing profession is even shorter.

“For the amount of money these people make, it should be a grind, it should be competitive,” Johnson stated. That assertion holds true for each finance and soccer, he famous.

What about taxes on bonuses?

The Internal Revenue Service is one other group that will get a shot on the cash, and gamers must play by the tax company’s guidelines.

Bonuses — in sports activities and different arenas — are utterly taxable, stated Robert Raiola, a director on the sports activities and leisure group inside PKF O’Connor Davies Advisory. His follow contains dealing with tax issues for NFL gamers, together with two with the Kansas City Chiefs.

The IRS says it contains bonuses with different kinds of “supplemental wages” that aren’t an worker’s common wages. Commissions, additional time, severance and pay for collected sick depart additionally rely as supplemental wages, the company stated.

There are a few methods employers can play it. For occasion, they’ll lump the bonus with common wages and withhold “as if the total were a single payment for a regular payroll period,” the company stated.

But Raiola stated a extra frequent strategy is paying the bonus individually and withholding 22% in federal taxes on quantities beneath $1 million. There’s 37% withheld on quantities above $1 million, he stated. For his NFL purchasers, the bonuses are separate from the paychecks they obtain over a 36-week span.

The bonus cash is handled as atypical revenue, Raiola famous. If the bonus quantity is beneath $1 million, however the recipient’s revenue reaches to the highest tax bracket with its 37% marginal fee, they’d must pay extra to the IRS at tax time.

In a sport the place pace counts, Raiola famous that his NFL purchasers have already been paid their playoff-bonus cash. Now, they’re simply ready on their Super Bowl bonus verify.