Did 17th century Caribbean pirates make more than NFL players?
Welcome back to MoneyLemma! Today’s topic is probably the most commonly requested one by readers. People always want to talk about 401ks, credit card debt, and the lifetime earnings Calico Jack. Enjoy scallywags!
Let’s talk about booty. Pirates spend and expend their lives in its pursuit, shoulder parrots squawk about it ceaselessly, treasure maps point to it with big red arrows, and her majesty rues the day it graduated from her coffers. Few lives are more romanticized than the pirate’s life. Yet booty, for all its marvel, is a nebulous term. Was being a pirate actually a lucrative career? How much money would the Goonies have recovered from that sunken pirate ship? What would have actually been buried on Treasure Island? If you drop anchor on this post, you’ll find out.
Why 17th century pirates?
As long as there have been boats, there have been pirates robbing them. Julius Caesar, Miguel de Cervantes, Christopher Colombus, Wendy Darling, and Tom Hanks have all been pirate captives for a time (for Tom Hanks, it was just two hours during Captain Phillips). The focus of this article, though, is 17th century Caribbean pirates. First, because this was (literally) a golden era: merchant ships laden with precious metals ferrying back to the old world were perfect targets. Second, there is real economic data available for this time period, largely in part to a 500 page work of nonfiction by Daniel Defoe, who would later write Robinson Crusoe (a story inspired by real-life pirate Alexander Selkirk).
Pirates of this generation were known as Buccaneers (named after a jerky they used to eat) and they came from all over. Many were former privateers (meaning they’re pirating was sponsored by a monarch) who just decided to go into business for themselves. Others were runaway slaves, British navy deserters, convicts dumped off on islands, and all sorts of misfits and fringe members. MoneyLemma’s post on LSD covered the countercultural movement of the 1960s, and in a way, pirates were counterculturalists. These were society's rejects, a group of people who chartered their own path, stole from the rich, and lived as free as anyone could. They also slaughtered innocent families, pillaged entire cities, and were truly disgusting, smelly, unbathed people. Still, like mobsters, gangsters, and the Kardashians, many people overlook any distasteful behavior to romanticize a life of hedonistic excess.
Economics of the piracy business
Quick disclaimer: I am translating 17th century currency to modern day dollars. This is a tricky operation for reasons explained here.
Today, you might call buccaneers libertarian-socialists. Libertarian because these pirates were the most rugged of individualists, beholden to no one and holding freedom above all else. Or, as a Bartholomew Roberts (also known as Black Bart, the pirate captain who took 400 ships) famously said:
"In an honest service there is thin commons, low wages, and hard labor; in this [piracy], plenty and satiety, pleasure and ease, liberty and power;. A merry life and a short one, shall be my motto."
At the same time, these people were socialists. On and off the ship they shared everything. Early buccaneers lived in bands of six or eight that operated like deranged hippie communes. This strange philosophical mix transferred to the economics of the business. Pirates were entrepreneurs who banded together for a joint venture, that venture being to plunder a bunch of ships. The group (typically under 250 crewmates) would democratically elect a captain to make major decisions like which vessels to target. Being the unruly bunch they were, the captain’s authority was limited and he could be deposed at any time. When the plundering was finished or everyone was dead, the venture dissolved. At that point profits were split pretty much equally amongst the members (captains or quartermasters received double shares). In this way, pirate ships were employee-owned businesses.
A pirating operation had limited upfront expenses. Pirate ships were never bought. Usually they were stolen. Early buccaneers would often hollow out tree-trunks into canoes and row out to commandeer a real ship. Pirates would pack up a bunch of jerky and water and take to the sea.
In terms of ongoing expenses, again not much. A modern ship might have to worry about fuel costs or port fees. 17th century ships used wind (occasionally rowers) as an energy source and pirates would just kill anyone who tried to charge them a docking fee. They stole all the supplies they needed and had the skills to do maintenance on their ships, hunt for food, and find fresh water. There were some expenses that a piracy venture might incur. For example, Pirate Law, which was a general code that evolved over time, stipulated that any crewmate who loses a limb, eye, ear or other body part gets paid a one-time stipend (ex. Loss of a right arm was worth 600 pieces of eight, or about $60,000 in today’s dollars). On occasions bribes might be paid for information or medicine or food might be bought. Overall, though, expenses were low. Because of this, ships were self-sustaining and pirate ventures could last years, and pirate fleets could be built up into small armadas of stolen ships, many manned by prisoners.
The revenue of a pirate ship was simply how much loot it could plunder. This was highly variable. Sometimes ships were kidnapped or sunk before taking any loot. Others made a fortune. In 1696 Captain William Kidd spent a year at sea with his pirates and had nothing to show for it. In other instances pirates could take a fleet of three ships in a single day. Even when a ship was captured, the payoff was unpredictable. Ideally pirates would capture a commercial vessel hauling gold back to Europe. In 1672 Captain Laurens de Graaf intercepted and robbed a merchant ship of 120,000 Spanish pesos ($12 million in today’s money). Most of the time though, the bounties were far smaller, and usually in the form of wheat or furs (not all ships carried gold). To get a sense for how rare that $12 million payday was, consider that de Graaf would pirate for another decade before he got another one that big.
Over the lifetime of a venture (which could last years), pirate ships tended to do well. One report in the late 16th century estimated that the average pirate venture yielded between $150,000 and $300,000 in booty ($10 million to $20 million in today’s dollars). Captain Henry Morgan once returned to port with 500,000 pieces of eight, which would be worth about $50 million today. This understates the total haul as the ship was also filled with stolen cargo like wheat and barrels of booze.
In this sense 17th century piracy was a fantastically profitable business. Huge pools of revenue with no upfront costs and basically no expenses. Buccaneering, as a business model, compares favorably to basically any other business in history, illicit or not. It’s a far better business than drug dealing (where you have to pay for your supplies) and a better business than the Crusades (huge upfront costs + proceeds went mostly to the Church). It’s certainly more profitable than Google’s search business or Coca Cola’s soft drink brands.
How much did these pirates make?
Since they had no boss, pirates operated on a “no prey, no pay” policy. They had no salary and were guaranteed nothing. One of the Pirate Laws, though, explicitly states that no venture will disband until each crewmate's share exceeds $1,000 pounds (~$60,000 in today’s money). Considering that most fleets were under 250 members and loot was split almost perfectly evenly a pirate could easily come away with the modern-day equivalent of a six-figure payday at the end of a venture, seven-figures on a good venture. This loot would come in the form of gold and precious metals.
On the low end, a venture by Captain Henry Morgan once yielded an average of about $20,000 per head in modern dollars, which is not much to show for a few years work. On the high end, The Cabo once paid out 4,000 british pounds ($760,000) to each crewmate in addition to 42 diamonds each. That means each pirate easily scored over $1 million.
How did the pay of pirates compare to NFL athletes?
NFL players can help us better understand the economics of a pirate career because the two careers actually have a lot in common, putting aside the fact that pirates are murderous criminals and NFL players are, with a few notable exceptions, not. The overlaps:
Both careers are short. The average NFL player has a 3.3 year professional career according to Statista. Those figures aren’t available for pirates, but would probably be pretty similar. Pirates lived a nasty life filled with violence and disease, and few lasted more than a few years.
Significant skew in earnings: While 34 NFL players make upwards of $20 million per year, median pay is $860,000. Pirate pay distribution was similar: Black Bart was like Tom Brady, pirating for decades, looting 400 ships, and amassing what would today probably be a >$100 million fortune. Most pirates lasted a few years and walked away with far less.
Small labor pool: There are just under 1,700 NFL players active right now. Similarly, there were about 5,000 pirates active during the golden age, according to the Royal Musuem in Greenwich. The NFL limits its labor pool based on skill, while the labor pool of pirate’s was limited by self-selection: not many people were crazy or desperate enough to live that life, even for the payoff.
Dangerous jobs: The NFL is one of the most dangerous jobs around, especially as more information on the long-term effects of head injuries comes out. Still, the pirate’s life was way more dangerous. The aforementioned fortune seized by Captain de Graaf involved the death of 20% of his crew in battle - in a single day!
All in all, from a compensation perspective, the job of a pirate is pretty comparable to an NFL athlete.
How do employees profit shares look across different businesses?
A pirate ship is owned by the pirates. NFL teams, on the other hand, are not owned by players. JoinColossus reports that the Dallas Cowboys reported $425 million in profit last year, while the players on the team received about $180 million. This means that the owner makes over twice as much as all of the players combined. Put another way, if the Dallas Cowboys operated like a pirate ship then players (and other employees) would triple their income. The Federal Reserve tracks this figure in national aggregate - it’s called the Labor Share of Income. It measures how much of the national income is collected by laborers (as compared to corporates and other non-individuals):
Over the last 75 years the labor share of income - the amount people are making - has trended down. Why is that? Let’s return to our two examples, the NFL and Pirates. The labor share of income in the NFL is about 33% (higher when you layer in non-player payrolls, but that data isn’t reported). Pirates labor share of income is 100%. The difference has to do with the industry structure in each case. For professional sports, there are actually laws that give owners significant leverage over players. For example, it’s illegal to create a professional baseball league competing with the MLB (which gives owners significant negotiating leverage over employees because there’s no other job in town). And many stadiums are owned by teams but heavily subsidized by cities (almost always a waste of taxpayer dollars). Since cities are unlikely to sponsor multiple stadiums, this creates a quasi-monoploy status for many sports teams. Pirates, on the other hand, operate outside any law. They can quit anytime, they can mutiny and kill the captain if they don’t like him, they can. Without basic institutions like property rights and the ability to enforce contracts, non-labor income isn’t really possible. Private Equity investors can’t buy stock in Blackbeard’s ships, and even if they could it’s hard to imagine Blackbeard honoring his contractual obligations and shipping his loot to a bunch of bros in Patagonia vests. Pirating and football operate under different market forces, industry structure, legal superstructures, and social institutions. The labor share of income is a downstream result of those conditions.
As a parting thought - we often view these deep economic forces as fixed, like the laws of nature like gravity. But the above chart shows that US labor share of income has been declining for decades. Under a different set of conditions (laws, governance, social structure), that trend could reverse. A lot of economic realities we think are fixed are actually malleable. This is one of the fun things about businesses: we don’t have to sit back, conform, and listen to the laws of nature the way we do in engineering or biology. In business, we create the natural laws.