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Why on earth does Roger Goodell make so much money?

AP Photo/Brandon Wade

THE ANNUAL UNVEILING of the NFL's tax filings took place this week, spurring a predictably horrified reaction: Roger Goodell made how much? In 2014, he pulled in $34.1 million -- a slight decrease from 2013, but hardly the expected rebuke after a year in which the commissioner stumbled through a series of crises. Goodell's supporters -- the owners, basically -- have defended his massive pay by pointing to the league's continued financial success and the complexity of Goodell's job. The NFL pulled in an estimated $11 billion in revenue in 2014, which would place it in the middle of the Fortune 500.

And yet, even by the gilded standards of corporate America, in which CEO pay continues to skyrocket, the commissioner makes boatloads of money. Consider the comparables: The 10 publicly traded companies closest in size to the NFL -- a group that did $10.9 billion-$11.1 billion in revenue in 2014 -- paid their CEOs an average of $12.1 million, including stock, bonuses and other forms of pay. Goodell made nearly three times that.

Of course, there are a number of smallish businesses that give their leaders outsized sums, as well as giant corporations that are more modest (the CEO of Costco, which made $116 billion in revenue last year, earned just $6.3 million). But if you look at a list of the highest-paid CEOs of large, publicly traded U.S. companies, you'll notice something interesting. A disproportionate number of them work for media and entertainment companies -- Discovery Communications, Liberty Media, CBS, Disney (which owns ESPN), Yahoo and Viacom, for example. Like the NFL, some of these businesses aren't huge, by Fortune 500 standards. In fact, none of the 50 biggest companies in America are media or entertainment companies -- but eight of the 20 highest paid CEOs work in the industry.

"There's a myth about media moguls, which is that there's something unique about them," says Michael Pryce-Jones, the director of corporate governance at CtW Investment Group. "People believe they're irreplaceable."

Compensation experts point out that businesses set their pay rates by copying one another -- and a few entertainment companies have ratcheted up the scale. Several are controlled by just a few shareholders; for example, Sumner Redstone's family controls most of the voting shares of CBS and Viacom. As a result, it's nearly impossible for outside investors to overturn inflated CEO salaries. "The media industry is populated by companies with this structure, so you tend to see higher pay," says Charles Elson, a corporate governance expert at the University of Delaware. "You don't have the same accountability."

Which brings us back to the NFL.

Like the executives who helm these media companies, Roger Goodell is accountable to a small group of people: the league's 32 owners. An even smaller segment of them control his pay. In recent years, the NFL's compensation committee has actually shrunk, from seven members in 2011 to three in 2014 (Arthur Blank, Robert Kraft and Jerry Richardson). These owners have justified Goodell's exorbitant salary by pointing to the league's expansion under his regime. And indeed, the commissioner has served them well; he negotiated the owner-friendly 2011 collective bargaining agreement, oversaw continued growth in television ratings and locked in big broadcasting deals, ensuring long-term stability. Between 2010 and 2014, the NFL's revenue grew about 22 percent, according to public reports. Goodell's salary has actually outpaced that, nearly tripling in that time.

But the question remains: Why $34.1 million? Blank has said the number reflects "the value of [Goodell's] leadership and the success of the NFL at the highest levels." The committee has also disclosed that it looks at the salaries of top executives in two industries: sports (the other leagues also pay their commissioners large salaries that are disproportionate to their revenue) and -- wait for it -- entertainment.

"The marketplace is mythically created by the peer group," Pryce-Jones says. Goodell's compensation is based on a number of factors, one of which is that the NFL is, at heart, a media company -- the league not only publishes its own content on its website and network, it sells it to other providers. And because many media CEOs make significant money, Goodell, too, is likely to make significant money.

So Goodell's pay, like the pay of other entertainment executives, continues to shock and awe. But his situation is unique in some regards. The owners who set his compensation aren't just his pals -- they're also his subjects, insofar as he wields the power to punish them and their employees. They're incentivized to reward Goodell so that he rewards them, which is why it'll be fascinating to see if the commissioner's pay decreases in the wake of Deflategate, which ticked off Robert Kraft, and the Rams' move to L.A., which reportedly went against the wishes of Richardson.

Unfortunately, we may never find out. The NFL dropped its tax-exempt status last year, and it won't have to disclose executive pay in the future. As a result, Goodell's salary, much like the logic behind its determination, will soon become a mystery.