How do Olympic athletes make money? The answer is more complex than you might think. Yesterday, controversy over how Olympians are allowed to make money sprung up as the athletes took to Twitter to voice their distaste for rules muzzling their ability to thank personal sponsors that are not also official Olympic sponsors. It’s called #Rule40, and it essentially prohibits athletes from talking about their financial supporters on social media.

“These (Olympic) sponsors have done absolutely nothing to help me be the athlete I am today,” one U.S. runner, Nick Symmonds, is quoted as saying in an article The Guardian published yesterday. “For years my sponsors … have helped me train and compete and now they are made to feel unwelcome. This is not right.”

#Rule40 & The Lawrence Rawlings Conundrum

The topic of Olympic athlete compensation is one that has personal significance to me, though I never hoped to compete in the Olympics myself. When my great-grandfather, Lawrence Rawlings, qualified for the 1936 Summer Olympics as a sprinter, his dream came true… But only temporarily.

Lawrence never made it to the Olympics.

According to family lore, he didn’t travel from New Jersey to Berlin for the Olympics, because he simply didn’t have enough money to go. Lawrence had to turn down his invitation and someone else went to Germany in his place.

Why didn’t he have enough money to go? The short answer is: Because he was an amateur runner.

He was good; one of the best. But he wasn’t allowed to make money as a runner without losing his amateur status. There is a longer story behind his inability to attend the Olympics, but I’ll get to that in a moment…

What Happened to the Olympic Amateur Status Requirement?

Years before my great-grandfather qualified for the Olympics, one of the most storied athletes in U.S. history, Jim Thorpe, had gold medals he rightfully won in the 1912 Olympics taken away. The reason? He had earned a small sum of money playing amateur baseball years earlier. In days past, Olympic organizers did everything they could to ensure the Olympics only featured amateur athletes. Once upon a time, you had to be a Regular Joe to compete. No superstars allowed.

Thirty years after his death, Thorpe’s medals were reinstated by the International Olympic Committee. Around that time, the Olympics and athletics in general were changing. Pros in major sports were beginning to draw substantial paychecks — and substantial crowds, something that certainly made changing the rules easier. In 1971, the rules were updated so Olympic athletes could receive personal sponsorships by companies. In 1986, professional athletes were granted admission to the Olympic games. Thus began a serious disconnect between the Olympic Haves, and the Olympic Have-Nots.

How Much do Olympic Athletes Make?

The answer isn’t as short as you might expect. Big stars make big money, after all. And nowadays, the Olympics both create and support big stars. Lebron James, a member of the 2012 U.S. Olympic Basketball Team, made some $53M last year through his NBA Championship-winning salary, plus endorsements. Swiss tennis player and 2012 Wimbledon winner Roger Federer earned an estimated $54M last year. Top-tier athletes from less-watched sports can also do well. U.S. swimmer Michael Phelps is worth a reported $45M today. And Jamaican three-time gold medalist Usain Bolt took home $20.3M last year.

But what about top athletes who aren’t world famous?

Each individual country participating has an Olympic committee that pays a different bounty to each athlete per medal earned. In the U.S., which pays less than countries like Russia, each gold medal earned in the 2012 Summer Olympics will net a $25,000 bounty for the athlete. Silver medals earn $15,000 and the reward for a bronze is $10,000. Beyond that, many of these stars don’t make much (and they still have to pay taxes on those honorariums, too).

According to the Track and Field Athletes Association, half of the U.S. runners, jumpers and throwers ranking in the top-10 in their events make less than $15,000 annually from their athletic careers, including sponsorships and endorsements. Rowers are in the same boat (or out of it, rather), earning a measly $400-per-month stipend from the U.S. Olympic Committee.

Leveling the Playing Field

The #Rule40 debate is just the latest battleground for the ongoing debate of Olympic athlete compensation. Symmonds, the angry runner quoted earlier, also caught flack for auctioning off sponsorship space on his shoulder in the form of a temporary tattoo he wore leading up to the games. He earned $11,000 for it, though he couldn’t display it during Olympic qualifying events and still can’t at the Olympics.

The truth is this: American viewers value different sports differently. And here in the U.S., the four major pro sports make athletes rich, the Olympics aside. Moreover, some sports, like tennis and soccer, have a year-round, global spectator appeal that divers and long jumpers could never hope to rival. But shouldn’t the top athletes in the world be able to make money for their skills and notoriety just like many of their competitors do? Shouldn’t their hands (and feet) be unbound?

The truth is, Olympic sponsorship is a relative waste of marketing dollars. And who are these sponsors anyway? Half of the people living in London couldn’t even name one Olympic sponsor in a recent poll. Some analysts are arguing that the biggest benefit to sponsor companies is knowing their competitors aren’t sponsoring instead.

If You ain’t Cheating, You ain’t Trying?

So maybe there aren’t quite as many Lawrence Rawlings’ out there this year as there were back in the ’30s but then again, maybe there are.

As the story in my family goes, Lawrence couldn’t attend the Olympics not just because he didn’t have enough money — but because the money he won in paid competitions, racing under an assumed name, wasn’t enough to get him there.

Even back then athletes knew what they were worth and had to find ways to get it.

Now PerkStreet nor I could never endorse cheating. And we don’t. If there’s anything everyone hates — athletes, spectators and ruling bodies alike — it’s cheating. But think about this: If some athletes are being prohibited from pleasing their personal sponsors, thereby doing their jobs and making money so they can keep competing, who’s being cheated now?

What do you think? Should #Rule40 be overturned? Should Olympic athletes be able to talk about their personal sponsors at the games? Weigh in below.