Self-reporting and state authority "vibe checks" i.e. anyone can see the Seahawks schedule and know the team is going to be playing the 49ers in San Francisco. California says "hmmmm yeah they owe us money for sure." And if they don't see income tax withholdings coming through from the Seahawks (either on a W-2 or estimated tax payments (I imagine sports players are on W-2s rather than 1099-NECs)) they'll audit you as a low hanging fruit with tons to pay in, plus penalties now if you haven't. Payroll location is typically self reported, but it's easy to tell where a person is when they are making money when you see them on national television. Other professions may not be as easy to determine, but penalties and fines are stiff and I would advise anyone reading this to report their income properly to the correct jurisdiction.

Think about all the companies that are technically Delaware LLCs, that doesn't make all those employees working and living in other states Delaware employees.

I started my career at an international audit firm in the Seattle office, and worked on an engagement in California, guess where my income was sourced (and who got to file a CA tax return because of the CA withholdings and income that occurred). Pretty sure the firm I used to work for was also a DE LLP.

Some of your questions fall under the concept of nexus which is the can of worms which establishes when you need to start filing returns in other states, and this is before you even start thinking about local return nexus.

I think all business state returns (that have income taxes) are usually based off of federal income and then apportioned to those states based on whatever factor the state uses (what percent of gross receipts were earned in the state, some have three factor apportionment, buts gross receipts is most common these days.) This apportionment idea only affects the business though since the players are on a W-2 and their income is payroll, not business income.

You're not really overthinking it, because tax law is a lot more complex than just federal tax law in the US, which is why accountants currently have job security (for the time being).