Are athletes paid too much? Should contracts be more performance based?

[BAH HUMBBUG!]

With the potential threat of the NFL lockout that was finally resolved, the most likely NBA lockout for at least part of the upcoming season, if not all, my friends and I were talking about it. Throwing out some ideas and I curious, what does everyone here think? How would you want to see sport contracts improved or how do you think they should be structured?

imho

I think a sliding scale performance based contract with a percentage guaranteed based on previous year's performances, assessed against other players performances, based on an agreed upon standard with a worker's compensation clause if injury is suffered during work but to also include compensation if injured away from work.

So for example, let's take the NFL with Peyton Manning and Philip Rivers.

Their numbers stack up almost 100% identical across the board, the only two major categories, really just one, that have some distance between the other's wold be:

QB Rating: Rivers 101.8 Manning 91.9
Completions: Manning 450 Rivers 357


Such minor differences at this level of play both QB's should be paid approximately, or exactly the same with any other QB's, such as Drew Brees having very close to the same numbers as well, being paid very similarly. Let's use Peyton's $14 million average before this season as the yard stick for arguments sake.

All three make $14 million, or Rivers $14 million and change, Peyton just shy of $14 million and Rivers just slightly below Peyton. Overall win totals, playoff wins and a Superbowl win could all be taken into account as bonuses for the team as a whole, so in theory let's just say that could bump up any of those three to $15-$20 million for the year.

Now what happens if a player such as Alex Smith [can't believe he is still getting a f*@#$&% chance! Rant done] signs a massive $49.5 million contract and plays s*@$$#r and s*@$$#r each following year. Or he plays so poorly from the start that he is the worst starting QB in the league, so instead of getting X millions he makes league minimum. Now I don't think that is entirely fair, but I also don't feel him earning the full amount of his contract or him just being cut flat out is fair based on one bad year.

So perhaps instead it is a sliding scale that can increase or decrease only by a percentage. So for example let's say he did sign for the original $49.5 million over six years. An average of $8.25 million each year. So let's use Kyle Orton's $2.621 figure last year as the lowest paid starting QB.

Perhaps there can be an X% decrease in pay that will follow the inability to perform as a rookie, mid-level and veteran. Say anywhere from 20%-50%. This would take Smith from $8.25 million down to $6.6 million - $4.125 million. Still a ridiculous amount of money for anyone to earn in a year.

Of course I am aware that if contracts are based purely upon a performance scale and has nothing to do with rookie status, mid-level or veteran, the above wouldn't matter.

So perhaps years of service are taken into account, while coming in as a rookie and having an outstanding year, perhaps leading the NFL in most major category or right up there with the pack, your performance pay can only increase by X% as other factors may have helped contributed to your success. The same applies if you have a horrible year and your numbers drop off dramatically.

So players that have one great year will have the ability to earn much more than they would have on a static contract, while players that have been proven performers over years and have a bad season, are not automatically shifted to the bottom of the pay scale.

Of course it would have to be much more well worked out and fine tuned, but I think this way, players can still make millions of dollars, while also allowing teams and owners not to get locked into long term deals that pay massive contract to players that earned them contracts based on one or two great seasons or are well past their prime.

Perfect example, Barry Zito. $18 million plus each year and his best year with The Giants so far has been 11-13. 11-13 for $18 million plus. Now I will admit that that is The Giants' fault, but there are plenty of other teams in other sports that have gotten themselves into the same bad position with horrible contracts with players that performed well then cashed in and either gave up, or just couldn't perform at that level anymore. Keith Van Horn anyone?


Just some thoughts and my two cents.

 

[DWinters]

Very well thought out.....I don't think it really matters how much athletes are paid or overpaid because it is very difficult to handle that amount of cash unless you are an accountant or exceptionally knowledgeable about finances.....

 

[The Incredible Hulk]

athletes are paid whatever the free market dictates. Simple supply and demand. The reason they can get away with

If you pay a guy who turns out to be a bust, it's no different than someone making a bad investment in the market. It happens. There shouldnt be an out clause.

On the inverse side, when a player outperforms his contract, and holds out for more, again this part of the free market, as players in the NFL (and only the NFL) have the right to do that from their collective bargaining agreement.

Point is, someone is always willing to pay these people, therefor the market dictates that they make what they're making.

 

[StorminNorman]

Players are probably underpaid, to be quite honest.

There isn't really a free market in sports because of unions and CBAs and antitrust laws and all that jazz. 16 rich guys can't really start a league tomorrow and offer players more money than they would make in the NFL (the UFL made a big mistake not pursuing Chris Johnson, Vincent Jackson, Logan Mankins and Marcus McNeil in 2010, followed by agressive attempts to pay NFL players higher-than-current contracts during the lockout, but I digress).

 

[BAH HUMBBUG!]

Very well thought out.....I don't think it really matters how much athletes are paid or overpaid because it is very difficult to handle that amount of cash unless you are an accountant or exceptionally knowledgeable about finances.....

I don't think one has to be exceptionally knowledgeable per se, but I agree, suddenly getting a $15 million dollar contract one would think awesome! I can buy anything I want. Wrong, tax 1/2, 3-10% goes to your agent and who knows what else. You buy a $4 million dollar home, have to pay property taxes, nice car et cetra. Suddenly you're in debt and playing to pay your bills.

I can only assume that the professional leagues have some sort of financial advisors they refer their athletes to.

 

[BAH HUMBBUG!]

athletes are paid whatever the free market dictates. Simple supply and demand. The reason they can get away with

If you pay a guy who turns out to be a bust, it's no different than someone making a bad investment in the market. It happens. There shouldnt be an out clause.

On the inverse side, when a player outperforms his contract, and holds out for more, again this part of the free market, as players in the NFL (and only the NFL) have the right to do that from their collective bargaining agreement.

Point is, someone is always willing to pay these people, therefor the market dictates that they make what they're making.

The difference with comparing an athlete with a market is if the market tanks, or your investment goes belly up, your money is gone. There is no, well we will give you back 10%. That option isn't viable at all.

But with an athlete, as you stated, it goes both ways, and it is possible to construct contracts to allow athletes who out perform their contracts to see an immediate raise instead of having to wait three more years before they can renegotiate. Or vice-versa as you stated.

I don't think holding out looks good for the athlete in most cases, but I understand why they do it [NFL], like with Chris Johnson recently. I've been the best, or arguably the best running back in the league and you want to keep me at $700,000 a year or something ridiculously low?

If he worked for a major corporation such as Cisco and was bringing in millions of dollars but being paid $50k and he could quit, go work for Microsoft that was heavily recruiting him for $200K +, he has every right to do that. In most cases anyway.

Why can't athletes contracts be based, at least in part, in this fashion to pay them for how they perform?

To add to that, if an athlete knows he has roughly five to seven good years left, gets a massive $100 million dollar contract, he may just hang it up and not put in any effort. With at least some, if not all of of his contract being performance based, he would at least have some actual motivation to play harder.

 

[The Incredible Hulk]

Never going to happen. As we've seen, someone will always guarantee them $1 more than the next guy. You're dealing with a very sought after skill set that's very, very limited. Demand is always exceeding supply, so the "supply" in this case the athletes are always going to win out.

 

[Hound55]

Depends on the sport. Performance isn't always measurable.

 

[BAH HUMBBUG!]

Depends on the sport. Performance isn't always measurable.

Which does bring up the issue of having contracts purely based on performance, for guys like Robert Horry who has seven NBA championship rings, while he was a very vital part, statistically he was never one to be considered to be at the top of the tier, but clearly he helped a few teams win championships.

But again, guys like Zito or Alex Smith kill me, millions of dollars that they are in no way shape or fashion remotely close to earning.

 

[BAH HUMBBUG!]

Never going to happen. As we've seen, someone will always guarantee them $1 more than the next guy. You're dealing with a very sought after skill set that's very, very limited. Demand is always exceeding supply, so the "supply" in this case the athletes are always going to win out.

But as you mentioned, the NFL has a much different system from the other sports, where only part is guaranteed and if an athlete doesn't perform or is deemed no longer needed, they can cut ties and recoup some of the contract.

I agree, I don't think things will change, but I would like to see some form of change to contracts, if nothing else, at least some form of teams being able to recoup money to players that are clearly overpaid and vastly under-performing.

I'm all for make as much as you can, but if you're earning $20 million a year, you should at least be somewhere near that value in terms of performance.

 

[Hound55]

Which does bring up the issue of having contracts purely based on performance, for guys like Robert Horry who has seven NBA championship rings, while he was a very vital part, statistically he was never one to be considered to be at the top of the tier, but clearly he helped a few teams win championships.

But again, guys like Zito or Alex Smith kill me, millions of dollars that they are in no way shape or fashion remotely close to earning.

Well in fairness, Big Shot Bob would often coast throught the regular season, but I was thinking more of your premier post defenders in the NBA. There's no stats for that, and if you attempt to use stats you could claim that someone's ho is garbage position-wise (like a Sam Dalembert or Joel Anthony) can be more valuable than quality post defenders purely because they get more blocks.

Or ice hockey, where there's much more to the game than just how many points you can put up, you need guys who do the grunt work.

Or rugby.

Not all sports can be broken down to stats, or are as effective when you try to.

 

[BAH HUMBBUG!]

Well in fairness, Big Shot Bob would often coast throught the regular season, but I was thinking more of your premier post defenders in the NBA. There's no stats for that, and if you attempt to use stats you could claim that someone's ho is garbage position-wise (like a Sam Dalembert or Joel Anthony) can be more valuable than quality post defenders purely because they get more blocks.

Or ice hockey, where there's much more to the game than just how many points you can put up, you need guys who do the grunt work.

Or rugby.

Not all sports can be broken down to stats, or are as effective when you try to.

Yeah, as you said I doubt it will ever change, but it does seem there could be some improvements made to adjust contracts, for both the teams and the players if the player over performs or under performs their contract.

 

[BAH HUMBBUG!]

So I was posting on another thread here, and I had another idea to add to this thread for an option. What is players had the choice?

Say they could choose between a performance based sliding scale contract or a set amount?

Let's use Barry Zito for example. His contract was $126 million for 7 years. In hindsight, a horrible deal for the Giants. Zito says he feels bad, but obviously not bad enough to give some of that unearned money back.

What if there would have been an option at the time to say play for...$126 million over seven years if X levels of performance are reached each year. Obviously a lot of fine details would have to be worked out, such as is this number purely based on wins alone, or a combination of everything?

Wins, ERA, strikeouts, what is his overall teams record, do they make it to the post season, how well does he perform in the post season, how well does his numbers stack up against the other top pitchers in the league and so on. And would it be a scale based on X pitcher getting 24 wins and that is the most in the league where as Zito gets maybe 16 wins and comes in ranking 10 in the league, does that he means the nine other pitchers in the league are paid more than he is? Or is there an approximate level of play, 18 or 19 wins are almost the same thing, 232 or 248 strike outs are almost the same thing. But to a team that misses the playoffs by one game, clearly it isn't the same thing.

Or, perhaps he would have been offered a contract for less, maybe 7 years for $70 million. Regardless of how well or poorly he performs this is the most he would make. So far the advantage is Zito, but it clearly is hurting the Giants. But he's 43-61, his best season, is 10-11 and 3-4. Clearly hurting his team in more ways than one.

As The Incredible Hulk pointed out, someone else is always willing to pay $1 more until the person gets top dollar. I understand working your way up and getting paid for your skills and how you have out performed your contract in the past. This is true in non sports jobs all over the place as well, but if you also consistently underperform, your pay is reduced or you are then fired.

Then of course people will say that the owners will be able to make more money, well one, they own the team. But two, perhaps there could also be an X amount set that if an owner's players play poorly, there for their sliding-performance based contracts aren't worth much, the owners are not allowed to raise prices, or some other agreement due to the amount of money they saved.

I know this will never happen, but if a team suddenly had $18 million more to spend on either another pitches, or couple or a big bat or two, imagine how crucial that could be during a portion of the season when they are trying to make the playoffs.