Show Me the Money: On Compensation and Player Contracts

This blog has been a long time in the making and its going to cover a lot of ground. So grab ya popcorn, pour a glass of your favorite adult beverage and buckle up for the ride. I hope you find this interesting and that you will comment if you do. If not, feel free to bookmark it for those nights when you can’t sleep like I had last night.

As many of you know, I am a practicing lawyer and for you lawyer types you know what that means. It means we got indoctrinated and our brains fundamentally altered in law school and our lives will never be the same. Please note that is not a joke. I distinctly remember the moment I realized this cold hard fact, and recognized that my mind was no longer my own. For better or worse, I can’t NOT look at things as an attorney anymore.

My defining moment came during Thanksgiving break my first year in law school. I am in my old Toyota Corolla hatchback with over 130k miles rolling down I40 headed home for the first time for a much needed 4 day weekend. I have the radio jamming and life is good when an advertisement comes on the radio from a notoriously corrupt car dealership in Knoxville, Tennessee.

I no longer remember the exact details of the advertisement but I do recall it fit the old adage “if its too good to be true it probably isn’t.” My first thought was surely no one will fall for that mess. My second thought, and thus my life altering moment, was whether I could enforce it for them if they did. I spent the remainder of the trip, roughly about an hour, going through various scenarios in my mind on how to make that horrible ad an enforceable contract. Feel free to judge away.

The car advertisement is a good illustration of how I look at money, player contracts and compensation in general when talking about sports. The primary reasons I wanted to delve into this topic is twofold. For one, I see people talking about compensation in the sports world and it has often been suggested to me its wrong to “begrudge” the most compensation possible to an athlete. Second, the job of analyzing the cost efficiency of contracts and monetary compensation for a variety of things is what I do day in and day out and as I indicated earlier its impossible for me not to think along these lines. Let’s consider each one of these individually.

First, let’s discuss the issue of compensation in general and the thought process that you pay an athlete the maximum amount possible whether it makes sense or not. After all it’s not your money! I see a lot of people, primarily athletes, tweet that athletes should get paid as much as possible and that its wrong to discuss whether it is appropriate for an organization to “show them the money.”

I don’t begrudge anyone being compensated for their services but you would be hard pressed to find any occupation where there isn’t a salary compensation range. Using the car example, certainly there is a range of money you would pay for a vehicle and that would be determined based on a lot of factors like age, condition, and bells and whistles. Ask yourself if you would pay new Mercedes value for my beat up old Toyota Corolla? If you say you would please contact me immediately!!

Along those lines, one of the more puzzling things I see is the dichotomy about player compensation versus coaching compensation. As a fan of the Tennessee Volunteers, I saw it a lot when UT fired then head coach Derek Dooley. People who advocated paying players the maximum amount would say Dooley “stole” money from the University. I’m sure some of it was simply just talk but there were those who seemed serious about it. Seems odd to me but maybe that’s just me. It takes two to tango in a contractual compensation agreement.

This brings me to my second point. When a player, coach or anyone else associated with sports gets a contract its natural for me to consider whether that contract falls within what I would consider to be the appropriate range. There are a multitude of factors that going into this analysis and they can best be lumped into tangibles versus intangibles. Or, if you prefer, objective evidence versus subjective evidence for you lawyer types.

The tangible things are generally geared around past performance. Lumped among intangibles are leadership qualities, durability to an extent, and other things that aren’t easily quantifiable. The degree to which you balance these things can sometimes make the difference between the top end of a salary range and the bottom end of the salary range.

Now let’s turn to a specific example and since it’s the last contract the Titans negotiated we will use place kicker Rob Bironas. The Titans and Rob Bironas just negotiated a 2 year 6.675 million dollar deal. It is reported he will receive a $1.5 million dollar signing bonus. USA Today: Titans Reach Agreement with Bironas

Let me set the record straight by saying from what I can tell Bironas is a good guy but I have learned to be wary of the public persona of many of those in the entertainment business. See my blog from August of 2012 Lance Armstrong and the Dangers of Liking the Thought of Someone. The question for me is whether the contract makes sense in light of of what I have discussed above.

Bironas has been an excellent kicker for the Titans. However, he is 35 years old and coming off a sub-par 2012 season. I wrote that kickers have a longer shelf life than most players and a 2 year deal isn’t terrible. We don’t know what else is guaranteed but the other two options were to tag Bironas, and pay him $4.4 million dollars on a one year rental, or let him walk and look for a kicker on the open market or through the draft.

While the Titans have some money to spend in free agency this year, and there is a minimum they must spend, there is still a limited pool of resources and contracts carry cap consequences that last into future years. For more information on salary cap numbers, see Spot Trac Salary Info and Total Titans Salary Cap Estimates.

So, the question for me isn’t whether Bironas is “worth” the almost $7 million dollar contract, because he and the Titans agreed on that worth. The question is whether the contract makes sense in light of the tangible and intangible factors above. We know $1.5 million is guaranteed but what we don’t know is what his salary will be for 2013. Those details haven’t been released nor do we know what other compensation is contained within the agreement or what other guarantees might be available. These are all questions I would like to see answered.

None of these questions mean I don’t value Bironas as a player or as a person. It just means I want to know whether it was a wise decision, in light of all factors, to “show him the money.”

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