Negative impact of guaranteed salaries in professional sports

October 6, 2012 by Marshall S. Stackman   Comments (7)

I find it disturbing that owners & general managers of professional sports franchises do not understand how non-productive it is to "guarantee" 100% of a professional athletes salary.  They all have limited windows of opportunity to play their sports, With the numerous distractions  they would be that much more motivated to come prepared to perform at the highest levels if they knew a percentage of their salary was tied directly to certain levels of performance.  This crap about their professional competitiveness motivating them day in and day out - most people who actually work daily for a living know their salary and increase in salary is tied to "productivity & performance."  There are far too many under performers in professional sports especially in the NBA & MLB - that has a direct effect on lower earning players not being paid what they deserve and in many instances, in their leaving the team as soon as free agency allows. I also believe that every player should be required to put a certain percentage of their salaries in a special account set up by the franchise (protected from bankruptcy or sale of the team) so that when their careers end they have something saved up.  My guess is that 90% of these athletes never come anywhere near making the dollars they are making when they play - and that they give so much away as gifts to family members (new homes, cars etc.) because they have no idea how to manage their money.  This way no matter what they will have something owed to them in deferred payments so they can more easily make the transition to a civilian life - the agents have a "moral" responsibility to see that there clients are protected - as you said, they have and continue to fail in taking their responsibilities as agents seriously - its all about the money right here right now.
 
It is just Poor Business Practices & Ego of the owners and General Managers that allows this failed system to continue along with Agents who think only of how much they can get for their client, rather than how much it means to an athlete to be motivated to compete on the highest levels - to be in the playoffs & playing for the right to be # 1.  Guaranteed Contracts is a failed system that continues to harm athletes year after year.
 
Best regards,
Marshall

 
It is just Poor Business Practices & Ego of the owners and General Managers that allows this failed system to continue along with Agents who think only of how much they can get for their client, rather than how much it means to an athlete to be motivated to compete on the highest levels - to be in the playoffs & playing for the right to be # 1.  Guaranteed Contracts is a failed system that continues to harm athletes year after year.
 
Best regards,
Marshall

I find it disturbing that owners & general managers of professional sports franchises do not understand how non-productive it is to "guarantee" 100% of a professional athletes salary.  They all have limited windows of opportunity to play their sports, With the numerous distractions  they would be that much more motivated to come prepared to perform at the highest levels if they knew a percentage of their salary was tied directly to certain levels of performance.  This crap about their professional competitiveness motivating them day in and day out - most people who actually work daily for a living know their salary and increase in salary is tied to "productivity & performance."  There are far too many under performers in professional sports especially in the NBA & MLB - that has a direct effect on lower earning players not being paid what they deserve and in many instances, in their leaving the team as soon as free agency allows. I also believe that every player should be required to put a certain percentage of their salaries in a special account set up by the franchise (protected from bankruptcy or sale of the team) so that when their careers end they have something saved up.  My guess is that 90% of these athletes never come anywhere near making the dollars they are making when they play - and that they give so much away as gifts to family members (new homes, cars etc.) because they have no idea how to manage their money.  This way no matter what they will have something owed to them in deferred payments so they can more easily make the transition to a civilian life - the agents have a "moral" responsibility to see that there clients are protected - as you said, they have and continue to fail in taking their responsibilities as agents seriously - its all about the money right here right now.
 
It is just Poor Business Practices & Ego of the owners and General Managers that allows this failed system to continue along with Agents who think only of how much they can get for their client, rather than how much it means to an athlete to be motivated to compete on the highest levels - to be in the playoffs & playing for the right to be # 1.  Guaranteed Contracts is a failed system that continues to harm athletes year after year.
 
Best regards,
Marshall

I find it disturbing that owners & general managers of professional sports franchises do not understand how non-productive it is to "guarantee" 100% of a professional athletes salary.  They all have limited windows of opportunity to play their sports, With the numerous distractions  they would be that much more motivated to come prepared to perform at the highest levels if they knew a percentage of their salary was tied directly to certain levels of performance.  This crap about their professional competitiveness motivating them day in and day out - most people who actually work daily for a living know their salary and increase in salary is tied to "productivity & performance."  There are far too many under performers in professional sports especially in the NBA & MLB - that has a direct effect on lower earning players not being paid what they deserve and in many instances, in their leaving the team as soon as free agency allows. I also believe that every player should be required to put a certain percentage of their salaries in a special account set up by the franchise (protected from bankruptcy or sale of the team) so that when their careers end they have something saved up.  My guess is that 90% of these athletes never come anywhere near making the dollars they are making when they play - and that they give so much away as gifts to family members (new homes, cars etc.) because they have no idea how to manage their money.  This way no matter what they will have something owed to them in deferred payments so they can more easily make the transition to a civilian life - the agents have a "moral" responsibility to see that there clients are protected - as you said, they have and continue to fail in taking their responsibilities as agents seriously - its all about the money right here right now.
 
It is just Poor Business Practices & Ego of the owners and General Managers that allows this failed system to continue along with Agents who think only of how much they can get for their client, rather than how much it means to an athlete to be motivated to compete on the highest levels - to be in the playoffs & playing for the right to be # 1.  Guaranteed Contracts is a failed system that continues to harm athletes year after year.
 
Best regards,
Marshall

Marshall,

I agree with you that athlete salaries and owner's egos are out of line! No player is worth the amounts that they are getting at the top end of the spectrum.  I think of the Sedin twins playing for the Vancouver Canucks each being paid $40,000,000.  Now that is low compared to baseball and football players (particularly when one considers that football players play less than 20 games a year), but it is a perfect example of the extraordinary money they get.   Looking back on Vancouver's excellent records over the last few years there is no doubt that the Sedin twins are a big reason for that, but where do they disappear to when the playoffs come?  They quite literally disappear exactly at the time they need to step up and demonstrate why they deserve the $40 mil...

Having been a player, my siding with your argument may sound like heresy, but I it was all about a bonus system when I played.  You score 20 goals and you get "X"; score 25, you get "Y", then every goal after 25, you get "Z"...  That was incentive to make big things happen.  If I'm banking quite literally a million a month during a season, what incentive do I have exactly???

I'm glad that the guys who take the bullets are well compensated, but I just don't believe that the amounts the top guys are getting are just, particularly when it takes 20 guys on a hockey team to win the games - and most of those guys are grinders supporting the stars.

As for agents working with the players to put money away for post-hockey, that wasn't even on the radar in my era.  Today, it has probably not changed much - execpt for the big dogs who have so much money coming in that financial planning is part and parcel...

The only good news in this regard is that the NHL Alumni Association has put a 'Life After Hockey' program in place to provide assistance to players as they transition out of the spotlight into everyday life.

Thanks for you post.  Great food for thought!

 

Ron Andruff 4585 days ago

Marshall,

First and foremost, I assure you I am no fan whatsoever of Gary Bettman and all that he/they represent. Your comments most certainly bring to the forefront several key points for thought/discussion.

I am in full agreement with a 'base salary' and progressive bonus system for current players, one that rewards an individual player for a productive and successful season - all supported by a fully-funded pension plan, further, as Ron points to in hockey... the 'NHL Alumni Association'.

And as a former player, Ron clearly explains...'You score 20 goals and you get "X"; score 25, you get "Y", then every goal after 25, you get "Z"...'

However, with the current average player contract in the vicinity of $2.4m/season, why would any player, the NHLPA, OR especially the agents - even remotely entertain such a pay structure?

Moreover, with ever-increasing player contracts, perhaps a stable pension plan is not considered as important as it once was?

For example, I recall a TV interview with Gordie Howe after the memorial service for Carl Brewer in August, 2001.

The one comment that has always stayed with me is when Howe said (paraphrasing)....'Above all, it was most disappointing to look around the room and not see one active/current player in attendance'.

Perhaps the 'Old Guard' need to sit down and have a serious 'heart-to-heart' with their current union brothers, with some not-so-subtle history lessons and reminders of what once was.

Found this article about Carl Brewer's memorial:

http://www.nytimes.com/2001/09/01/sports/carl-brewer-62-battled-nhl-for-pensions.html 

On the flip-side, what about the rush by NHL GM's/owners to sign all those huge long-term contracts with so many of the high-profile players prior to the contract deadline?

Beats me.

Anyway, I know I'm dating myself here.... but I sure miss the likes of Sammy Pollock et al :)

Cheers,

Mark

Mark Syme 4585 days ago

Marshall,

               I agree with your comment that sports owners/teams should not guarentee 100% of the salaries and have some clause in their contracts based on performance to ensure they are still motivated. What you are forgetting (and what has changed in all of sports) is players have realized that their time is limited to be at their peak. They all want to be rewarded, because unlike the average citizen, they dont have the ability to do their careers for 30 years. While we are "not guarenteed" our salaries for 1 year, let alone 6, we do have the ability to job hop, do other things and eventually in some professions cash in on big bonuses. Often more than any of us are worth to our companies. (Look no farther than corporate america for this)

              Players though are trying to protect themselves against not having another job. How they manage their money is another issue. Some blow it all away on girls, travel, gambling, but there are others who are smart, thrifty and build something for the future. Look no farther than the ahole of the NHL for the past decade Sean Avery. Sean cashed in big after his 1st go round with the NY Rangers and signed a overly paid contract for ~$20M over 4 years with the Dallas Stars. He lasted 3 months before they begged the Rangers to take him back by paying half his salary. What he did with that guarenteed money (that he never really performed for) was to build himself a restuarant business in New York (owns two places) and also try to build a career in fashion. While Sean might be an enigma, he proves that players can be smart with their money. That usually starts by keeping it away from agents.

              The one thing I like about the current system is that young players have to earn their stripes before the big pay day. Small market teams can keep a player for up to 6 years at low level salaries. Once they have played those six seasons (and have been productive) they are rewarded with a bigger contract. I think this really also weeds out the younger weaker players, by getting rid of one hit wonders and players who cannot hack it!

              In short I believe owners should give more incentive laiden contracts, than just guarentee throwing money at players. However I believe the system in its structure as it stands today works in theory. Just getting the percentage splits and caps on what players can earn needs to be ironed out.

Alex Olsen 4585 days ago

Guys,

I think it's a matter of the horse being out of the barn and he's never going back in. On the players side, three is a million in one chance that a player makes all the way to the NHL and has a healthy and successful career. So I can understand the desire to cash in on that opportunity. On the owners side, they buy these NHL franchises for hundreds of millions of dollars and they have to compete with the other sports for the limited customers dollars. In order to attract as many fans as possible, they fight overa limited resources in talented players. The only way franchises like Minnesota can compete with the big markets in attracting big talent is to throw big money at players. It's a supply and demand issue and there just aren't veryMann superstars available so owners with big debt payments need to fill seats and only superstars or winning teams do that.

Max MacKenzie 4585 days ago

It is an interesting discussion and I have a hard time arguing with any of the points made on this thread.  Players DO have a short shelf life.  The talent DOES need to get weeded out over the first few years of a player's contract.  Small markets DO have different issues than large market teams.  Owners DO need to fill seats... .... But $40 million here and $50 million there... I recall Bruce McNall, former owner of the LA Kings bringing Gretsky to LA and stating that he "will always be the highest paid player in the NHL!"  That was certainly a lot of showmanship to make LA into "hockey town" and it probably filled a lot of seats, but human nature being what it is, McNall's claim about highest paid player was as much throwing down the gauntlet to the other owners ego's...  And that is where this thread began!  Sure a player should take as much as is given, but here we sit with the 2012/13 season in jeapardy because owners need the extra 3-7% points (whichever it ends up to be) to try to meet expenses - or so they say... Argh!!! 

Ron Andruff 4584 days ago

I agree that professional athlete's salaries are simply out of control, however as long as fans are paying to sit in the stands and watch them on TV, they will continue to get paid that sort of loot, across the board.  Sports is a business, just like any corporation, the owners are interested in creating revenue and if it means paying top dollar to athetes that don't appear to be giving it their all but putting fans in the seats, as long as the cash register is ringing at the game, that's all they care about.  NHL attendance (and TV ratings) have skyrockedted the past several seasons (has to do with so many North American teams playing at a high level) so I do agree that the owners need to work with the players to come up with a solution as fast as possible.  BOTH sides are losing money hand over fist with each day(and cancelled game) that passes.  I think the players though have more leverage in this particular situation since most have the option to go play abroad.  But I also think the owners are fair in asking for a more even split.  Even that 3-7% equates to a TON of money.  Remember, at the end of the day, it's still a business.  A very lucrative one, and if the owner of the team is not making money himself, then what's the point of being the owner??  Yes, the players are the ones taking the bullets and laying it all on the line, and they get paid, handsomely for it.  I also think that if I were a pro athlete, the very FIRST thing I would do would be to hire a financial advisor to help me manage that money.  It's a shame that so many of them either go bankrupt or are clueless what to do with it all, but they need to figure it out..fast.

Dave Shusterman 4584 days ago

Having generated $3.3 billion during the 2011-12 season, the league has lost $250 million because of the cancellation of pre-season and the first two weeks of regular season play according to today's NY Times. Sacrificing the entire season in 2004-05, the owners forced a 24% pay cut on the players.  This time around they want another 7 or 8%!   Fans and players are SOL because of pure, unadultered greed on the part of the owners... It's disgusting that the oldest trophy in North American sports goes uncontested for this reason! So sad....

Ron Andruff 4581 days ago