Monday, March 10, 2008

Contractual Obligations: The Keith Van Horn Story (Pt. I)

We're starting to get out of that lull on the Sports Calendar, also known as 'February,' where nothing seems to happen and reporters basically start and spread rumors just to keep their jobs.

The NHL and NBA are past their respective all-star weekends so the playoff push is starting to heat up, March Madness is just about here, spring training is under way for the upcoming MLB season, and the NFL, well the NFL is basically a year-long sport anyway, but this time of year provides us with Free Agency and getting ready (read: reporters starting and spreading rumors) for the draft.

Now here's the thing. The NBA and NHL are gearing up for the playoffs, and the NFL and MLB are in the after-season and the pre-season, respectively. Yet when I tune into Sports Radio 950 or flip to the Sports page of the Inquirrer, I am primarily looking for Eagles and Phillies news, and that is what I am primarily going to get.

With that being said, one of the main things that I am going to hear about this time of year is contracts.

Contracts, contracts, contracts.

Max deals. Signing Bonuses. No-trade clauses.

Restricted free agents. Salary Caps. Negotiations. Re-negotiations. Negotiation breakdowns. Arbitration.

It's all about contracts.

In order to be a somewhat knowledgeable fan, you have to have the training of an IRS agent.

What the hell is going on here?

The worst part is, with every single contract being signed this off-season, at some point in time, whether it is later that day or three years down the road, one of the two sides is going to regret signing the contract. If you're lucky, you might be able to follow a contract long enough to see both sides regret it at some point.

And that's the thing. Contracts kind of suck. Teams make bad decisions. Players make bad decisions. The sport as a whole makes bad decisions. And the fans have to pay. Because instead of saying something like "Chris Paul is a great point guard." You have to add "But I don't think the Hornets are going to be able to give him a max deal."

To prove my point, let's just take a look at the contract situation in baseball, basketball, and football. Stay tuned, because at the end you will get my grand solution to the entire problem.

The NBA is ridiculous. Players sign these max deals for like 7 years and $105 million dollars. They are actually motivated/healthy/happy for about 2.5 of those years, and then the team gets stuck with a $60 million dollar stiff. The only thing to do from there is trade that player using his expiring contract as trade bait. However, in order to make a trade in the NBA, you need to have the salaries match. So in order to trade said $60 Million Dollar Stiff, you will have to accept the contract of $10 Million Dollar Retired Stiff. (Go ahead and look at some of the trades that are being made. It's a vicious cycle. Bonus Points: look at how many former Sixers are a part of these trades. The number is frightening).

Baseball is not that much better. An interesting aspect of baseball's contract workings is the practice of arbitration. You may remember this with Ryan Howard. The Phils wanted to pay $7 million. He wanted $10 million. Fine, give him $8.5, right? Wrong. They couldn't agree to that so it went to arbitration, meaning an outside panel objectively picks either 7 or 10. They picked ten.
To add to the craziness of baseball's contract situation, I'm going to bring in two more players to the fold here, Cole Hamels and Adam Eaton.

Cole Hamels has the potential to be a true ace pitcher. He is young, talented, and extremely motivated to succeed. He has shown flashes of brilliance in his short time in the majors and also a steady level of consistently good pitching. A history of injuries seems like the only thing that is going to keep him from racking up a few 20 win seasons and possible a no-hitter someday.

Adam Eaton, to be concise, is none of the above.

Cole recently signed a 1 year, $500,000 contract.
Adam signed a 3 year $24 million contract.

Cole is complaining about being underpaid while Adam admits that he is probably being overpaid.

Looking at it from their points of view, yeah, they're both right. Now let's look at it from the Phillies front office: we are paying $8.5 million this year for the services of Cole Hamels and Adam Eaton.

The reason the Phils can sign Cole to such a cheap contract is because of his service time in the Bigs, a similar system to rookie contracts in the NBA. The reason Adam cost so much is because of Free Agency. There are only so many available free agent pitchers that they can command a high price on the open market, regardless of skill set.

There is really no reason to break the bank for Hamels just yet. Eventually he is going to get his pay day, just like Howard did.

It's an immutable law: some players are going to be underpaid and some are going to be overpaid.

There isn't too much "just right" in professional sports.

Looking towards football, the system is a little bit more efficient because the contracts are not guaranteed, which means a player can just be cut and he will not be owed any more money (other than the pro-rated signing bonus).

This is a great tool for the owners but not so great for the players.

There is a salary cap to contend with, so smart owners try to lock up their young talent before they get a chance to hit payday (see: Westbrook, Brian). The risk in signing a player while he is still young and slightly unproven is that maybe you get a bargain three years later, when you are paying an all-pro running back rookie money. It can come back to hurt you though, when signed players look around and see their peers getting huge signing bonuses (on account of salaries going up every year). They end up holding out, talking to the press, or just playing unmotivated football.

My solution?

Well, that's for another time.

Stay tuned for Part II.

1 comment:

Chris H. said...

Well said. The idea that 'athletes are overpaid' is somewhat beside the point and misunderstands the issue. Professional sports is one industry where the labor is actually paid proportionally to how much revenue is generated. Ryan Howard is paid $10 million because he puts fans in the seats and sells merchandise. Thats why I really can't take Hamels' side on this one. He said that that being paid $500,000 instead of $750,000 was a 'low blow.'

C'mon. His problem is he's a sensitive Californian. He needs to keep his mouth shut about what he considers a disappointing paycheck, and try to put the team first and his emotions second. Now, I like Cole. My advice to him? Get blue-collar, and put your nose to the grindstone.