Guaranteed contracts = no guarantees

June 16, 2009 | Keith Melchior

I don’t follow soccer at all but I heard a story the other day that made me cringe. I think the guy’s name was Renaldo or something like that. The rights to him were sold to another team for something like $150 million dollars. And that was just to have the rights to attempt to negotiate a contract with this guy. It reminded me of  what the Red Sox paid a Japanese team 2 years ago for the rights to negotiate a contract with their top pitcher Dice-K.  We common fans cannot even fathom the thought about how much money that really is. Since free-agency hit major league baseball in 1977, the phrase “guaranteed contract” became an important term for all major sports.

I recall the Orioles lost pitcher Wayne Garland in free agency to the Cleveland Indians. After winning 20 games in 1976, Garland signed a 10 year contract for  2.3 million dollars, which at the time was considered a lot of money. He never came close to winning 20 games in any season with the Indians. Garland had a record of  28-48 before being waived in 1981, halfway through his 10 year contract.

Magic Johnson was one of the first in the NBA to receive guaranteed money when he signed a lifetime 25 million dollar contract with the LA Lakers. Soon after, the floodgates opened and just about every major star had a guaranteed money contract.

Owners have to deal with player’s unions and face threats of a walk-out or strike if the demands of the unions are not met. Don Fehr was notorious for holding baseball owners hostage and getting players outrageous sums of money. Spending by owners got way out of hand as each scrambles to sign a major star to a lucrative deal to draw people into their stadium or arena.

The bad thing about guaranteed money contracts is that it costs the average fans more money to see these stars perform. Not only in sporting venues , but also in the entertainment world. Joe SixPack used to buy a box seat ticket to a baseball game for $7  to $10 prior to 1990. Now, that same seat costs upwards of $50. Courtside seats for the NBA Finals in LA were selling for as much as $25,000. Super Bowl tickets START at $350 -$450 per seat (I often wonder WHO gets those seats at that price.)  NHL games in the lower seating bowls of many arenas run $80-$150 per game.  I thought it was outrageous when the AA version of the  ECHL ice hockey team in Upper Marlboro wanted $15 for rinkside seats in 1998. No wonder they didn’t do so well down there. The NHL knew there was a problem with revenue and even shut down for a full season and now they have a salary cap and the league has really balanced out to a point where any team can win. Fans started to return to the arenas and fairly new expansion teams such as the Anaheim Ducks, Tampa Bay Lightning and Carolina Hurricanes (the old New England Whalers) were winners of the Stanley Cup. That parity keeps the interest of the fans.

The NFL is about the only sport that can cut a player and not have to pay any remaining salary to that player, although there is a hit on their salary cap level at some point. The only guaranteed money is in a player’s signing bonus. If he doesn’t perform well enough, he’s cut. The only thing he gets is that guaranteed moeny in a signing bonus.

Prior to free agency and guaranteed money, you saw players in all major sports working hard EVERY night. Up until the 1980’s, many baseball and football players needed to work part-time jobs to help make ends meet and help feed and take care of their families. Nowadays, it seems like they can’t make ends meet with $50 million worth of money and they want more and more money(see Ray Lewis)   The players are no longer worried about the interest of the teams they play for. They are only interested in marketing themselves to the shoe, soft drink, clothing  companies. When was the last time you saw a baseball player hawking a razor or after shave on a commercial?

It’s about time the major sports really looks at who takes care of them, the fans who pay to go see them play.  Who can afford the luxury of having full-season tickets to any two sports teams in these difficult economic times? Is the entertainment value you get game after game worth the money you paid to see that event in person? 

 Here’s a great marketing ploy to get fans in the seats; Instead of a buy one get one free, how about you get in to watch the game for free and sit wherever you want, BUT on the way out you have to pay the team what you think watching that game in person was worth to you. Same with food and drink concessions. Pay what you feel it’s worth, and of course you’d have to really approach that with an open honest attitude.

Just because a player gets guaranteed money from a team doesn’t mean it’s guaranteed he’ll perform to the best of his ability game after game after game. I’d love to see it go back to the old days of player contracts but I know it’ll never happen.  Everyone has a 5 year deal and the next season salary depends on what they did the prior season. Hypothetical example the Orioles signed Joe Player to a 5 year contract. He is guaranteed to be with the club for 5 years unless they chose to cut or trade him. His salary for the 1st year would be $750,000. If he plays well and hits >.250  he earns a $250,000+  bonus for the next year and so on and his salary would be 1 million in year 2.  If he hits <.250 he doesn’t get a raise. other incentives may be in the contract, but no guaranteed money for the long term.

 The only guarantee is Joe Player will bust his ass each and every night he is in the lineup, which makes it much more enjoyable for the fans. There is no guarantee a player will do that in the days of  guaranteed money.