Saturday, February 07, 2015
Inanity of “worst-contract” articles
In the NHL, a team could present an offer to a player, while his original team had a "right to match". It was accepted that superstar Joe Sakic was worth a 3 years 21MM$ deal. But...
On July 28, 1997, Mark Messier signed a contract with the Vancouver Canucks for $20 million over three years.
Following this, the Rangers set off on a path to replace Messier and targeted superstar center Joe Sakic.
In Behind The Moves, Neil Smith said “When we lost Messier [to Vancouver as a free agent], [my boss] Dave [Checketts] comes in and says to me, ‘We should do an offer sheet on Joe Sakic.’… He said, ‘I’m on the board of governors and the Nuggets and Avalanche are broke and [their parent company CEO] Charlie [Lyons] says they are out of money. We’ll front-load [the offer] and they can’t match because they can’t come up with the cash.’
So, the Avalanche's Joe Sakic was offered that 21MM$ from the Rangers, as a 2MM$ a year salary for 3 years, plus the 15MM$ signing bonus. That means he'd make 17MM$ the first year, then 2MM$ each of the next two years. Now, how do you evaluate Sakic's contract? Would you say that in his first year, he's incredibly overpaid, while in his next two years he's incredibly underpaid?
Now, what if he signed a backloaded deal of 21MM$ (or whatever the equivalent present-day value of it would be). So, it's a 2-2-17 deal instead of 17-2-2. And say that after those two years, he wins an MVP one year at 2MM$ and a Stanley Cup in the second year at 2MM$. Would you then say that his third year, at 17MM$, double the salary of the best player in the league would be an overpay?
It's just too myopic to view a contract in that manner. If Sakic had signed a 2-2-17 deal, what the Avalanche would have done is taken the 10MM$ savings of the first two years, and put it in a trust account, or a time capsule with a "open after two years" note attached to it. The 10MM$ that they saved would then be given to Sakic in that third year.
You simply cannot look at contracts in the way that most of these "worst contracts in baseball" articles look at. Well, you CAN if you want to be deceitful. But if you want to be honest, you wouldn't write those articles, even if that means foregoing an easy 1000$ payday from your editor.
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