Pay for Performance in Team Sports
How many fans have been flummoxed, frustrated and indeed furious when a player coming off an outstanding year or two, negotiates a humongous salary, enough Spanish doubloons to sink the flagship, and then disappoints everyone, including himself, the following year. How many fans are frustrated for the rookie who signs for a modest sum and out performs the more highly paid players.
Equally frustrating is the case of the the first round daft pick who commands a large signing bonus and lengthy contract only to fall well short of expectation. Hockey fans of my advanced years will recall the unfortunate case of the Ottawa Senator’s players Alexandre Daigle and Alexi Yashin. While Daigle’s numbers were decent for a rookie, they were seriously disappointing for the star he was expected to be. Yashin, on the other hand, had considerably more points and received less than half the pay. A current example is Connor McDavid and Leon Draisaitl. The former earned $15 M and the latter $9 M in 2019–2020. Draisaitl was outpacing McDavid when the season was halted due to the covid 19 pandemic.
More recently, Steve Simmonds opens his Ottawa Citizen article (May 25, 2020) with the words, “In the midst of a pandemic, with millions unemployed, and no assurance there will even have NFL season, Dan Prescott now stands as the leading symbol of professional sporting idiocy”. This less than stellar quarterback has apparently turned down a $175 million contract over five years.
Under these scenarios, would one be surprised if there is a suggestion to institute a pay-for-performance system (PFP). This is hardly unique to sports. Tennis players, golf pros, boxers and even curlers are paid only if they succeed. Why not other sports.
I wish to state at the outset that I am not suggesting that players deliberately underperform. I also believe that players want to win and may not play harder if they are paid more, though some might. Duke Snider mentioned on a Montreal Expo broadcast one evening that players in his day frequently played harder during contract negotiating month. The reason for suggesting a PFP system is to be fair to players, to compensate them for how they perform on the ice, court or field, not for how well they performed in the past or are expected to perform in the future.
My home town hockey hero Bobby Clarke told my brother, himself a former member, like Clarke, of the Flin Flon Bombers, that Clarke was told, when he signed with the Flyers, that he would be given a bonus if he accumulated 50 points or more.
He replied, “No you won’t”.
Astonished, the GM asked, What do you mean?”
Clarke explained, “I will play as hard as I can, every game in every year and paying me a bonus will not make any difference.”
Even if all players adhered to that standard, and always played as hard as they could, despite their pay, I would still suggest, an anathema though it might be, that members of team sports such as hockey, baseball and basketball should be paid for performance.
But how would it work? Could it withstand the myriad of criticisms?
- How would pay be determined? There are so many metrics kept on players that it would be astonishing if one could not find a formula that most could agree on. For example, Ashley Jones has devised a measure (SPR) that uses the standard elements such as goals and assists, ice time, hits, blocked shots, take aways and give aways, face-off win percentages, shots on goal, and +/- scores. Jones also uses advanced metrics explained in the Medium Publications article, NHL player rating using standard and advanced hockey stats, which includes team play. It correlates very highly with the NHL’s EAS rating scheme. Intuitively, Jone’s SPR scales rings true as Connor McDavid, is rated the highest at 0.944 points (highest possible is 1.0), Taylor Hall, 16th at 0.918 and John Travares 29th at 0.901 points. The scores were based on a weighted average of statistics from the years 2016 through 2018.
- I do not have access to the computer program that can replicate Jone’s metrics so I have devised my own crude method based on official statistics. I chose the 20019–2020 Edmonton Oilers as a case to illustrate my method and point. I selected goals, assists, the +/- score, average time on ice per game, blocks, hits, power play points and share of points, many adjusted for games played. Draisaitl received the highest count at 62.9 points, Connor McDavid 59.1 points. I added all the points together. A players salary was then computed by the following formula: $700,000+ (IPM/TTM X TTS), where IPM = Individual Player Metrics, TTM = Total Team Metrics and TTS = Total Team Salaries. Following this calculation, the salary of Draisaitl would increase somewhat while McDavids would be cut by nearly 30%. Overall, 17 salaries of the 24 players for whom I did calculations, would see their salaries increase, three would stay the same and 11 would post reductions.
- It may be noteworthy that half the players in the top 30 of Jone’s SPR scale are centres. This suggests, perhaps, that different player positions should have separate rating scales with separate budgets. This is especially true for goal keepers. I included all players in my example (and excluded face offs) except the goal keepers.
- How would payment be allocated during the season? First, all players would be paid the minimum NHL salary, regardless of performance. No one would starve. Second, at the end of each pay period (say when all teams have played 12 games at the start of the season and then after successive 10 game periods), the statistics would be accumulated and a rating score calculated. All players would be paid their share of a salary commensurate with their rating
- As NHL players are paid their full salaries while sidelined by injuries, one might pay them their full portion while off duty or according to the share they were receiving prior to the injury.
- Another advantage of a PRF system is that players will not be so keen to jump team just for an increased salary that might not materialize. However, if a player is just interested in the salary, he might opt for a weak team where he might play more and accumulate more points. A player just signed with the Ottawa Senators because he would get a much better chance to play than on a team packed with stars.
- One could be more imaginative and set a maximum salary for the league (theoretically the team cap times the number of teams). This would leave only a Stanley cup prospect, location, teammates and organization as reasons for changing teams.
- I have only given examples from hockey. Every team sport has an avalanche of statistics on which to build rating scales, both defensive and offensive, negative and positive.. Baseball and football might be more challenging with their highly specialized roles.
- Would a PFP system appeal to team owners? Owners should find it appealing since they would not have to commit a large proportion of their salary budget to a single star, leaving equally deserving players under payed and possibly disgruntled. Owners would not be pushed into huge salaries to compensate players who were underpaid in their initial contracts.
- Would the average player benefit? From the players point of view, more players are likely to benefit than not due to the wide gap between the highest paid and the remaining players. In addition, there might be little or no need for an agent’s fee that can run between three and six percent.
- One might argue that team sports are teams and winning or losing depends on a team effort. If that is the case then why the huge huge pay differentials? Why not pay everyone the dames? Clearly, some players play at a higher level and deserve to be paid accordingly.
- How would you attract players to your team if you could not offer them an astronomical salary? Even now players do not always make their decision based on salary alone. Some I have heard say it is not really the salary, they just want respect. Pay me a salary commensurate with my skill so I know you respect me. If salary is paramount, with a PFP system, you might want to join a team that sets its salary budget at the cap. You will know you have the potential for the highest salary you can earn. As now, you will want to consider whether a team has Stanley Cup potential. As now, you might want to consider location. As now, you might want to consider your team mates. In short, there are several criteria one can use in determining a team to sign with once your contract has expired. An added bonus.
- At present, salary caps act as a system to redistribute talent which makes it less likely to win successive championships, not to mention dynasties of four or five seasons in succession. The salary cap would not likely function in this manner under a PFR system. To maintain this principal, one could use a total talent point system as a cap. In my example, the Edmonton Oilers players earned 450 points. Therefore, the cap might be set between 400 and 500 points in my example. Presently, salary is a proxy for talent and not always a perfect one as illustrated above.
- One would not be able to pay signing bonuses as this would circumvent the intent of the PFP system. New drafts who were instant stars would be compensated by earning a higher share of the salary avoiding the Yashin problem noted above or the Scottie Pippen controversy (though controversy seems to follow him like a lost puppy).
- Despite what I think may be a perfectly logical proposal, it might take a two year strike to implement.
- Despite the unquestionable logic of this proposal, it might take a two year strike to implement. aPerhaps with the distraction of the corona virus epidemic the league could pull it off. Just a thought.
- I salaries ere calculated from a league pool, based on each team having to allocate the the same cap for players, small market teams would not be able to sustain this. However, weaker teams would not utilize all of their salary allocation while stronger teams might over-draw. As is currently the case, some teams would have to be subsidized. It would not take a mathematical genius to figure it out.
To conclude, sports are not the only profession where one gets paid for performance. Many sales people work on commission. The earnings of entrepreneurs who are sole proprietors or in limited partnerships depend on their performance. On the other hand, the earnings of senior executives of large corporations do not correlate well with performance. Perhaps this should be rectified with their own PFP system. A good subject for another blog
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