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Peter Livingston’s Incentive Laden Contract

Sports - by - May 20, 2011 - 10:38 UTC - Be first to Comment!

I want to get Greg Oden. Seriously.

Hear me out–I know this is out of left field.

I’m totally bored, as I sit here and watch my video files render, so I started thinking of ways to entertain myself. What better way to entertain myself than to create incentive laden, yet possibly lucrative, contract deals to try to lure players whom everybody has forgotten about or given up on, away from respective teams . *big breath from very long sentence*

The elusive Greg Oden

I wonder what the possibility would be in acquiring Greg Oden with an incentive laden contract, ala Billy Beane, in order to get the best possible production to pay-out ratio? To take somebody who was at one point of great worth and has since fallen to near obscurity,  then obtaining him in hopes that they can perform themselves back to their projected form, while earning their keep at the same time, albeit at a discounted rate, is probably the dream of any GM and hopefully any player who is trying to redeem themselves or prove themselves worthy of a big contract.

*DEEP BREATH NUMBER TWO*

I think the conversation/offer would go something like this.

“Ok,  you’re 22 years old, you’ve had more injuries from 18-22 than most people would have in an entire career–or a lifetime, for that matter– and nobody really knows how good you are.

 

So here’s the deal.

I will offer you a $1.5 million dollar per-year –base– contract. You will receive the following incentives if said requirements are met:

Per Game–

10 minutes played: $5,000
20 minutes played: $10,000

30 minutes played: $17,000
40+ minutes played: $40,000
Overtime: $5,000 additional for each overtime played (minimum 3 minutes played)

Blocked Shot(s): $10,000 per block

Steal(s): $4,000 per steal

Rebound(s) Defensive:

Less than 10 rebounds: $0
10 rebounds: $20,000
15 rebounds: $45,000
20+ rebounds: $75,000

Rebound(s) Offensive:

Less than 5: $0
5 offensive rebounds: $35,000
10 offensive rebounds: $75,000
15 offensive rebounds: $125,000
20+ offensive rebounds: $250,000

Total Rebound(s):

less than 10: $0
10 rebounds: $15,000
15 rebounds: $40,000
20+ reounds: $50,000

Hold opposing player to:

0-10 pts: $25,000
11-15 pts: $7,500
16-20 pts: $5,000
20+ pts: $0

Yearly Awards–

MVP Award: $5,000,000
Defensive Player of the Year Award: $3,000,000
Most Improved Player: $1,500,000

1st team All-NBA Defense: $2,000,000
2nd team All-NBA Defense: $1,250,000”

Essentially, what I would be banking on is the fact that Greg Oden is a huge liability; so much so that to sign him to a multi-year contract worth loads of money (see his $9 million a year contract now) could have disastrous consequences–financially speaking anybodies franchise. No franchise will want to venture out on a financial limb to gamble on somebody who has been in the league for four years and has only played in thirteen games! He has not proven to be reliable, by any facet of the imagination, in that he has been injury ridden the past four years of his basketball career.

You might be saying, “Well why in the hell would Greg be willing to sign this incentive-based contract when he could probably get a $2-3 million dollar-a-year contract, maybe even take a contract for $4-5 million with somebody else and actually get guaranteed money?”

Because what if he out-performs his contract, ala Scottie Pippen? Say he, for the sake of argument, does sign a $2.5 million dollar-a-year contract with his team, actually stays healthy, and puts up Ohio State numbers, totally eclipsing his own expectations and the expectations of everybody around hims–and on top of that we’ll just say that Greg’s durability is on Dwight Howard’s level and never

misses a game. His stat line would look like this :

28.9 min.

15.7 pts

9.6 rebs

  • 3.6 offensive
  • e6 defensive

3.3 blocks

Pretty darn good numbers. Probably worth more than his $2.5 million contract.

Now, lets add our incentive aspect to his $2.5 million deal:

28.9 minutes played a game (sorry Greg, almost made it to 30 minutes a game status–so you settle for 20 minutes a game) at $10,000 per 20 minutes played for 82 games: $10,000 x 82 games= $820,000

Rebounds (With a thrown in average of (30) 10+ rebound games, (9) 15+ rebound games and (2) 20+ rebound games–since his Ohio State rebounding averages do not meet the minimum 10 defensive rebounds and 5 offensive rebounds requirements of the contract):

(30 x $15,000= $450,000) + (9 x $40,000= $360,000) + (2 x $50,000 = $100,000)

$450,000 + $360,000 + $100,000 = $910,000

Blocks (271 total): $10,000 x 271 = $2,710,000

Add up the total incentives…

$820,000 + $910,000 + $2,710,000 = $4,440,000

$4,440,000 in total incentives + $2,500,000 salary = $6,940,000

That is almost $4.5 million in incentives that Greg would be missing out on–and that isn’t even including his other potential incentives!

Say he holds a couple of guys to under 10 a game; that’s another $25k per game! Not to mention if he makes first or second team defense–that is another potential $1.25 or $2 million dollars!

Say Greg does get those monster stats, gets NBA 1st team defense, and we add that $2 million to his $6.94 million:

$6,940,000 + $2,000,000 = $8.94 million!

Since Greg is getting first team defense, I am going to give him the benefit of the doubt that he would probably receive the most improved (comeback) player of the year award, so add another $1.5 million onto the $8.94 million.

$8.94 + $1.5 = $10,440,000

Maybe we throw in six games where he holds opposing centers/forwards to less than 10 points a game:

Shaq-Diesel!

6 x $25,000 = $150k

So we’ll say at the end of the year Greg Oden will have made a grand total of:

$10,590,000!

That would be for an All-NBA first-team defensive center, most improved player, and defensive anchor in the paint paint for under two-thirds the price of Dwight Howard’s $16 million–but Greg would only see $2.5 million of the $10.59 million because Greg didn’t take our incentive ridden deal! Even if Greg received more than league minimum and signed a $5 million dollar contract, he’s still missing out on another potential $5.59 million! Now you have a pissed off Scottie Pippen Greg Oden who knows he should be getting his money but he isn’t seeing a dime because he locked himself into a fixed contract that doesn’t see him getting more money! Not a single dime.

Again, I must remind you that these incentives would be a best case scenario for Greg. If Greg under-performs and doesn’t come close to meeting his expectations then what do we loose as an organization? $1.5 million? Maybe $2 million if he has a few monster games at the beginning of the season and gets hurt? Even if Greg Oden has a few monster games and then gets injured, there is no way that he would be able to make enough money for us to actually “loose” anything financially. Or even if we feel generous and give him $2.5 million as a base and he gets injured, the loss would still be almost non-existent; it would be like having a practice squad player on the roster.

If Greg over-performs during his one year–then great! If Greg over performs so far over his head that not only is he NBA First Team Defense, Most Improved Player Award, but also receives Defensive Player of the Year, and MVP? Then you essentially are getting a LA Laker/Miami Heat Shaquille O’Neil for about $2-3 million cheaper:

$10,590,000 + $3,000,000 (Defensive POY) + $5,000,000 (League MVP) = $18,590,000

Greg Oden’s over-performance in this situation means that you are getting an All-NBA Alpha Dog center on sale and my organization would more than likely be sniffing the play-offs and/or competing for an NBA Title with an MVP/DPOTY/1st team “D” guy.

Either way, my organization would essentially be winning! Greg would be winning as well! If he over-performs while under his incentive contract then he will  have a new salary to use as a bargaining chip for future contract negotiations: $18,590,000! When he wants to leave and get more money, unless he’s really cool and wants to stay, he has the stats and the cash to back up his demands. When somebody is in the last year of a contract, they tend to over-perform, in order to look more enticing to other teams so they can get the maximum salary possibly.

Essentially, you could look at the incentive based contract deal as  Greg Oden getting a “free contract year”, where he will have the opportunity to actually make the money that he would have been playing for next season. Greg would be playing under his future contract by signing the one year incentive deal.

So if somebody is in the last year of their contract and is only making $4 million a year, at the end of that year, whether they win league MVP or not, they are still going to get paid $4 million– then go on to sign a new contract the next year with a large increase in scale.

BUT–if you do the incentive deal, then you could essentially get paid your potential future contract money while playing in your “contract” year.

Basically, you’ll get paid what you are deserved, based on your performance.

The point of this incentive laden contract is to get Greg to perform at his peak performance. I want him to be an Alpha Dog All-NBA center, and I want him to get his money at the same time. The incentives are the carrot at the end of the stick. The incentives are the driving force to performance. At the same time, these incentives protect my organization for over-paying when we don’t have to, but it is also giving Greg the opportunity to get paid lucratively based on his performance. So although the $1.5-$2 million base salary that he would be starting with may not seem enticing, the extra $10-$16 million that is out there on the table, for the taking, should be more than enough to influence a decision.

Then again, in order for this contract to work, other teams must be willing to under-pay Greg, which I assume would happen since he has not proven himself worthy of his current $9 million a year contract. Who wants to sign a player, who has only played 13 games in four years, to a $9 million dollar (guaranteed money) contract –and they might never see the floor for another four years! That would be a huge gamble to take. I would be banking on contract offers being sent to Greg Oden around the $4-$6 million dollar range, and hopefully Greg would take the incentives over the guaranteed money.

Hopefully, Greg is the kind of person who believes he is worth more than $4-6 million and takes my organization’s incentive based contract. If he doesn’t take the contract, that could potentially pay him upwards or $11 million dollars and settles for the $4-6 million guaranteed, then I don’t know if I would want him as part of my organization anyway. Why? Because why would you walk away from an extra possible $11 million dollars? Are you lacking confidence in your own abilities to stay healthy and perform? Do you not see yourself capable of going an entire season while being a productive starting center and earning yourself a bigger contract. If somebody cops out and takes the $4-6 million contract, they probably aren’t the kind of person you would want to build around.

And I would be totally OK passing on a player like that.

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