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qldmagpie67
Joined: 18 Dec 2008
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| Post subject: Are performance based contracts the future ? |  |
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Watching the Cloke drama unfold this year it made me start thinking the decline in his performance and attitude seems to coincide with the realisation that he wouldn't trigger the extra payments associated with his contract extension for 2017.
I have no idea what those clauses where but I'm assuming everyone involved would have had a very clear understanding of what was needed to trigger the extra dollars.
Gauging by the little info fed out of the club none of the clauses had anything to do with goals kicked or accuracy or games played so one would assume they were all based of effort and second efforts like tackling and making constests etc.
For mine this has worked in our favour really as if not for these clauses Cloke would have been getting $800k + for not performing
So with that in mind should we be looking at making all contracts over say 2yrs performance based to trigger further years and extra dollars ?
The latest big contracts where those of Treloar & Sidebottom. I think both are 4 or 5yrs with obvious annual increases in salary but should the club have put KPI in each to ensure we get value for money all the way along ?
How would we feel that now both or either signed could just relax and plod around taking the cash each year and then maybe on th last year turn it on so if we don't sign them again there stocks have risen for another club to come in and offer them a multi year deal on very good coin.
Not saying either player would and neither could be accused of it based on efforts this past season but if a player had the incentive based deal would that make them hungrier ?
Keen for some opinions. |
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E
Joined: 05 May 2010
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players will never agree to performance based contracts representing a large percentage of the tpp. The rules of the road are that the club gets benefits of cheap contracts in the early years and player gets benefits in the later years. If you want to take away their money at the end, you'll have to have higher rookie level contracts and then clubs are really stuffed if they screw up a draft pick.
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Ohhh, the Premiership's a cakewalk ....... |
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RudeBoy
Joined: 28 Nov 2005
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E is correct.
It takes 2 to tango. The clubs would obviously like all contracts to be performance based, while the players want to be guaranteed as much as they can. In the end, some performance based element is common in most contracts. |
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MightyMagpie
Joined: 04 Jun 2013
Location: WA
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True performance-based contracts (ie linked to certain outcomes eg AFL Rating Points, goals, etc) can make it very hard for the Club to manage TPP within the cap and up to the % of the cap the club is seeking to pay in a particular season. Games played is relatively easy to factor in as there are a maximum 22 players x 22 games so it can be catered for in predictive calculations.
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qldmagpie67
Joined: 18 Dec 2008
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All good points and I understand the salary cap minimum has to be paid each year of the difference paid the second year of the cycle.
I wasn't inferring we should have several of these but at least a couple with players on longer term deals. I get the fact players want surety in what they earn but also a club needs some certainty on a players performance. No use having a player eating up $600k+ of your cap playing seconds
It would be hard to manage granted but I can see a time in th not to distant future where this could be a more normal practise like in the NFL where players get guaranteed money and the chance to earn more based on KPI's |
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stui magpie 
Prepare for the worst, hope for the best.
Joined: 03 May 2005
Location: In flagrante delicto
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many player contracts are already perfomance based to a degree in that they have a base and have extra bonuses based on certain achievements.
Other players, usually older or second stringers, can have clauses in their contract that by achieving certain targets, they get an extra year.
Apart from managing the TPP issue, which would be a PITA, the club might want to put performance targets in a contract, but the player, AFLPA and AFL would all need to agree.
The AFLPA and players want the american system with big contracts, but those ones come with get out clauses. You could sign a 5 year multi million dollar contract, and have it torn up in your face for a 3 month notice payment and not a damn thing you could do about it. US and AUS contract law are just a tad different.
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Every dead body on Mt Everest was once a highly motivated person, so maybe just calm the **** down. |
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AN_Inkling
Joined: 06 Oct 2007
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No. Because they're unfair and any club who tries take it further will immediately be outbid by another. Performance based contracts will remain as they are now, something around the edges when players want something beyond the norm.
As stui points out there are better options and the more pressing need is to get rid of FA compensation and the overly tight restrictions on free agency.
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piedys 
Heeeeeeere's Dyso!!!
Joined: 04 Sep 2003
Location: Resident Forum Psychopath since 2003
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| stui magpie wrote: | | ...You could sign a 5 year multi million dollar contract, and have it torn up in your face for a 3 month notice payment and not a damn thing you could do about it. US and AUS contract law are just a tad different. |
Oh, to see the look on the faces of the COLA kids, if this happened...
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M I L L A N E 4 2 forever |
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E
Joined: 05 May 2010
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| stui magpie wrote: | many player contracts are already perfomance based to a degree in that they have a base and have extra bonuses based on certain achievements.
Other players, usually older or second stringers, can have clauses in their contract that by achieving certain targets, they get an extra year.
Apart from managing the TPP issue, which would be a PITA, the club might want to put performance targets in a contract, but the player, AFLPA and AFL would all need to agree.
The AFLPA and players want the american system with big contracts, but those ones come with get out clauses. You could sign a 5 year multi million dollar contract, and have it torn up in your face for a 3 month notice payment and not a damn thing you could do about it. US and AUS contract law are just a tad different. |
this is not true of the facts in the USA.
First, Baseball and Basketball contracts are always fully guaranteed.
NFL is the only possible sport where you are in the ballpark, but even then, you are wrong. NFL contracts come part guaranteed and part non-guaranteed. The guaranteed part is becoming increasing more and more of the contract price.
The non-guaranteed portion of the salary becomes guaranteed on dates specified in the contract, but the dates co-incide with decisions to include the player on the roster prior to the start of the season (to give the player a full opportunity to land with another club in free agency). This three months notice period crap is just that.
In fact, the decision to cut a player is a tough one for a club because they get nothing in return.
The most common use of this tactic is actually when the team gives a player a very long term contract that is expected to outlive the players useful life. Both parties dont expect the final years to be paid out and the tactic is used primarily to spread the salary cap hit on the guaranteed portion of the salary over a longer period of time (and to give the player an incentive if he is still able to play all those years later). For example, lets say i want to pay a player 60 million for 4 years. That would be 15 million per year if it was a 4 year contract.
Instead, i give him a 6 year deal for $70 million and the last two years (of $5 million each) aren't guaranteed. The salary cap hit in that case is less than $10 million per year which gives the team the opp to get another player at $5 million.
The player gets cut after 4 years and has received his $60 million over 4 years. If he is still worth $5 million per year after 4 years, he gets retained.
But to be clear, the tactic doesn't screw the player at all!!! It benefits the player.
And finally, US and Australian contract law are IDENTICAL!!!!
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Ohhh, the Premiership's a cakewalk ....... |
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MightyMagpie
Joined: 04 Jun 2013
Location: WA
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| E wrote: | | stui magpie wrote: | many player contracts are already perfomance based to a degree in that they have a base and have extra bonuses based on certain achievements.
Other players, usually older or second stringers, can have clauses in their contract that by achieving certain targets, they get an extra year.
Apart from managing the TPP issue, which would be a PITA, the club might want to put performance targets in a contract, but the player, AFLPA and AFL would all need to agree.
The AFLPA and players want the american system with big contracts, but those ones come with get out clauses. You could sign a 5 year multi million dollar contract, and have it torn up in your face for a 3 month notice payment and not a damn thing you could do about it. US and AUS contract law are just a tad different. |
this is not true of the facts in the USA.
First, Baseball and Basketball contracts are always fully guaranteed.
NFL is the only possible sport where you are in the ballpark, but even then, you are wrong. NFL contracts come part guaranteed and part non-guaranteed. The guaranteed part is becoming increasing more and more of the contract price.
The non-guaranteed portion of the salary becomes guaranteed on dates specified in the contract, but the dates co-incide with decisions to include the player on the roster prior to the start of the season (to give the player a full opportunity to land with another club in free agency). This three months notice period crap is just that.
In fact, the decision to cut a player is a tough one for a club because they get nothing in return.
The most common use of this tactic is actually when the team gives a player a very long term contract that is expected to outlive the players useful life. Both parties dont expect the final years to be paid out and the tactic is used primarily to spread the salary cap hit on the guaranteed portion of the salary over a longer period of time (and to give the player an incentive if he is still able to play all those years later). For example, lets say i want to pay a player 60 million for 4 years. That would be 15 million per year if it was a 4 year contract.
Instead, i give him a 6 year deal for $70 million and the last two years (of $5 million each) aren't guaranteed. The salary cap hit in that case is less than $10 million per year which gives the team the opp to get another player at $5 million.
The player gets cut after 4 years and has received his $60 million over 4 years. If he is still worth $5 million per year after 4 years, he gets retained.
But to be clear, the tactic doesn't screw the player at all!!! It benefits the player.
And finally, US and Australian contract law are IDENTICAL!!!! |
Baseball contracts in the US are not all guaranteed. There are bonuses for all sorts of things from at bats, innings pitched, all star selection, mvp and other awards ... but they don't have a hard salary cap. They can also have team option years, player option years and vesting (ie conditional) option years.
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All We Can Be |
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stui magpie
Prepare for the worst, hope for the best.
Joined: 03 May 2005
Location: In flagrante delicto
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| E wrote: | [
And finally, US and Australian contract law are IDENTICAL!!!! |
I doubt that very very much. Are you a US contract lawyer?
_________________
Every dead body on Mt Everest was once a highly motivated person, so maybe just calm the **** down. |
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E
Joined: 05 May 2010
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| MightyMagpie wrote: | | E wrote: | | stui magpie wrote: | many player contracts are already perfomance based to a degree in that they have a base and have extra bonuses based on certain achievements.
Other players, usually older or second stringers, can have clauses in their contract that by achieving certain targets, they get an extra year.
Apart from managing the TPP issue, which would be a PITA, the club might want to put performance targets in a contract, but the player, AFLPA and AFL would all need to agree.
The AFLPA and players want the american system with big contracts, but those ones come with get out clauses. You could sign a 5 year multi million dollar contract, and have it torn up in your face for a 3 month notice payment and not a damn thing you could do about it. US and AUS contract law are just a tad different. |
this is not true of the facts in the USA.
First, Baseball and Basketball contracts are always fully guaranteed.
NFL is the only possible sport where you are in the ballpark, but even then, you are wrong. NFL contracts come part guaranteed and part non-guaranteed. The guaranteed part is becoming increasing more and more of the contract price.
The non-guaranteed portion of the salary becomes guaranteed on dates specified in the contract, but the dates co-incide with decisions to include the player on the roster prior to the start of the season (to give the player a full opportunity to land with another club in free agency). This three months notice period crap is just that.
In fact, the decision to cut a player is a tough one for a club because they get nothing in return.
The most common use of this tactic is actually when the team gives a player a very long term contract that is expected to outlive the players useful life. Both parties dont expect the final years to be paid out and the tactic is used primarily to spread the salary cap hit on the guaranteed portion of the salary over a longer period of time (and to give the player an incentive if he is still able to play all those years later). For example, lets say i want to pay a player 60 million for 4 years. That would be 15 million per year if it was a 4 year contract.
Instead, i give him a 6 year deal for $70 million and the last two years (of $5 million each) aren't guaranteed. The salary cap hit in that case is less than $10 million per year which gives the team the opp to get another player at $5 million.
The player gets cut after 4 years and has received his $60 million over 4 years. If he is still worth $5 million per year after 4 years, he gets retained.
But to be clear, the tactic doesn't screw the player at all!!! It benefits the player.
And finally, US and Australian contract law are IDENTICAL!!!! |
Baseball contracts in the US are not all guaranteed. There are bonuses for all sorts of things from at bats, innings pitched, all star selection, mvp and other awards ... but they don't have a hard salary cap. They can also have team option years, player option years and vesting (ie conditional) option years. |
i stand corrected. it is true that when A-rod signed a reported $275 million 10-year contract, only $275 million was guaranteed. he did indeed have the right to numerous extra amounts for breaking records and making all-star teams.
Option years in baseball usually come with a buyout. for example - final year is $12 million with an option for the team to buy him out prior to the start of the season for $5 million.
_________________
Ohhh, the Premiership's a cakewalk ....... |
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ad4eva 
Joined: 15 Jan 2006
Location: The 'G'
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One persons opinion of a players performance will differ from another persons too. How do you come to an agreement as to what value in dollars that performance has?
Football is such an open sport and has many different positions on the field, most would disagree that a players statistics reflects how good their performance was. |
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MightyMagpie
Joined: 04 Jun 2013
Location: WA
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| E wrote: | | MightyMagpie wrote: | | E wrote: | | stui magpie wrote: | many player contracts are already perfomance based to a degree in that they have a base and have extra bonuses based on certain achievements.
Other players, usually older or second stringers, can have clauses in their contract that by achieving certain targets, they get an extra year.
Apart from managing the TPP issue, which would be a PITA, the club might want to put performance targets in a contract, but the player, AFLPA and AFL would all need to agree.
The AFLPA and players want the american system with big contracts, but those ones come with get out clauses. You could sign a 5 year multi million dollar contract, and have it torn up in your face for a 3 month notice payment and not a damn thing you could do about it. US and AUS contract law are just a tad different. |
this is not true of the facts in the USA.
First, Baseball and Basketball contracts are always fully guaranteed.
NFL is the only possible sport where you are in the ballpark, but even then, you are wrong. NFL contracts come part guaranteed and part non-guaranteed. The guaranteed part is becoming increasing more and more of the contract price.
The non-guaranteed portion of the salary becomes guaranteed on dates specified in the contract, but the dates co-incide with decisions to include the player on the roster prior to the start of the season (to give the player a full opportunity to land with another club in free agency). This three months notice period crap is just that.
In fact, the decision to cut a player is a tough one for a club because they get nothing in return.
The most common use of this tactic is actually when the team gives a player a very long term contract that is expected to outlive the players useful life. Both parties dont expect the final years to be paid out and the tactic is used primarily to spread the salary cap hit on the guaranteed portion of the salary over a longer period of time (and to give the player an incentive if he is still able to play all those years later). For example, lets say i want to pay a player 60 million for 4 years. That would be 15 million per year if it was a 4 year contract.
Instead, i give him a 6 year deal for $70 million and the last two years (of $5 million each) aren't guaranteed. The salary cap hit in that case is less than $10 million per year which gives the team the opp to get another player at $5 million.
The player gets cut after 4 years and has received his $60 million over 4 years. If he is still worth $5 million per year after 4 years, he gets retained.
But to be clear, the tactic doesn't screw the player at all!!! It benefits the player.
And finally, US and Australian contract law are IDENTICAL!!!! |
Baseball contracts in the US are not all guaranteed. There are bonuses for all sorts of things from at bats, innings pitched, all star selection, mvp and other awards ... but they don't have a hard salary cap. They can also have team option years, player option years and vesting (ie conditional) option years. |
i stand corrected. it is true that when A-rod signed a reported $275 million 10-year contract, only $275 million was guaranteed. he did indeed have the right to numerous extra amounts for breaking records and making all-star teams.
Option years in baseball usually come with a buyout. for example - final year is $12 million with an option for the team to buy him out prior to the start of the season for $5 million. |
Yes team and player option years do usually have a buyout at something less than the full year value, but vesting options are typically merely triggers for an extra year at a certain value.
In the case of A-Rod's contract it demonstrates what I was saying as it had $30m in non-guaranteed amounts with $275m guaranteed over the 10 years. Obviously A-Rod was a superstar player and able to negotiate such a large amount of guaranteed salary (that contract is second in total value in MLB history and 7th highest based on average annual salary) ... not many players are in such a strong position. Anyway, even with that relatively low potential variance of +10.9% it would create (in the AFL salary cap system) all sorts of headaches for managing TPP.
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All We Can Be |
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CarringbushCigar
Joined: 15 Nov 2007
Location: wherever I lay my beanie
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Thank god they don't have them for coaches.
Bucks Tanya and Ben would be homeless. |
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