Compensating Athletes

Yesterday’s post on Tom Brady’s new deal made me start thinking about the creative ways that agent’s are able to provide compensation for their clients. Some of the good/bad/interesting deals to learn from:

Bobby Bonilla

Back in 2000, Bobby Bonilla was a New York Met and Steve Phillips was the Mets’ General Manager. The Mets owed Bonilla $5.9 million back in 2000, but they had their eyes set on some free agents that they couldn’t afford. In an effort to improve the team and rid themselves of an underperforming and bad-natured player, Phillips decided that he wanted to buyout Bonilla. He did so by negotiating a contract with agent Jeff Borris of Beverly Hills Sports Council which would defer payment until July 1, 2011 at which time Bonilla will receive $1.19 million a year for 25 years.

Alex Rodriguez

In 2007, Alex Rodriguez signed a 10 year $275 million deal with the Yankees which he negotiated himself after a falling out with Scott Boras of Scott Boras Corporation. It was a huge deal that included some interesting incentives for reaching historic achievements. Sensing that Rodriguez would approach milestone career totals, the Yankees wanted to reward Rodriguez for these accomplishments. Thus, Rodriguez will be paid $6 million for tying each of the following homerun records: 660 by Willy Mays, 714 by Babe Ruth, 755 by Hank Aaron, and 762 by Barry Bonds. He would also be paid $6 million for breaking Bonds’ record. Both sides knew that the team could profit from a Yankee who would set major home run records, so some of the profits will also go Rodriguez’s way. He currently has 612 homeruns after hitting 30 in the 2010 season. His contract runs through 2017.

Ricky Williams

Ricky Williams was the number 5 pick of the 1999 NFL Draft when he was picked by the New Orleans Saints. Head Coach Mike Ditka thought so highly of him that he traded all of the Saints’ picks in the 1999 draft and their 1st and 3rd the following year. Williams was the first player to be the only pick in a team’s draft. His contract was as controversial as Ditka’s draft day decision. It was heavily laden with incentives that required Williams to play like an elite running back. It was heavily criticized by agents and reporters who believed that he was worth more. The 7 year deal had the potential of paying Williams the league minimum if he didn’t live up to expectations. It was negotiated by Leland Hardy of No Limit Sports, Master P’s sports agency. Williams later fired Hardy and hired Leigh Steinberg of Leigh Steinberg Sports and Entertainment.

There are a lot of interesting contracts. Ralph Cindrich, an NFL agent and the keynote speaker of our annual symposium on March 5, 2011, has negotiated some creative deals himself, and many more can be found throughout the different sports. Recently, Ilya Kovalchuk had some trouble with his own creative contract as negotiated by Jay Grossman of Puck Agency. Not all contracts are created equal.

– Jason