Richmond front-ending several contracts now for salary cap room later (H-Sun)

[one-eyed]

Pay now, play later
Jon Ralph From: Herald Sun March 23, 2010

MELBOURNE will pay its players the same wages as premier Geelong and Round 1 opponent Hawthorn in a bold bid to build a dynasty.

The wooden-spooners of the past two seasons will this year pay every cent of the $7.95 million salary cap and financially reward players, consisting of a bunch of strugglers and kids, not yet deserving of hefty deals.

The strategy of "front-ending" a raft of contracts will create future room in the salary cap, allowing the club to keep its young, exciting list together.

Clubs, including Melbourne, have often paid as little as 92.5 per cent of the salary cap, believing their players do not deserve big salaries.

It is believed Richmond will also front-end several contracts this year to ensure it has room to move when its early draft picks come of age.

http://www.heraldsun.com.au/sport/afl/pay-now-play-later/story-e6frf9jf-1225844049547

[yellowandback]

Obvious I know but what if these over paid players don't perform and we remain at or near the bottom of the ladder?
Then leave in search of success?
Dangerous.

[Owl]

if you havn't performed noone is going to be so keen to want you.  But front loading the contract is probably smart here, they get the bulk of it early, then later we still have them, AND room in our cap to pay any others that may shine, ensuring we can keep our better players from poachers.

[Smokey]

Taking a risk but also using the current situation to the club's advantage in these 'draft pick challenged' times.  I like that we are thinking outside the square because our rebuild will more likely remain on track if we can afford to keep our good young players while GC17 and GWS throw money around in their formative years.

[Smokey]

Obvious I know but what if these over paid players don't perform and we remain at or near the bottom of the ladder?

Won't make any difference Y&B.  A contract is always for X figure over Y years equals Z dollars.  All the club is doing is changing the values of X and Y to come up with the same Z.  The player will get the same amount of money regardless - he will just get more of it sooner to allow space for renewal contracts due in the next couple of years to grow naturally with improvement (given that most of ours will because of our younger than normal list age).

[Con65]

Personally, I understand making room for the future...but I dont like "front" loading contracts...just as I dont like "back" loading them...

What if you pay player X $300,000 this year, $250,00 next and $200,000 in yr 3 - but the coaching staff tell you after yr1 - player X wont make it and we want to trade him?  It means you paid him too much and the books look decidedly bad in yr 1.

At least with back loaded contracts, the club gets the player's skill and expertise when it is at its highest (supposedly) then makes up for it by paying for it in the player's declining years...eg. Kouta was rumoured to be on a large backloaded contract....when at his prime he was being paid under market...

[Infamy]

Given 1st & 2nd year players are on fixed contracts, you can't just pay some draftee $100-200k extra per year now. They have to have been at the club for a while, which means you should have some idea about their value in the future.

May be why McGuane is getting paid a large amount according to Jackstar

[Smokey]

Personally, I understand making room for the future...but I dont like "front" loading contracts...just as I dont like "back" loading them...

What if you pay player X $300,000 this year, $250,00 next and $200,000 in yr 3 - but the coaching staff tell you after yr1 - player X wont make it and we want to trade him?  It means you paid him too much and the books look decidedly bad in yr 1.

At least with back loaded contracts, the club gets the player's skill and expertise when it is at its highest (supposedly) then makes up for it by paying for it in the player's declining years...eg. Kouta was rumoured to be on a large backloaded contract....when at his prime he was being paid under market...

Making the books look bad in Year 1 is irrelevant - it's history, the money is already spent.  What matters is the future liability and by front-loading you reduce that liability giving you more flexibility with contract renewals and player trade-ability.  With back-ended contracts if you want to trade (dump) a contracted player then you will most likely be worse off because you often need to make up a part (or all) of the player's salary in order to get the deal done.  If the contract is front-loaded then your liability is going to be much less thus making it easier in theory to trade the player.  Front-loading would help getting rid of a player, not hinder it.  The more I think about it, the more I like the idea of front-loading, especially when you have a very young list of potentially good players.

[Rodgerramjet]

It's better than backloading i would think

[blaisee]

Personally, I understand making room for the future...but I dont like "front" loading contracts...just as I dont like "back" loading them...

What if you pay player X $300,000 this year, $250,00 next and $200,000 in yr 3 - but the coaching staff tell you after yr1 - player X wont make it and we want to trade him?  It means you paid him too much and the books look decidedly bad in yr 1.

At least with back loaded contracts, the club gets the player's skill and expertise when it is at its highest (supposedly) then makes up for it by paying for it in the player's declining years...eg. Kouta was rumoured to be on a large backloaded contract....when at his prime he was being paid under market...

Making the books look bad in Year 1 is irrelevant - it's history, the money is already spent.  What matters is the future liability and by front-loading you reduce that liability giving you more flexibility with contract renewals and player trade-ability.  With back-ended contracts if you want to trade (dump) a contracted player then you will most likely be worse off because you often need to make up a part (or all) of the player's salary in order to get the deal done.  If the contract is front-loaded then your liability is going to be much less thus making it easier in theory to trade the player.  Front-loading would help getting rid of a player, not hinder it.  The more I think about it, the more I like the idea of front-loading, especially when you have a very young list of potentially good players.

spot on as usual smoke

[the_boy_jake]

I would have thought that with Richo, Bowden, Johnson etc gone we would have to either front load contracts or give out undeserving salaries to meet minimum payments.

[Smokey]

I would have thought that with Richo, Bowden, Johnson etc gone we would have to either front load contracts or give out undeserving salaries to meet minimum payments.

I'm not sure Jake but I think both Richo and Bowden were on the vet's list so only half their salary would have been counted anyway - losing them would not have had such a big impact as you might expect.

[Con65]

Smokey...i still dont like the pay more now and get services later argument...

what if a player gets paid above the odds in yr 1 and then does a knee and never comes back right again...or has one or two good seasons..is then put on one of these contracts....take cogs, thursty or raines as an example...

or if a player is paid above the odds in yrs 1 and 2...with the idea it will be made up for in yrs 3 and 4...and the player says "Why should I take a pay "cut" and get less than what I am worth this year, I think I will leave now and go on the open market and get what I am worth..." eg. take Ottens as an example...

IMHO, and luckily I dont have to balance the RFC player payment books...pay what someone is worth at the time...

[Smokey]

Smokey...i still dont like the pay more now and get services later argument...

what if a player gets paid above the odds in yr 1 and then does a knee and never comes back right again...or has one or two good seasons..is then put on one of these contracts....take cogs, thursty or raines as an example...

or if a player is paid above the odds in yrs 1 and 2...with the idea it will be made up for in yrs 3 and 4...and the player says "Why should I take a pay "cut" and get less than what I am worth this year, I think I will leave now and go on the open market and get what I am worth..." eg. take Ottens as an example...

IMHO, and luckily I dont have to balance the RFC player payment books...pay what someone is worth at the time...

But it makes no difference Con, the player still gets their money regardless of the year it's paid in, and the club still spends the same amount regardless of when they pay it.  Where the payment period does matter is in accounting for each year's salary cap and that's where the front-loaded contract works very heavily in our favour.  And players on contracts can't just 'up and leave' mid-contract without facing potential legal action - something I'm sure none of them want.

As an example in our current situation, if a player is contracted for 900k over 3 years but we front-load his contract then we pay him $450k this year, 300k next year and $150k in his last year.  That means that in the 3rd year when this year's crop of draftee's become due for contract renewals, we can afford to increase them significantly to keep them from leaving without impacting our salary cap and/or having to move on a mid-tier player to make room.  For a young team rebuilding like us, that is a huge advantage over teams that are sailing much closer to the cap limit and trying to retain players in the increasingly (GC17 and GWS) competitive environment.  We get to keep our core of good young players for a longer period of time allowing our rebuild to complete fully.  And using the above example, if the player loses form and we need to move him on then any portion of his salary that we need to pay his new club is going to be much much less when compared to a back-loaded contract, allowing us to replace him with a better quality player because we have more cap room.  Don't think of it as paying a player what they are worth each year - they sign contracts for a total payment over a number of years and that's what the real figure is - how we split that up per year is where we can 'get an edge'.  I like it.

[Penelope]

 I can see what you are saying, Con, but i think the players understand that their contract is for two or three years, and look at the monetary value over the entire period and not each individual year.

Once a contract is made, the total value of the contract has to be paid, excepting for certain circumstances. So if an injury or dramatic drop of form happen in the middle of the contract, it doesen't matter how the payments are spread. The total payments for the period specified must still be honored. That is why there are still some players on the list who may otherwise have got the chop - they still have contract to run and cutting them could see richmond paying out the full amount if no-one else picked them up.

If a player was to walk out just because he didn't think he was getting his worth in the last year of a contract, when, if you want to look at it that way, he had been overpaid for his first, then he's probably not the sort of person you want at the club anyway.