SHOW ME THE MONEY $$$$$$$$$$$$$

1. SHOW ME THE MONEY $$$$$$$$$$$$$

2. What is a player’s contract • It is a legal agreement of compensation and length of term. Ex. 5 year 10 million$ • Contracts may include certain behavioral expectations of the player. DO’s and DO NOT’s • May include incentives and clauses Ex. If you start 80% of the games you get this. Some contract have guaranteed $

3. What is a player’s salary • The amount of money they make in one year of playing season. Some salary is guaranteed and some not

4. What is total payroll? • The total amount a team pays all the players on the team in a season. • Ex. New York Yankees have a $200 million payroll • Compare NFL payrolls

5. What is an Agent? • A person who represents an athlete. • This person negotiates all aspects of the players contract with team ownership. • Agents are paid a percentage of the athletes total contract value. Ex 10year/252 million- agent may get 5% of the contract value- $12.5 million

6. What is a Salary Cap? INDIVIDUAL • The maximum a team can pay a player • Ex. Rookie salary cap in the NHL TEAM The maximum amount of money a team can spend on the entire PAYROLL These values are set by the league

7. HOW CAN TEAMS GO OVER THE $120 MILLION CAP IN THE NFL? • Incentives • What are they?

8. What are incentives? • Money paid to athletes based on performance and are agreed to in advance in a contract

9. 2 TYPES OF INCENTIVES • Money paid to athletes based on performance and are agreed to in advance in a contract • Likely to be earned (LTBE) • Not Likely to be Earned (NLTBE) • What is the difference?

10. LTBE incentives count towards the salary cap and NLTBE incentives DO NOT count toward the salary cap. • Prevents teams from writing contracts loaded with ILTBE and going over the salary cap. • Examples from data base

11. What are signing bonuses Incentive given to athletes to sign contracts with the team. Most incentives are in the form of $$$$. Some of this money may not have an effect on overall payroll. • Ex. Players not earning salary but receiving signing bonus

12. What counts towards the CAP? • Signing bonuses are divided over the life of the contract and each year that value counts towards the cap. • Example. If a player signs a 3 year contract with a 3 million dollar signing bonus. 3 million bonus divided by 3 years (length of term) = 1 million/year towards the cap.

13. WHAT IS A FREE AGENT? • A player who is not bound by a contract to a particular team. • This player is free to negotiate a contract with another team. • Ownership is careful to monitor when players become free agents. • If many players become free agents at the same time it may cost them big $$$$ to keep them.

14. What are options/buyouts? • Two types

15. Player options/ Team Options • Player option- The player has the CHOICE (option) to extend the contract and accept the terms of the remaining contract. • Not all options are included in contracts. It is a negotiated item

16. Team Option or buyout • Team option/buyout- The team has the choice to extend the players contract or they can BUYOUT the remainder of the contract and release the player. The player gets paid.

17. Contract example • 5yr/$10 million deal • Buyout option of 1 million after the 4th year • 2009- 2mil • 2010- 2 mil • 2011- 2 mil • 2012- 2 mil Team buyout option 1$ or keep player for • 2013- 2 mil

18. WHAT ARE ENDORSEMENTS ? • COMPENSATION PAID TO ATHLETES BY CORPORATIONS/ORGANIZATIONS TO ENDORSE THEIR PRODUCTS. * NIKE,REEBOK • ENDORSEMENT DEALS CAN BE LARGER THAN THE PLAYERS SALARY

19. SOME CRAZY ENDORSEMENTS DEALS • 1- David Beckham - soccer • Sponsor: AdidasEstimated Value: $160 million (lifetime)If Beckham lives another 40 years, the contract would be worth about $4 million a year. His soccer salary is $6.7 million per season. He makes over $20 million a year in endorsements.

20. 2- George Foreman - boxing • Sponsor: Salton, Inc.Estimated Value: $137.5 million (lifetime)Foreman was making a comfortable living as boxing's heavyweight champion back in the 1970s. However, what he made then is just pocket change compared to what he has now. The "Lean Mean Grilling Machine" has made Foreman a very wealthy man. In 1999, he agreed to sell his name to grill maker Salton, Inc. According to the contract, Foreman would receive shares of Salton stock worth $23.5 million, and five annual cash payments of $22.75 million. Before this deal, the company was paying Foreman and his two partners 60% of the profits from grill sales.

21. 3- Tiger Woods - golf • Sponsor: NikeEstimated Value: $100 million (5 years)Forbes magazine estimates that Tiger made $78 million between June 2002 and June 2003. His tournament income in both of those years was near $7 million (9% of total income). His Nike deal accounts for a quarter of his annual earnings.

22. 4- LeBron James - basketball • Sponsor: Nike Estimated Value: $90 million (7 years)Forbes estimates that James will make about $33 million a year until his 25th birthday. His Nike deal is worth about $13 million a year, or about 40% of his annual pay. The Cleveland Cavaliers pay him nearly $5 million a season. That's about 15% of his total yearly income. • 5- Allen Iverson - basketball • Sponsor: ReebokEstimated Value: $5 million a year Forbes estimates that Iverson made $19 million between June 2002 and June 2003. His 2002-'03 salary was $12.7 million, or about two-thirds of his total income. The initial Reebok deal was worth $5 million a year. Apparently, that annual payout is guaranteed for life. With that in mind, the Reebok check accounts for 26% of his annual pay.