Compensation Design Group Has Perfect Solution for Top Performing Basketball Players: Pay for Performance.SAN FRANCISCO San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden -- Now that NBA NBA abbr. 1. National Basketball Association 2. National Boxing Association NBA (US) n abbr (= National Basketball Association) → Basketball-Dachverband (= teams are making the final push for the playoffs and sports pundits are calling their predictions for the championship title, it's time It's Time was a successful political campaign run by the Australian Labor Party (ALP) under Gough Whitlam at the 1972 election in Australia. Campaigning on the perceived need for change after 23 years of conservative (Liberal Party of Australia) government, Labor put forward a to look at whether or not it might have all been worth it. "Many of these teams have made an enormous financial sacrifice by compensating and, subsequently, relying on a few select players to lead them to glory," said Frank Glassner, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Compensation Design Group, an international compensation consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a headquartered in San Francisco. "Are these so-called so-called adj. 1. Commonly called: "new buildings ... in so-called modern style" Graham Greene. 2. 'warriors' worth the outrageously out·ra·geous adj. 1. a. Grossly offensive to decency or morality. b. Being well beyond the bounds of good taste: outrageous epithets. 2. Having no regard for morality. absurd amounts?" The NBA salary cap The NBA Salary Cap is the limit to the total amount of money that NBA teams are allowed to pay their players. While this seems simple enough in concept, the salary cap is in actuality extremely complex, and contains many obscure rules and loopholes. has increased from $26.9 million in 1997-98 to the new level of $43.87 million -- the highest amount since the salary cap was established in 1984. This doesn't does·n't Contraction of does not. even take into consideration amounts each individual receives from endorsement contracts. "The current salary structure in the NBA is bloated bloat·ed adj. 1. Much bigger than desired: a bloated bureaucracy; a bloated budget. 2. Medicine Swollen or distended beyond normal size by fluid or gaseous material. and obscene Offensive to recognized standards of decency. The term obscene is applied to written, verbal, or visual works or conduct that treat sex in an objectionable or lewd or lascivious manner. ," said Glassner. "Exorbitant sports salaries and compensation packages have become synonymous with synonymous with adjective equivalent to, the same as, identical to, similar to, identified with, equal to, tantamount to, interchangeable with, one and the same as the player as 'pay for ego' vs. 'pay for performance.'" To prove his point, Glassner decided to see if the players' actual game statistics contributed to their high salaries. A player's statistics reflect his accomplishments on the job. Likewise, as in any other business field, an employee's compensation depends on how well he carries out his duties. "Some players are paid like the CEOs who run companies in trouble," said Glassner, a 29-year veteran of executive compensation. "They are paid for lackluster lack·lus·ter adj. Lacking brightness, luster, or vitality; dull. See Synonyms at dull. Adj. 1. lackluster - lacking brilliance or vitality; "a dull lackluster life"; "a lusterless performance" performance. An ideal salary plan for players would be one based on the same principles and procedures used for successful businesses -- a plan based heavily on incentives for performance." In Glassner's plan, players would receive a base salary determined by number of years with the NBA, plus incentives based on points (adjusted by FG% -- field goal percentage), assists, steals, and blocks per game. In addition, there would be bonus payments for post-season play or for achieving top league status in various statistics. The following outlines Compensation Design Group's (CDG (CDMA Development Group, Costa Mesa, CA, www.cdg.org) A membership organization founded in 1995 that promotes CDMA wireless systems worldwide. It is involved with developing new features and services and promoting standards that provide global compatibility and interoperability. ) incentives for performance program: COMPENSATION DESIGN GROUP BASKETBALL SALARY PLAN Base Salaries: Per Game Incentives: Rookie $200,000 $2500 per point 2nd Year $300,000 $1500 per assist 3rd Year $400,000 $1500 per steal 4th Year $500,000 $1000 per rebound 5th Year $600,000 $600 per steal 6th Year $700,000 7th Year $800,000 8th Year $900,000 9 + Years $1,000,000 In order to avoid potential for "gaming" the points category, points related incentives will be adjusted based on FG%. FG% Per Points Game Adjustment ------------------------------------------- Greater Than or Equal to 60% 200% ------------------------------------------- 55-60% 175% ------------------------------------------- 50-55% 150% ------------------------------------------- 45-50% 125% ------------------------------------------- 40-45% 100% ------------------------------------------- 35-40% 80% ------------------------------------------- 30-35% 60% ------------------------------------------- 25-30% 40% ------------------------------------------- 20-25% 20% ------------------------------------------- Less Than or Equal to 20% 10% ------------------------------------------- For example, if player A scores 20 points in a game with a field goal percentage is 0.235; his total income from points scored is $10,000. 20 x $2500 x 20% = $10,000 In contrast, if player B scores the same number of points in a game but his field goal percentage is .461; his income would be $62,500. 20 x $2500 x 125% = $62,500 Recently, Latrell Sprewell Latrell Fontaine Sprewell (born September 8 1970 in Milwaukee, Wisconsin) is a former American professional basketball player who last played for the Minnesota Timberwolves in the 2004-05 NBA season. , 34, of the Minnesota Timberwolves The Minnesota Timberwolves are a professional basketball team based in Minneapolis, Minnesota, United States. Their organization is a member of the National Basketball Association (NBA). , demanded that the team either extend his contract or trade him, saying he was "insulted" by the team's last contract offer of $10 million per season for the next three years. "I've got my family to feed," he said, comments that drew criticism from NBA commissioner David Stern
Sprewell is set to make $14.6 million this season in the final year of his deal. Assuming that he plays in all 82 games this season, for every minute he is on the court, Sprewell will bring in approximately $5,732. Additionally, if CDG takes into consideration that Sprewell practices 4 hours per business working day, then he would still earn $225 per minute. "Imagine if you made $5,732 for every minute you worked," said Glassner. "In just one day, that's 60 minutes x 8 hours x $5,732 = $2,751,360 per day. In reverse, the median household income The median household income is commonly used to provide data about geographic areas and divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more. for 2003 was $43,318. Break that down and the average American made about $0.34 a minute." Applying Glassner's plan to Sprewell's performance so far, he would have earned $3,013,900 -- a far cry from its current situation. Up until the All-Star game An all-star game is an exhibition game played by the best players in their sports league. The players are often chosen by a popular vote of fans of the sport and the game often occurs at the halfway point of the regular season, although this is not the case for some all-star games , Sprewell played in 52 games scoring 654 points with a FG% of 41.7%, 138 rebounds, 120 assists, 35 steals, and 14 blocks.
Compensation Performance Total Pay
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Base Salary 13th Year in NBA $1,000,000
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$2500 for each point 654 points (41.7% = 100%) $1,635,000
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$1500 for each assist 120 assists $180,000
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$1500 for each steal 35 steals $52,500
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$1000 for each rebound 138 rebounds $138,000
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$600 for each block 14 blocks $8,400
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Total: $3,013,900
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"Under this plan, if players performed at their maximum, they could actually earn their current mega salaries," said Glassner. "The incentive to perform at their optimum would be simple: better performance, more money." In contrast, Glassner applied the same plan to Sprewell's teammate, Kevin Garnett Kevin Garnett (born May 19, 1976) is an American professional basketball player for the NBA's Boston Celtics. The 6 ft 11 in, 220 lb (0 kg) power forward is regarded as one of the best all around players in the game today. , one of the top league leaders at the moment. Garnett's FG% of 0.499 would yield him 125% of his points related incentive. Garnet would earn $5,307,200 under CDG's performance based plan.
Compensation Performance Total Pay
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Base Salary 10th Year in NBA $1,000,000
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$2500 for each point 1004 points (49.9% = 125%) $3,137,500
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$1500 for each assist 265 assists $397,500
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$1500 for each steal 70 steals $105,000
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$1000 for each rebound 630 rebounds $630,000
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$600 for each block 62 blocks $37,200
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Total: $5,307,200
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Realizing these figures only represent individual production, players are also eligible for year-end awards. However, it is evident how much basketball players are overpaid o·ver·pay v. o·ver·paid , o·ver·pay·ing, o·ver·pays v.tr. 1. To pay (a party) too much. 2. To pay an amount in excess of (a sum due). v.intr. To pay too much. , even high performers like Kevin Garnett. The following tables outline incentives that players can also cash out on if they perform well. Year-End Awards: Year-End Team Based Incentives Per Player ------------------------------------------------ NBA Championship $1 million ------------------------------------------------ NBA Runner-Up $500,000 ------------------------------------------------ Conference Winner $250,000 ------------------------------------------------ Playoff Participant $50,000 ------------------------------------------------ Year-End Individual Incentives ------------------------------------------------ Most Valuable Player $1 million ------------------------------------------------ Rookie of the Year $250,000 ------------------------------------------------ Defensive Player of the Year $500,000 ------------------------------------------------ Sixth Man Award $300,000 ------------------------------------------------ Most Improved Player $100,000 ------------------------------------------------ Sportsmanship Award $200,000 ------------------------------------------------ J.Walter Kennedy Citizenship Award $150,000 ------------------------------------------------ With the significant increase in scrutiny on executive performance, pay for performance is generally applied to corporate executives across the country today. "Why not apply this same concept to professional athletes?" said Glassner. "Especially now, since salaries have skyrocketed at an alarmingly high rate." Unfortunately, Glassner notes, in the end the fans are the ones who lose if the current system continues. "If sports teams dared to adopt a pay-for-performance plan, it could actually improve the game," said Glassner. "Players may become more motivated mo·ti·vate tr.v. mo·ti·vat·ed, mo·ti·vat·ing, mo·ti·vates To provide with an incentive; move to action; impel. mo to improve skills and undertake a training regime reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of their salary. Owners certainly wouldn't complain about rewarding performance and the real winners would be the fans. They would get to see an improved game with all players trying their hardest, no matter where their team is in the standings." Glassner said that based on his pay-for-performance plan, as well as Latrell's performance, or lack thereof, he may wish to revisit re·vis·it tr.v. re·vis·it·ed, re·vis·it·ing, re·vis·its To visit again. n. A second or repeated visit. re the $10 million per year contract with the Timberwolves. Compensation Design Group (www.cdgworldwide.com) is headquartered in San Francisco, with offices in Chicago and New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , and is one of the best known executive compensation consulting firms in the country. Frank Glassner can be reached at (415) 618-6060, or via e-mail at fglassner@cdgworldwide.com. |
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