As the title suggests, would you rather be paid a dollar right now or fifty cents now and fifty cents later? Seems pretty straight forward doesn’t it? Of course you’re going to take the dollar now. It’s the same amount of money and you get it all now.
Interestingly enough, according to this article in USA Today several NBA players have structured their contracts such that they were paid only half of their 2010-2011 salary during the 2010-2011 season and the second half will be paid during 2011-2012. According to their agents, their deals were structured as such so they would continue to receive a paycheck even if there is a lengthy lockout (which, unfortunately, seems like it will be the case).
I get it. The agents have seen enough guys spend their paychecks as fast as they come in and they want their guys to have some cash if there is a lockout. However, this still seems like a poor solution. Not only does it prevent the player from possibly earning some interest on the money that he has already earned, but, more importantly, it reinforces poor financial habits and does nothing to prepare the athlete for future financial success.
While an agent’s primary job is to maximize an athlete’s earning capacity during his playing career, I would argue that it should also be to counsel athletes on strategies for living their life during their sports career. Instead of expecting clients to blow through their cash and structuring deals to pay them over longer terms, why not take a more pro-active approach and, along with an appropriately experienced team that includes an attorney and financial planner, implement financial, managerial and life skill related plans and techniques which accomplish the short-term and long-term wants and needs of their clients? The cost of implementing these plans and creating accountability for the athlete is relatively low and a much better use of resources than creatively structuring salary to fit present cash flow needs.
Agree, disagree, or think my writing stinks? Let me hear about it.
Matt Breeden (SportsLawGuru.com) is an internationally respected business advisor and attorney at Breeden Legal and is based in Indianapolis, IN. He represents Sports & Entertainment properties, as well as many other entrepreneurial businesses, in a variety of matters, including: Athlete/Driver Contracts, Business Formation, Corporate Governance, Mergers & Acquisitions, Broadcast & Digital Media Agreements, Licensing Agreements, Sponsorship Agreements, Commercial Agreements, Private Placements, Insurance & Risk Management, Creditors Rights, Employment Agreements and Litigation Management. He can be reached at Matt@BreedenLegal.com
