How NFL contracts are helping NFL players, but hurting their teams

January 15
Edgerrin James (AP Photo/Ed Zurga, File)
Edgerrin James (AP Photo/Ed Zurga, File)

This is a guest post by Westminster College political scientist Tobias T. Gibson.

Another NFL season marches toward its culmination, the Super Bowl. If you, like me, think of football as your first, second and third favorite sports (NFL, college, and high school) you face an eight-month black hole. But the front offices, far from having time off, will be drafting, signing, and releasing players. This is an opportune time, then, to discuss a topic not quite as juicy as, say, Ritchie Incognito and Jonathan Martin, but much more important: the negative impact of the performance incentives that NFL contracts regularly include.

The logic of performance incentives seems correct on its face: give players money if they perform better. And the conventional wisdom is that incentives work. For example, this study found that “incentive programs aimed at individuals increased performance by 27 percent.” And esteemed NFL columnist Peter King, in discussing Carson Palmer’s (then pending) contract with the Arizona Cardinals wrote that it could “include incentives in the contract that will reward Palmer if he’s as good as he thinks he still is.” Indeed, Palmer’s signed contract includes a possible $4 million of incentives.

But, there is evidence that the contract incentives may backfire.  They may lead players to pad their statistics in ways that actually do not help their teams.  For example, ESPN’s Gregg Easterbrook often complains about members of the defensive secondary who intercept a ball rather than batting the ball down on fourth downs when the interception leads to a loss of yardage. He calls this evidence of a “low football IQ.” But in another respect, it looks smart. Can you blame a player who has interceptions built into a contract for making them, even at seemingly inopportune times?

Indeed, when he was with the Colts, Edgerrin James admitted to defying the play calling in an effort to meet contract incentives. As he explained “My coach, Jim Mora, wanted me to just get the first down in a game against Detroit a couple seasons ago [Oct. 29, 2000]. Fall down and run out the clock. But Ive got too many incentive clauses in my contract for that. Every yard is money, man. So I started laughing in the huddle when I heard what Coach wanted. And then I kept running past that first-down marker until I had my touchdown. And I heard a cash register ringing the whole damn way, too. … I’ve got a contract that forces me to be selfish. Thats why I want to renegotiate. You want to change my attitude? Then change my contract” (my emphasis).

Another belief is that incentives are good because they “encourage friendly competition between associates when linked to job performance.” But in the NFL, the competition may not be so friendly.  In his important, disturbing and excellent book Out of Their League, former NFLer Dave Meggyesy warned of the use this type of incentive:

My contract made it financially important to me to play as many defensive plays as possible during the regular season. … I was confronted with the dilemma of whether or not to share [insight about an opponent] with the other linebackers. Coaches constantly talk about team spirit but I’ve always wondered how the hell there can be team spirit if I know that the more other linebackers screw up, the more I’ll be able to play, and the more I play, the more money I make. Owners keep writing contracts with performance clauses … though these can only work to create divisiveness on the team… (221; my emphasis).

Meggyesy’s book was published in 1970. And still owners write these contracts, which is surprising since some in the business world recognize that incentives can backfire. In short, NFL players may be rational actors who maximize their individual success to the detriment of the team. This is all the more likely in the NFL, where players are not ensured of contract monies — in stark contrast to the NBA, for example.

This point cannot be overstated. Political scientist Gary Miller argued more than two decades ago, in his excellent book Managerial Dilemmas, that management “should learn from iterated game theory and apply what they learn to the structure of their workplace. Chief among these is that they need to find some way to make employees cooperate rather than defect. The only way to do this, in the long term, is to solve a commitment problem — in other words, for the employees to promise that they’ll go against their short-term self-interest and not shirk, and for the managers to promise that they’ll go against their short-term self-interest and treat the employees as valuable people” (emphasis in the original; quoted from here).

In short, until the NFL owners drastically alter the contract structure league wide, NFL players will pad their individual stats to the detriment of the team.

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