Sunday, October 25, 2009

Michael Crabtree Contract

With Michael Crabtree set to take the field with the 49ers against the Houston Texans this weekend, it is worth looking back at his contract holdout to illustrate the economics of his decision.

Crabtree was drafted 10th overall in the 2009 draft by the San Francisco 49ers. He was unhappy being slotted as the 10th best player and instead wanted 7th pick money. Oakland picked another wide receiver, Darrius Heyward-Bey, in the 7th slot. Crabtree argued because conventional wisdom said he was better than Heyward-Bey, he should be paid like Heyward-Bey. Heyward-Bey's contract is $38.25 million likely over five years with $23.5 million guaranteed.

According to media reports the 49ers suspended talks after offering a $20 million contract with $16 million guaranteed. Crabtree did not sign for 71 days after the start of training camp and was not on the roster for the first four games of the season. Crabtree reportedly signed a $32 million contract with $17 million guaranteed and has a voidable last year of his contract. His contract will pay him $19 million over 1st three years, $23 million over 1st four years, 28 million over 1st five years, and $32 million over six years. There are another $8 million in incentives.

Let's take a look at some comparable contracts. Jerod Mayo who was drafted in the same 10th spot the year before signed a five year deal with $18.9 million likely with $13.8 million in guarantees. BJ Raji who signed one pick before Crabtree in the 2009 draft got a five year deal for $28.5 million with $17.7 million guaranteed. Aaron Maybin who was signed as the 11th pick in the 2009 draft after Crabtree got a 5 year deal for $24.6 million and $14.24 million guaranteed.

Virtually all of the stories I read were how irrational Crabtree was with his holdout and the circus surrounding MC Hammer and Crabtree's "cousin and advisor." My take is Crabtree may be a shrewd businessman. From a contract perspective Crabtree was not obligated to sign the contract. When an office worker gets a job offer and then "holds out" for 6.25% more in guaranteed money, his family and friends congratulate him and have no ill will for acting in his own best interest. Why should The Crabtree case be any different? Just because a 22 year old will get more money than most people do in their lifetime doesn't mean that he is obligated to concede to the team offer. Most players in Crabtree's position have one, two, or at most three such contracts in their career. They should maximize their opportunities.

What did Crabtree live on while he was holding out? Did he stock up on Ramen Noodles and packages of Mac and Cheese like many kids right after college? Did he take out a loan based on expected future earnings? According to his agent, Crabtree has deals with Subway, Jordan Brand, Topps, and Upper Deck. His deals have brought in over $750,000 which probably means that Crabtree is not feasting on Ramen Noodles regularly.

What about other ill effects of the holdout such as losing out on 4 games worth of salary, ill will by teammates and fans, and possible worse performance by not participating in training camp and learning the playbook? From a salary perspective Crabtree likely would have close to a minimum salary in 2009 in the range of $310,000 to maybe $500,000. Missing ¼ of his game checks would mean that he would lose between $77,500 and $125,000. Given his increased guaranteed money, it seems like a good investment. In terms of the fans, other players, and his development, Crabtree better make sure that he performs to ensure that he can get another big payday when his contract expires in five or six years.

The discussion around the upcoming Collective Bargaining Agreement (CBA) renegotiation has rookie salaries as one of the top issues. The fact that a player could get more money by skipping 25% of his first season should be addressed in these negotiations.

Crabtree contract details:

Crabtree negotiation details:

Crabtree sponsorship details:

Other 2009 rookie contract details:

Mayo contract details:

No comments:

Post a Comment