Fairness

Why Overpaid Quarterbacks Are Losers

The science behind team success

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By Lixing Sun

For a long time, it wasn’t easy to be a Seahawks fan. People would look at you sideways, as if asking, “Are you serious?” And one thing you could be guaranteed was disappointment—year after year. But that was the 1990s. Today, if you wear a Seahawks jersey, chances are that you will be greeted with a proud hooray—“Go Hawks!”—anywhere in the Pacific Northwest.

The Seahawks made consecutive trips to the Super Bowl in 2014 and 2015, winning one and nearly the other. A key to its recent surge lies in the leadership of the quarterback Russell Wilson, whose salary was $526,000 and $662,000, respectively, for the two years, far below the team average of about $2 million. What could a low salary do to Wilson as a team leader?

After some data crunching for the regular season of 2015, I found an NFL team that paid top dollar to its starting quarterback tended to do worse than that paid moderately less (see the chart drawn for the top 50 players for each of the 32 teams). No wonder the Saints have complained that Drew Brees is being paid too much ($23.8 million in 2015).

lixin

The chart shows an inverse-U relationship between performance and reward, also found in many similar psychological studies. Why could this be so?

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The answer lies in the fairness factor as I have elaborated in my book, The Fairness Instinct: The Robin Hood Mentality and Our Human Nature. For any organization, whether it’s a sports team or a business, if leaders take too much, they can jeopardize their credibility and demoralize those on the lower rungs. A larger difference in pay scale, as many studies show, will lead to a poorer performance for a pro basketball team or lower-quality products for a corporation. That’s why overpaying your quarterback will compromise your team performance.

If the Seahawks were lucky enough to pick up Wilson in the 3rd round (#75 overall pick) in 2012, the payoff for the franchise was redoubled when it paid the then unproven quarterback a dirt cheap salary—it helped Wilson quickly establish himself as the leader of the team.

Of course, Wilson isn’t the only talk of the town in Seattle. Dan Price, CEO of Gravity Payments, is another. Struck by an epiphany one day in early 2015, Price jumped out of his bed and announced to the world that he was to slash his own salary of $1.1 million by 90% and set $70,000 as the minimum wage for his company. He did so because he wanted people to be happy. And the $70,000 income, as studies show, brings the highest level of happiness. But the radical move stunned the nation and set off a firestorm in the media, drawing loud cheers as well as fierce denunciations.

Mr. Price may or may not know people see fairness very differently, from equality in opportunity to equality in outcome. Humans by nature are competitive, striving for relative advantage over their peers. For any organization, while extreme unfairness will incite internal strife, equal pay for all without merit will also kill the motivation to perform. So, there is a window where the fairness factor works the best. That’s what the inverse-U curve is all about.

Furthermore, low performers tend to prefer equality in outcome whereas high performers lean to equality for opportunities. By setting a high minimal wage and compressing the wage difference within his company, Price, while popular among low performers, reportedly faced the challenge of retaining high performers from financial lures from outside. Gravity, according to some nasty critics, would soon be nothing but a company of secretaries and janitors. Talk show host Rush Limbaugh trashed Price’s “experiment” as “socialism,” predicting, “it’s gonna fail.”

Obviously, these doomsayers forget that money is not the only incentive. Psychological and social wellbeing can also be potent rewards, which apparently have worked well for Gravity. A recent article in Inc., reports that Gravity’s profits have surged and the retention rate for the past three years has risen to 91%, well above the industry average of 68%. Moreover, Gravity has been flooded with applicants, including top talents like Tammi Kroll, a Yahoo executive, who would take a pay cut of 80-85% to work for Gravity.

Of course, it’s still too early to declare Price a winner in playing the fairness card. But as a Seahawks fan, I would be more worried about the Seahawks’ performance next season. Wilson’s salary was 2.83 times of the team average in 2015, but this ratio will shoot to 9 in the coming season. You can look at the chart to see why I am worried.

Illustration credit: Elliot Gerard. To see more artwork from Elliot, follow him on Instagram and Twitter @elliotgerard

2016 January 29


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  • Dawson Steele

    The author’s general point that greed at the top doesn’t inspire the machine below it seems quite reasonable to me, but any real understanding of what actually occurs in the NFL deeply undermines his particular choice of analogies to the point where this article simply isn’t valuable.

    The author – who claims to be a Seahawks fan but apparently does not understand how football contracts work – shows a data set that is massively skewed by the fact that NFL salaries are always outsized for quarterbacks, and that QB salary decisions have far less to do with “fairness” or the relative merit of a QB and far more to do with which QB’s contract is up most recently. The passers who earn the most money each year are the ones who are the next to re-sign, because if they do not get big money despite their relative mediocrity, another team will poach them. (Joe Flacco, Phillip Rivers, and Eli Manning were all marginal QBs who re-signed for big money in 2015, skewing the numbers in the author’s favor).

    Secondly, unlike in business, a football is a team game played under a salary cap whereby all player salaries must fall under a collective limit imposed by the NFL. One would think this would support the author’s point, but it actually doesn’t support it in practice. A QB’s ability to produce on the field has very much to do with the talents of his teammates who support him. In this sense, teams that convince their star players to play for less can afford to sign better complementary players, precisely because NFL players rarely if ever take a discount to join a winning team. A key example here that massively skews the 2014/15 stats in the author’s favor is leading QB Tom Brady, who voluntarily earned almost ⅔ less than his market value so that the Patriots could put strong players around him in a quest for another championship and still fit under the salary cap. This was not a decision made by Patriots management, but a voluntary decision by Brady because he wanted the team to sign high-priced free agents and knew those free agents would not take a discount to join the Patriots despite their record-breaking success for 15 straight years. The Patriots promptly used Brady’s money to sign Darrelle Revis to the richest free agent defensive player contract in NFL history and won a Super Bowl. Nevertheless, Revis walked away from this contract a year later to join a losing team that did not make the playoffs but offered him more money. This is par for the course in football.

    Most damagingly to the author’s analogy is the current 2015/16, where, despite the author’s worries, Russell Wilson signed the second-richest contract in NFL history and enjoyed by far the most successful individual season of his career, leading the NFL in most major passing categories. The only player to have a better season at QB? Cam Newton, who was the highest-paid QB in the above chart, is likely to win the NFL MVP and is leading his team to a Super Bowl against another QB (Peyton Manning) who is in the upper tier of NFL salaries. Another pivotal player? Aaron Roders (the highest paid player in the NFL). In fact, the only key player not to be amongst the top 5 highest-paid players in the league was Tom Brady, and that was only because of his aforementioned volunteer arrangement. (An arrangement that hurt the Patriots this year as they were not able to find additional players to join them at a discount and lost in the playoffs specifically because Brady’s good deed didn’t inspire others to join his team).

    Again, I love what the author is trying to convey here, but in sports, top talent tends to win, and that talent does not come cheap. The author’s moral underpinnings are admirable, but his selective use of data simply doesn’t work.

  • armorandwings

    This is not a well thought out article at all. In the NFL in particular, pay is a lagging indicator of performance. He didn’t choose to get less money those early years; he was simply under a contract that predated his success. Once he was successful, he cashed in (see $87M 4 year contract). That’s not because he was a different person motivated by coherent things all of a sudden.

    Second, the institution of a salary cap means that as a QB pay increases there is less to be divided amongst the other 51 men on the roster, limiting the overall team quality generally speaking. The NFL management’s goal with the cap is to create some level of parity to ensure that the league as a whole remains competitive and interesting.

    Third, winning is a team result, not a QB result. While Russell Wilson was important to the Seahawks SB victory, it would be reasonable to argue that he was modestly less important than a few of his teammates. That team had the league leading defense in virtually every category and a premier RB in Lynch. In the Seahawks SB victory, for example, they scored a safety (that had nothing to do with anyone not wearing an orange jersey), an interception TD, a kickoff return TD, two FGs and a rushing TD in addition to passing TDs. How do you allocate those accomplishments to Wilson?

    This article unfortunately was written by someone stretching a bit too far beyond their grasp.