Dallas-Area Teams Face Financial Problems With “Dead Money”
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Rangers Still Paying
For Signing Of Rodriguez |
Dallas-area pro sports teams will pay out almost $150M over the next few years
in “dead money,” the term used for money paid to players who are either retired
or playing for another team, according to Mike Heika of the DALLAS MORNING NEWS.
Former Stars RW Bill Guerin agreed to a $4.4M buyout this summer; Spurs F Michael
Finley received a $51.8M buyout from the Mavericks last summer; and Yankees 3B
Alex Rodriguez will get $67M as part of his trade from the Rangers in ’04. MLB
Rangers and Stars Owner Tom Hicks: “It really is just ‘sunk cost,’ and I see that
in every business I have.” But Hicks added, “There is one that really bothers
me. We signed [RF] Juan Gonzalez to a two-year $24[M] contract (in 2002) and got
absolutely nothing out of him. Well, $12[M] of that money was deferred over a
six-year span, so we pay for that mistake every year, and that was just a horrible
decision by the organization.” Hicks said that he now “think[s] twice about offering
long-term free-agent contracts.” Mavericks Owner Mark Cuban did not comment, but
he indicated on his blog after the Finley buyout that “the way he does business
is changing.” Cuban wrote, “I was guilty of being overly optimistic. I wanted
to believe that the next deal was the one that was the difference maker.”
NFL STRUCTURED DIFFERENTLY: Heika notes the Cowboys “have a different kind
of dead money,” as NFL teams “often pay big signing bonuses and then take salary-cap
hits at the end of the contracts if things don’t work out.” However, with NFL
contracts not guaranteed, clubs can “release a player and terminate the contract
without paying it in full.” Cowboys VP & COO Stephen Jones said, “When you give
a bonus, that’s it. It’s done.” He added that the Cowboys “like to keep their
payroll about 8[%] below the cap and have recently avoided long-term deals that
could create salary-cap mayhem” (DALLAS
MORNING NEWS, 8/11).
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