Tuesday, January 22, 2008

The Price is Right

Grizz Offer 20% Buyout To Stoudamire
Source: Memphis Commercial Appeal

The Grizzlies recently presented point guard Damon Stoudamire with a buyout offer that would have required the 34-year-old to give back nearly 80 percent of his expected salary for next season.

Sometimes penny pinching owners get in the way of common sense on the basketball court. That is not the case this time.

Damon Stoudamire is already slated to lose 50% of his contract next season simply because the Grizzlies aren't thinking of playing him in 28 games. 55 games played is a magic number for guaranteeing Damon his full contract. So far, Damon has played in only 29 games out of 41 so he has a few more DNPs in his future here. Opening negotiations at a 60% discount to next season's anticipated salary is a good starting point. It is illogical to promote the offer as an 80% discount to his full salary when it is apparent he will only be paid 50% of that figure regardless of a buyout.

So what is a normal buyout amount? Anywhere from 50% to 75% of the existing contract has been said to be normal by some. By offering 40% Heisley has put out a low but fair opening offer (again using the reduced salary amount which makes sense). Expect Damon's agent (I believe his name is Satan but don't quote me) to counter at 50% of the total contract value (i.e exactly what he would be paid if he isn't bought out). The two sides will poster and probably continue to use the media to win the PR battle but the most likely outcome will be Damon getting bought out for an amount that is equal to or slightly greater than a 25% premium on his current reduced salary minus the league minimum salary contract Damon will sign if he is bought out.

How much is that in Dollars you ask? Simple, Damon is scheduled to make $4,650,000 next season. 50% of that would be $2,325,000. The league minimum for a veteran with more than 10 yrs experience in the league is $1,219,590. So $2,325,000 - $1,219,590 = $1,105,410. That plus the remaining full salary for this season would be a reasonable buyout option for the Grizzlies. Throw on a premium for good service to the team and you get a buyout amount of $1,381,762 or there abouts. Damon would take home more money this way than simply sitting out his contract. Memphis would get a reduced amount against the cap and the agent will get another pay day for negotiating the free agent deal.

So what the appropriate 'Mendoza Line' for a Damon buyout looks to be $1,381,762 for next year's salary. Anything above that amount has to be considered a win for Damon and his agent. Anything below that amount is a win for Heisley.

What percentage of his full contract is that amount? 29.72%. So you see an opening offer of 20% of his full contract value isn't unreasonable or at least it won't be after 18 more games. To portray the Grizzlies offer as only paying him 20% only inflames an issue that most Grizzlies fans want to see end anyway. I hope Damon's agent will stop leaking stories to the press to try and raise sympathy for his client by misrepresneting the numbers to better represent his client.

1 comment:

Anonymous said...

appreciate the analysis. thanks.