An incentive to pay/play well?

Are we being sensible with this for a change?
Clearly Newcastle are attempting to turn into a fine-tuned business with our approach to transfer fees and player remuneration.

A number of recent news articles about Mike Ashley have indicated a notable preference by him for incentive-based contracts in his businesses:

* It has been reported in the press that the terms of the Dunlop sponsorship between Lee Westwood and Sports Direct have been on no-win, no-pay basis

* Shopworkers at Sports Direct have recently been celebrating a massive shares windfall for exceeding sales and profits targets

* Closer to home we heard rumours of a heavily incentivized contract offer to Kevin Nolan, rather than a higher base pay contract

In this article I consider the advantages and disadvantages of so-named ‘performance based pay’ contracts and their suitability for application at Newcastle.

For those unfamiliar with the topic, performance based pay rewards employees with increased remuneration based on achievement of agreed goals on top of a ‘lower’ base pay. When applied to Newcastle United, such goals may include league position, goals scored, clean sheets, cup achievements, disciplinary record and so on.

Advantages to this arrangement can include:

* Pay motivates performance of individuals, leading to increased performance

* Personal goals are linked to the employer’s goals (in this case, better league positioning & related reward)

* A safety net for the employer where poor performance costs less

* Pay is based on current performance, not potential or past performance

Disadvantages to this arrangement can include:

* Heightened turnover of staff as low performers leave/ are scared of the challenge

* Unreasonable goals lead to demotivated staff

* Can contribute to poor teamwork as individuals concentrate on their own goals

* Can contribute to a feeling of ‘entitlement’

My position?

Simple really – it’s here, here to stay and is a great idea. We are moving into a new world of financial control within football and this will become more commonplace. Additionally, this will contribute to eager and motivated players who will get rewarded for their success. Those not willing to perform will leave or be paid accordingly.

My fear – the establishment of unreasonable goals…though surely that would never happen at our club would it?!

Many thanks to Sydney Toon for sending this article in, I’m sure it’ll provoke an interesting debate.

35 thoughts on “An incentive to pay/play well?

  1. Disadvantages to this arrangement can include:

    Another disadvantage would be players that earn so much anyway turning a stinker every now and then wouldnt dent their bank balance.

    What happened to playing for the Fans/club/pride


  2. I could see it working for minimum waged employees but egotistic players wouldnt tolerate being told they didnt play well enuff to qualify for their pay. this would lead to strikes / transfer requests etc


  3. I would love to see all clubs have an incentive based pay policy.
    Doubt it will happen as long as you have agents and the likes of Man City.


  4. Pay as you play is by far the best solution from an economic perspective. It will prevent players like Michael Owen form milking the club and is by far the most fair way to calculate wages.

    But a disadvantage that has not been mentioned here before, is that the best players in a club will want to move on if they feel the rest of the team is underperforming and preventing them form acheiving their goals.
    Like a striker that gets no good crosses or a goalkeeper with a poor defence preventing him from getting clean sheets.

    All in all it will boost the egos of football players and teams outside the Champions League will find it difficult to keep their best players, increasing the gap between the top teams and those below.

    Also players who are not favoured by a new manager or fringe players will suddenly find their wages cut and cause unrest among those not in the starting eleven, affecting the morale of the whole squad.

    In the end I think it is a good idea, but it should be approached with caution.


  5. Although it sounds like a good idea it will actually be a lot harder to implement a decent and fair system than it sounds due to some of the problems highlighted by other posters.

    Surely another big hurdle is that if we are the only team making a big thing out of inventivised pay it makes us less attractive to potential players, because they can get the same money without the loopholes elsewhere.

    Take Nolans supposed contract offer for example. He supposedly had a clause which meant to earn more we had to finish higher up the league. He would probably think ‘why should I accept a clause like that when most of my colleagues won’t have one’ and ‘what if bad managerial decisions or decisions by the board (such as the decision to sell Carroll without having a replacement organised) have a negative impact on my pay through no fault of my own’.

    Also, as mentioned previously, any disparity about the rewards on offer and the difficulty obtaining them will damage team cohesion, rather than enhancing it.

    If you were a wingers and a large part of your salary was based on your ability to provide assists from crosses, say, you may be unhappy if the fullback behind you was in poor form and it hampered your ability to get forward, or if the manager started picking you to play in the middle or at fullback to cover for injuries, for instance.


  6. Only works if every other club does the same – so it’s not going to work.

    This is Ashley and Llambias trying to take on the world – and failing. They did something simlar with the Daily Mail and when nobody else in football followed suit they just looked what they – are bunch of fcking dicks!


  7. Most major blue chip companies operate incentive schemes like this and they are very successful. There are disadvantages but the advantages far out weigh them.

    Although with the fantastic money players make it could be argued that they would not be motivated to give that bit extra to get a bonus, that depends on how much of their earnings potential is related to performance. We also know that most players are mercenaries and will move to other clubs if they are offered more money and particularly if it is guaranteed.

    In theory it should work however – the difficulty is that it is hard for one club to try and implement this when another club will just stump up the whole amount guaranteed (e.g Nolan and West Ham). Of course that means you will lose the players that can’t be ar*ed to try and earn it which may be no bad thing.

    Any bonuses should be team performance based rather than individually based to avoid the situation where a striker who has a big goals bonus written in his contract doesn’t pass to a better placed colleague and a goal is passed by. Similarly it is difficult to incentivise an individual midfielders performance. In this way you should get a team all pulling in the same direction and well motivated

    If the bonuses are aligned to the club goals e.g. position in league, progress in cups etc then that benefits the owner, the players and the fans. The problem is getting the right balance and other clubs taking a similar view. I applaud Ashley for trying to bring this into the club – Pardew’s contract is apparently heavily weighted towards performance goals and obviously a similar deal was put to Nolan who ran a mile.

    A great concept but it needs careful implementation and an understanding of some of the negatives as well as positives.


  8. Yes, Stuart; Ashley’s a total failure. That’s why his employees now have very small mortgages and he’s the only profitable retailer in the UK right now. 🙄

    Actually, there is another big disadvantage that can apply to inventives if you’re not careful (and I suspect Ashley and co will be careful so it may not apply): The ‘Pompey Effect’. They are reputed to have massively incentivised their players on things like winning the FA Cup, but failed to ensure that this incentive was directly linked to extra income resulting from the same success.

    Oops. 😐


  9. Whumpie says:
    July 20, 2011 at 16:55

    Could have sworn that the last time I looked Sports Direct sold cheap sportswear and NUFC was a football club. Think they work on very different models – could be wrong like so I stand corrected.

    Also I’m not quite sure that his employees have small mortgages considering his big bonus scheme is paid in shares and they cannot cash them in for at least a year! Unless their banks will take them in leu of actual money…


  10. lee_ryder Lee Ryder
    #nufc Reserve team have set off for Holland via the ferry

    How can the fat man be so skint??? 🙄


  11. Stu: the club has to spend less than it earns; that’s the model.

    Good point on the shares – but it doesn’t change the fact that calling Ashley’s mob “fking dicks” is fine if you’re talking about their morality or football decisions – but a bit hard to make stick if you’re questioning their ability to run businesses.

    I’ve just had a horrible thought: what does the average chav working for Sports Direct do with £20k? That’s a lot of fake bling and books by Katie Price. 😯


  12. Referring to the laying of tarmac around the pitch, it would make a great go go-cart track.
    More Income 😆


  13. Deepak: How rich Ashley is has NOTHING TO DO with how much the club has. I wish people would get this into their heads – it’s about the only consistent message we’ve had from the club.

    Why spend on flights if the ferry and a bus will do? That’s money that can go towards players, or reduce the price of season tickets. It all comes out of OUR pockets one way or another – not Ashley’s.

    Sorry to rant – especially at you – but it’s just amazing how people still don’t get this.


  14. Whumpie says:
    July 20, 2011 at 17:16

    They have £30m in the fcking bank! Jeez, man how much more do they want?!

    He hasn’t got a clue how to run a football club – simple! History shows that!


  15. Actually, I agree that when it comes to the footie side he seems pretty clueless still – albeit improving a little.

    And this idea of £30m in the bank is just daft. It’s not as if they plonk it into a separate, ring-fenced account somewhere – it just goes into the profit & loss along with all the other income.

    Besides – I know I asked this a few days ago, but nobody answered: what exactly do you want the club to do that they’re not already doing in order to get the players? Having the money is the easy bit; getting the right players without getting ripped off is a smidge more tricky than people seem to realise.

    And yes, having an MD with ANY kind of relevant experience would be a good start!


  16. Damn – good banter here, fellas, but got to go pick up the sprog and head home. Good evenin’ all!


  17. @3horswasted
    ‘ In theory it should work however – the difficulty is that it is hard for one club to try and implement this when another club will just stump up the whole amount guaranteed (e.g Nolan and West Ham). Of course that means you will lose the players that can’t be ar*ed to try and earn it which may be no bad thing.’

    No you will lose the vast majority of players, including the ones that cant be arsed – why would any player in their right mind accept a contract offering a heavy slant towards performances if they can earn the same money at a flat rate? Why would Nolan accept a contract which requires the team to finish in the top ten, when Ashley is prepared to sell the clubs only decent striker without any contingency plan, the sort of decision which directly affects our league position and therefore Nolan’s potential wage.?


  18. Whumpie- Am not meaning to bring about negativity at all mate and I have always been of the proposition that Ashley inspite of his money saving ways has been a blessing in disguise to our club.Have never even once criticized him regarding the 35mill or anything cause all I want is the team to be better with or without spending the pounds.All I was suggesting was that when you are sending a team of professional footballers to another country,you expect to send them in the most comfortable way(a flight), so that they can put their entire energy and time into their game and not opt for a cheaper,more uncomfortoble option.I get the message mate but being the owner he is always gonna be held responsible for things under him.(much like Murdoch is finding out now I guess) 😉


  19. @3hourswasted
    ” Most major blue chip companies operate incentive schemes like this and they successful. There are disadvantages but the advantages far out weigh them.”

    Comparing a football clubs operations to that of, say, a bank is not sensible. They are completely different.

    Incidentally wasn’t it the case that the huge incentives on offer to the bankers lead them to take unsustainable risks, which in turn lead to worldwide economic meltdown?
    Or is that what you meant by ‘disadvantages’


  20. Look I wish we could get football players to live in ‘the real world’ in terms of money – its disgusting that footballers earn more in a week than most people earn in a year. Nevertheless, unilaterally imposing a policy like this just won’t work. It will just make Newcastle less desirable to play for.

    Again I ask those in who think this will work a simple question:
    Would you be prepared to sign a contract that required a top ten finish, when your boss has previous history of selling your best striker without any contingency plan?


  21. Deepak. Still rather have Barnetta, but would not be disappointed if the deal went through. However, we will wait for the photo with the shirt.


  22. It will be a good hoot on the ferry across to Holland. The last time I went over I was blattered. Mind you with a reformed alcoholic and a bunch of sixteen year olds I don’t think they will be at the bar most of the journey


  23. Mark – I guess I would too mate but dunno about his ability to stand up to the physical nature of the Premier league.
    Premandup – Exactly my thoughts mate..would much rather have Barnetta.Younger,Pacier and a winger.But as you say,would not be sad if this comes off.5 million plus Aquilani for Enrique would be nice.. 😉
    Then go spend the 5 miilion on that M’Bengue lad.. 🙂


  24. Not sure the following is a disadvantage:

    Heightened turnover of staff as low performers leave/ are scared of the challenge

    I don’t want low performers or are chickens 😆


  25. @DeePak: That video i think even rooney twitted it and also salute that guy,who being such as a troll. 😆


  26. A relative of mine started playing in the 60’s, he got a set weekly wage but that doubled if he was in the 1st team. Got a bonus for a win, draw, crowd size etc. I really think thats the sort of thing we should go back to now, maybe not thw crowd size but the rest of it would be fine. Make all players do their best and help the team and entertain the fans.

    An idea a mate of min came up with is, have a set wage per club per division, for every year a player stays, his pay goes up, but if he moves, drops back down and has to start again. Would hopefully give loyalty to clubs. Downside I suppose would be players from abroad might not want to know, but may help clubs from all the debt problems.


  27. I think we are all assuming that Newcastle will not perform well this season because we havent brought in any highly paid superstars.

    It is of course possible that we could play well and end up comfortably in the top half.

    Let’s not forget that we have 4 new players so far, 3 or 4 stars from last year and
    a few healed cripples. Thats almost a new team.

    We are not looking for the 30 year old megastars on a hundred grand a week. We are looking for up and coming talent that can be nurture, developed and payed peanuts over 2 or 3 years until we can sell them for a huge profit and replace them with more up and coming talent.

    No, but in all seriousness, it really is time that these overpaid posers took responsibility for their own performance.

    Personally I think performance based incentives will encourage them to play more together – and not as individuals


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