Compensation Design Group Has Perfect Solution
For Top Performing Baseball Players

NEW YORK, NY - March 26, 2002 -- With opening day just around the corner, baseball fans will have an opportunity to see which players worked out the kinks during spring training and which ones deserve the outrageous salaries they're commanding, according to Frank Glassner, CEO of Compensation Design Group.

"Some players are paid like the CEOs who run companies in trouble," said Glassner, a 26-year veteran of executive compensation. "They are paid for lackluster performance. An ideal salary plan for players would be one based on the same principles and procedures used for successful businesses - a plan based heavily on incentives for performance."

"The current salary structure in major league baseball is bloated and obscene," said Glassner. "Exorbitant sports salaries and compensation packages have become synonymous with the player as 'pay for ego' vs. 'pay for performance.' Last year, baseball's average salary hit the $2 million mark, up 12.8 percent from the previous year's average."

In Glassner's plan, players would receive a base salary determined by multiples of previous batting averages or pitching records. They would earn set amounts for each of a list of positive accomplishments: $10,000 per home run, for example, $2,500 for a stolen base, $25,000 for a pitching win. In addition, there would be bonus payments for winning championships or for being among league leaders in various statistics.

Like every successful business person, Glassner believes that risks should accompany opportunities. With this in mind, his plan would levy a $1,000 tax for every failed steal attempt, a hefty $5,000 for bouncing into double play, $1,000 a strikeout or error.

Taking this plan and applying it directly to New York Yankees' shortstop Derek Jeter, for example, might look something like this:

Based on his performance last season, Jeter's salary would be $1,881,500. Under Glassner's plan a player gets an additional $50,000 for making the All-Star team, $150,000 for winning the League MVP. Leading the league in any of the following categories would get a player $50,000 per category: batting average, home runs, RBIs, hits, doubles or triples. If a team won the World Series, each player would receive an additional $100,000 bonus.

"Under this plan, if players performed at their maximum, they could actually earn their current mega salaries," said Glassner. "The incentive to perform at their optimum would be simple: better performance, more money."

Glassner said that the incentives in his plan are the basics of any solid compensation plan in a corporation. "For the sports world, I believe that one more incentive might be appropriate: a bonus based on being a good role model for kids," said Glassner. "Whether players like it or not, they are in the position of being role models. Under an ideal compensation plan, players who perform community service and work with children would be properly rewarded."

Glassner also believes that fans should have a say in a player's bonus program. "In a corporate structure, directors would vote on bonuses as rewards for performance and efforts. Baseball fans are, in effect, a baseball team's shareholders," said Glassner. "In that sense, they should be given the opportunity to vote on a player's season-end bonus. With input from fans, rookies who are stellar performers would be properly rewarded and players who demonstrated poor performance throughout the season would get what they deserved."

The pay for performance concept is applied to corporate executives across the country today. "Why not apply this same concept to professional athletes?" said Glassner. "Especially now, as salaries have skyrocketed at an alarmingly high rate."

Glassner poses a few questions to sports fans: "Why should the owners and fans alike have the guts to challenge the players and instill a pay for performance philosophy along with the rest of America?" he asked. "Why not continue this complete insanity in sports compensation: huge salaries coupled with poor performance; lack of team work; brutal money raids on baseball, football and basketball teams; wild-eyed agents flying around the country in Lear jets with huge sacks of cash and mind-bending contracts for any player willing to challenge their team's owners and any group of owners willing to pay the ransom for this form of extortion?"

Although Glassner strongly believes his plan would work, the union might be a major obstacle to implementing such a plan. "This organization has, in its lifetime, become a legalized and unregulated monopoly with power that amounts to life or death over the fate of baseball salaries.," said Glassner.

Unfortunately, Glassner notes, in the end the fans are the ones who lose if the current system continues. "If sports teams dared to adopt a pay for performance plan, it could actually improve the game," said Glassner. "Players may become more motivated to improve skills and undertake a training regime reflective of their salary. Owners certainly wouldn't complain about rewarding performance. And the real winners would be the fans. They would get to see an improved game with all players trying their hardest, no matter where their team is in the standings."

Compensation Design Group is headquartered in New York, with offices in Chicago and San Francisco. The firm focuses on delivering cost effective and customized compensation, benefits and human resources programs.

COMPENSATION DESIGN GROUP BASEBALL SALARY PLAN

Base Salaries:

Veterans would be paid a base salary that is based on their prior year's batting average using the following formula:

B.A. x 1 million x multiple = base salary

The multiples are as follows:

BA under .100 = 5 multiple
.100 - .150 = 1
.151 - .200 = 1.25
.201 - .250 = 1.5
.251 - .300 = 2.0
.301 - .350 = 2.5
.351 - .400 = 3.0

So, if a player hit .155 last year, his base would be:

.155 x 1 million x 1.25 = $193,750

A .330 hitter would make:

.330 x 1 million x 2.5 = $825,000

Base salaries for pitchers would be as follows:

Multiple x 100,000 = base salary

The multiples are as follows:

ERA under 1.00 = 8 multiple
1.01 - 1.50 = 7
1.51 - 2.00 = 6
2.01 - 2.50 = 5
2.51 - 3.00 = 4
3.01 - 3.50 = 3
3.51 - 4.00 = 2
4.01 - 4.50 = 1
4.51 - and above = .5

So, if a pitcher's ERA was 3.70 last year, his base would be:

2 x 100,000 = $200,000

A pitcher with a 1.25 ERA would make:

7 x 100,000 = $700,000

Rookies (both batters and pitchers) with no prior major league numbers would be paid the minimum of $100,000.

Add for each offensive stat:

Add for each pitching stat:

Add for each defensive stat:

Bonuses:

Subtract for each: