Originally Published: May 2, 2008 6:34 p.m.
Imagine being hired out of college at a salary that's 5-10 times greater than someone who has worked for the company for five years. Not possible, you say? It is if you're a first-round NFL draft pick.In this past weekend's NFL draft, the Miami Dolphins used the first pick to select Jake Long, an offensive lineman from Michigan. The Dolphins promptly signed Long to a five-year, $57.5 million deal, with almost $30 million of that figure guaranteed. The deal makes Long the highest paid lineman in the NFL. And he has yet to play a single down.All four Major League team sports have a draft, which essentially means players have no bargaining power. They either play for the team that drafts them or they don't play professional sports, at least not until after the following year's draft, or even longer in some sports. From a business perspective, it seems ludicrous to shell out exorbitant sums for unproven talent that has no leverage. Yet first round draft picks in the NFL are routinely paid more than proven veterans.In MLB and the NHL, draft picks are shuttled off to the minors for additional seasoning, which operates, in part, as a drag on signing bonuses. In addition, both leagues have a rookie salary structure that operates as a salary cap. The NBA and the NFL rely on colleges to develop their future talent. But the two leagues operate at opposite extremes when it comes to paying rookies.The NBA limits the length of a player's first contract to a maximum of four years. In addition, the league has had a salary cap since the late '90s. Draft picks are compensated on a sliding scale, based on a player's position in the draft.Last year's No. 1 pick in the NBA, Greg Oden of the Portland Trail Blazers, received a three-year, $12.5 million contract, the maximum salary allowed under the league's Collective Bargaining Agreement with the player's union. The team has the right to exercise an option for a fourth year at 30 percent more than the year three salary ($4.62 million). The No. 1 pick in the NFL in 2007, Oakland quarterback JaMarcus Russell, signed a six-year, $68 million contract, with $29 million of that figure guaranteed.Unlike the NBA, contracts in the NFL aren't guaranteed. But even though NFL teams have the ability to jettison an underperforming player, the fact remains that Russell received almost two-and-one-half times as much guaranteed money as Oden.NFL owners and players signed a six-year extension of their CBA in 2006 after union boss Gene Upshaw threatened the owners with the loss of a salary cap. Before the ink was dry, a number of small-market clubs, led by the Buffalo Bills, began a campaign to renegotiate the agreement. The concept has gained momentum and it seems likely that the league will exercise an opt-out clause in the agreement this November. If that happens, the contract will continue through the 2011 season, but the salary cap will expire in 2010.Not surprisingly, one concern the owners have with the current labor agreement is the absence of a cap on rookie salaries. The union, on the other hand, views the high cost of rookie talent as good for the veterans. The more the owners are willing to pay for unproven talent, the theory goes, the more they'll be willing to pay for proven veterans.The league counters by arguing their position will ultimately benefit veterans. Commissioner Roger Goodell, in a draft day news conference, suggested that the more teams spend on rookies, the less they're able to pay the veterans. So far, the union isn't buying.Negotiations on a new CBA will undoubtedly address rookie compensation. In the meantime, even those who benefit from the current structure recognize the obvious inequities. Former Boston College quarterback Matt Ryan, chosen third this year by the Atlanta Falcons, told Yahoo.com, "I see both sides of the argument but I'm going to take the (rookies') side now. Maybe in 20 or 30 years and I'm a GM, I'll take the other side."The league may not have the luxury of waiting that long.(Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University and teaches the Business of Sports at the University of Wyoming. Jordan can be reached at email@example.com)