Comments on: Black Coffee: My Favorite Blogs, Money News & Opinions #54 (The LeBron Who? Edition)

By: Jennifer Barry

Jennifer Barry — Wed, 20 Apr 2011 20:48:56 +0000

Thanks for linking me, Len! I found your housing stats very interesting, especially the 35% of homeowners under water. Due to this fact and the huge number of homes that aren’t on the market but owners want to sell, I’m not expecting a turnaround until 2012 at the earliest.

By: Tweets that mention Black Coffee: My Favorite Blogs, Money News & Opinions #54 -- Topsy.com

Wed, 20 Apr 2011 20:48:56 +0000

[...] This post was mentioned on Twitter by 2 Cents. 2 Cents said: RT @LenPenzo Black Coffee http://tiny.cc/vsq1z (With apologies this week to LeBron, socialists & B. Obama) <- Always a great read! [...]

By: Financial bondage

Financial bondage — Wed, 20 Apr 2011 20:48:56 +0000

You are not alone Len. I don’t idolize sports figures. They are all overpaid in my view… they should be paid for performance… $100K base salary… if you play well, you make more. Play bad, and we take money from you.

By: Len Penzo

Len Penzo — Wed, 20 Apr 2011 20:48:56 +0000

@Jen: I guess I am even more pessimistic than you. I’m not expecting any appreciable increase in home prices through 2015 – if not later. I think the damage from the previous run-up is going to take many years to fix. I attribute any tepid increases over the past year solely to government stimulus programs that have artificially propped up the market and only delayed any real recovery.
@WiseSquirrel: I was a heavy Coke drinker for years. Thirty two ounces or more for lunch, another can for dinner. A couple years ago I cut back to a can at lunch – I still love the stuff. But now I drink only fruit juice now in the evening and since then I have felt much better.
@FinancialBondage: That sounds more than reasonable to me. I don’t think LeBron or Kobe would agree though.

By: Mr Credit Card

Mr Credit Card — Wed, 20 Apr 2011 20:48:56 +0000

re: useless news

1. Guess the folks from Venezuela trying to learn from you and actually wish you were their president.

2. The folks from Hong Kong must be laughing their a** off about our fiscal situation. No capital gains tax – tax rate at 17% and still have a functioning socialized medical system! Guess they do not have to fund aircraft carriers!

By: Jennifer Barry

Jennifer Barry — Wed, 20 Apr 2011 20:48:56 +0000

That’s interesting Len! Usually when I tell people I don’t expect a bottom in the US housing market until 2013 or so, they recoil in horror and disbelief. The major ARM resets don’t end until 2013 either according to Credit Suisse, and houses are still expensive relative to incomes in many cities.

By: Greg McFarlane

Greg McFarlane — Wed, 20 Apr 2011 20:48:56 +0000

Jim Irsay, who owns the Indianapolis Colts, pays Peyton Manning $14 million annually. For that, Irsay gets about as indestructible a force as there is in pro football, the linchpin of an offense that’s a threat to go to the Super Bowl every year. Before Manning got to town, the Colts were the laughingstock of the league and the franchise value nowhere near what it is now.

Irsay didn’t remain rich enough to own a football team by overpaying people. If having Manning around is worth $14 million to Manning, you can be sure it’s worth more than that to Irsay.

I neither idolize Manning nor disdain him (same goes for any pro athlete), but exactly what good would result from paying him a base salary of <1% of what he commands on the market? Would you have the remaining 31 NFL owners collude and refuse to pay any more than that to an athlete who could enrich their teams by tens of millions of dollars?

Begrudging athletes their salaries seems to be nothing more than jealousy – the same activities we grew up doing for fun, these people worked so hard to get proficient at that they can command lots of money. Meanwhile, I'm punching a clock and trying to figure out how to pay the mortgage. It's so unfair.

And exactly how do you "pay for performance", anyway? You want to tie LeBron James' salary to his scoring and rebound averages? In other words, encourage him to shoot as much as possible and play close to the basket even when the game situation calls for him to pass or defend someone on the perimeter? And yes, let's put a coach in a position where he can draw up plays that have a direct negative financial impact on his players.

So, you argue, pay athletes for winning. How do you determine how much of each victory each player is responsible for? Should a player who works his tail off in a game and injures himself risk further injury by coming back earlier than he should, just so he can get paid more?

Maybe you could just trust that the majority of pro sports owners know what they're doing. And the few stupid ones (like the guy in Minnesota who just signed Darko Milicic for $20 million) are engaging in an exchange that doesn't affect you or me in any direct way.

By: Len Penzo

Len Penzo — Wed, 20 Apr 2011 20:48:56 +0000

Jealousy with a capital J, my friend. I don’t think many people would argue that.

I’m quite surprised you are arguing against pay-for-performance. Personally, I see nothing wrong with it – that’s how the paychecks of most non-union salaried employees in America are determined. Your arguments for not tying LeBron to a performance-based contract use the same tactics that many unions use to argue against merit based pay for their members (i.e., it’s unfair because: 1) you can’t reliably determine individual performance, and/or 2) employee performance may be impacted by factors outside their control). I don’t buy either argument. Well, check that. I don’t buy 1). As for 2), that may be true in some instances, but safeguards can always be put in place to account for such scenarios.