Discussion in 'Yanks Abroad' started by olafgb, Aug 27, 2002.
I nominate this post for post of the year !
$$'s a bit off but............
donovan9...you're giving away all the secrets.
Congrats to Karl Keller!
Re: Re: Good for MLS
For the 10,000th time people, no club can make a player do anything. And if they were to play hardball with him they'd really do themselves a huge PR blunder and cause potential problems in attracting other players to their club. Take Paolo DiCanio for instance. He got in a huge spat with Celtic. They said he'd play for them or no one because he had a firm long term contract. Within 2 mos. he'd been transferred to Sheffield on the cheap. I don't doubt that Bayer own him outright and that MLS has NO rights to him other than what Bayer graciously provides. But if Landon wants to play in MLS, then Bayer has to listen and listen carefully. Simply selling him off to somewhere he doesn't want to play solves no problems for them. Bottom line, even players under firm contracts have a big say in their futures.
And this notion of the buyout clause conversation is probably preposterous as well. Bayer is simply waiting because they know he'll raise a huge f'in stink if they call him right now. They're hoping he'll change his mind about Europe and that he'll either play for them or they'll be able to exact a bigger transfer fee for him later.
Nice Post, Karl !
Kudos to you for figuring out what is likely going on here, although the dollar amounts you are throwing around are too low. All of your thoughts are plausible, even more probable than mine (!), but I still think everyone is denying MLS' contractual rights in this discussion. This is not, and has never been, a discussion solely between Landon and Bayer.
Thanks also for taking the time to read my thoughts and at least acknowledge the logic behind them, even if the conjecture is ultimately proven to be wrong. I often torture fact patterns to discern all possible permutations, but that's an occupational hazard for a corporate attorney who works with contracts all day.
EVERYONE brings their own prejudices to the table in these discussions, myself included -- but I can walk away from these postings without feeling emotionally involved, despite the rhetoric. Obviously, not everyone can. I never mind anyone arguing a point logically, but to hear someone exclaim "you idiot" (or words to that effect) in a one line post while slinking off into the background proves that they can't string together coherent logical thoughts -- which is too bad for them. No skin off my back.
Back on topic:
If I were in Landon's position, and I had a $5 million buy-out clause at my discretion (and we agree that Landon is worth MUCH more to NIKE/MLS than $5 million), why even bother with the posturing? If one party has all the leverage, it's not called a negotiation, it's callled an imposition by fiat. MLS spent that much for Luis Hernandez, and, at the moment, Landon's PR value is infinitely higher than Luis' ever was.
Have NIKE/MLS cut a check, his rights revert ENTIRELY to MLS, and MLS can sell him to Europe (with NIKE's approval, obviously ) when they're good and ready.
That would end all the discussion right now.
As Olaf points out, Bayer (from a time-value of money perspective) is better off taking the $5 million today than $5 million in a year or two -- unless the buy-out has an escalator. Questions upon questions...
If the transfer market rebounds (and Landon becomes worth, say, $12-15 million), why would Landon/MLS ever allow Bayer to negotiate a fat transfer fee on Landon's back, if they could get ALL of that fee AFTER paying Bayer much less?
I'm also troubled by Calmund's unequivocal denial of the existence of a buy-out. Why? Because clubs often have a terse "no comment" at the ready, if nothing else for PR purposes. If Calmund is NOT lying, then Landon has a problem. If Calmund really IS lying, then why is Landon even negotiating? Once a liar, always a liar... Strike One: Landon doesn't make the bench in Leverkusen for a meaningless game when promised. Strike Two: Calmund lies about the existence of a buy-out. (Possible) Strike Three: Bayer "promises" to give him game time? Hmmm... Time to cut bait, don't you think?
Finally -- and, from my perspective, most importantly -- I believe Landon's own words (not ANYONE else's) when he says "it would take a perfect situation for me to leave." Based on everything he has said to the press and since he has returned from the World Cup, does ANYONE really believe that he would simply return to Bayer if they promised (even in writing) that he would make every gameday 18, when healthy? If he doesn't want to go back to Bayer NO MATTER WHAT, what's left to negotiate?
Use the buy-out, and get control of your own destiny. Simak threw a fit and got transferred to Leverkusen from Hannover 96, for heaven's sake, so it's not like having a club ticked off at you for acting out is professional suicide!
Man, what I wouldn't give to actually read this mythical contract with my own eyes when all this is done and over! Must be a piece of art...
Re: Nice Post, Karl !
I think the case of Simak is different. His Czech agent cooperated with agent firm ROGON for the German market. ROGON is having giant influence in Kaiserslautern (almost all their players are under ROGON contract) and they used Simak like a puppet on a string to get him there. Simak himself hardly speaks German, he didn't really know what he was doing (can also be seen nicely now: in Leverkusen he's giving all interviews in his language and uses an interpreter). Landon is also no "evil" person, just a little clumsy and uncautious with the things he's saying.
Buy-out option: the only case in which Bayer had a buy out option in a contract in the last years, was Ballack. But in that case everyone knew about this option. And generally the media is always very well informed about these contract details - in case of Donovan there weren't such reports, which makes me believe there is no option (and as you said, when asking Calmund for the option he clearly said "such an option doesn't exist" - usually if it's true, a GM says "no comment").
However, all we can do is believe that there is or there is no option. In any case we'll see in the future. Either when he really is transferred or when he signs a new contract in Leverkusen as then the details of the old contract will be known by the media.
I, like most everyone else in this conversation, really have no idea about this contract and its details. Most of these comments are pure speculation, informed or otherwise. However, I do have some questions. If there is no buy-out clause, what possible reason would Landon's dad have to come on a message board and lie about it? Do you really think that a teenage kid, which was what Landon was when he signed the contract, doesn't discuss such matters with his folks?
Hey, maybe there are reasons I just don't see. Or, maybe Tim is just a pathological lier. Or, maybe he just gets his kicks running message board posters in circles. I just kind of doubt it.
Re: Re: Re: Good for MLS
If Bayer own his contract out right, then they have 100% control over his registration. They could refuse to loan him out to anyone if they chose. Ya, DiCanio was sold outright. But how many players end up languishing, lucky to even make the bench? DiCanio was special since he had a high wage bill & was in demand. I doubt Bayer is concerned about tkaing on all of LD's wages and letting him ride the pine for the reserves.
It may surprise you, but an incredible number of soccer players don't know what exactly they are signing (just as any other employee) - often the agent and the clubs are the only ones being informed about all details. And I don't know Tim's profession, but personally I'm just asking my dad in job matters as he's in the law/taxation business (and I wouldn't ask anyone else in the family as they are having professions not related to these matters). Especially Landon's naive past in Leverkusen makes me doubt that they were incredibly clever regarding the contracts.
Re: Nice Post, Karl !
Gosh Maverick, your post started out so promising, but then ...
This is just silly. Whatever, the $ attached to the buyout clause is, it is less than Landon's actual value as evidence by the apparent fact that someone is willing to pay it so easily. When you have a choice between selling an asset at below market value or keeping that asset with the possibility of getting a loan fee, the obvious anwer is that depite the loss of two years interest, wait and collect the fee later. It is also possible that Leverkusen will be able to later arrange a sale of Donovan at a price higher than the buyout clause to a club Landon likes and then both Leverkusen and Donovan profit from waiting. It's the only intelligent business move.
Of course what Karl Keller wrote was blatantly obvious very early on in this thread. One or two posters seemed intent on convoluting the obvious.
Re: Nice Post, Karl !
This make no sense. The value of a contract goes down, not up, as it nears completion. It would take a special kind of stupid for some team to pay a high price for Landon right before he's available on a free transfer.
Man, you got me, darn it!!! And I thought I was REALLY smart!!
Sometimes, things are very simple.
This is EQUALLY obvious, but when you look at a situation, you have to look at the whole context.
Some posters here seem anxious to have BL take the buyout money. Why? These guys are no dummies.
They have rights to a VERY talented, VERY young player, with a good head on this shoulders who has CONSIDERABLE upside. Last I heard, such players are hard to find. Why give up on him now? Better to wait and get him over there when the circumstances are right.
And you know what? Circumstances can change fast. Suppose one of their front runners tears an ACL, say, in early November. Klaus tells Calmund to call Landon, amd tell him he starts as soon as he comes over there.
Landon loves to play -- and long plane rides to get to a game don't seem to be a particular issue for him. He's 20 years old AND from what I can see, not particularly prone to injury.
This is a drama with 5 Acts, and we are in the middle of Act 2. We have yet to see how the whole saga will unfold.
Re: Re: Nice Post, Karl !
Umm... not always.
Landon's contract is up in 2007. He's 20 now. It's very conceivable that a buy-out have an escalator according to, say, National Team appearances or age. The value of a contract goes down the closer you get to completion only if the asset stays equally valuable. If Landon continues to improve, the "value" of one year of his services in 2006 might be worth considerably more than the present discounted "value" of five years of his services at his current performance level.
Pulling numbers out of a hat: 2002 = $5 million, $2 million each additional year, resulting in a $13 million buy-out after World Cup 2006 (if he's on the roster) with one year remaining on the contract. It's like a swap contract: Bayer takes the risk that Landon is worth more than $13M in 2006, Landon takes the risk if he's worth less than that. Given that Landon may well be starring for the U.S. attack in Germany during the World Cup, that $13 million might look pretty good for other clubs, right?
Why would a club take a risk on Landon? Well, they have an exclusive right to negotiate an extension. They get him for a year. That's certainly worth something.
Glad we agree it's a saga.
Re: Re: Nice Post, Karl !
First, how do you know MLS is paying a loan fee? Even if the loan fee exists, it is probably relatively minor (e.g., covers Landon's salary), certainly not enough to cover the lost "interest." Also, interest need not only be monetary. Let's say Bayer turns around and invests the buy-out in a young Brazilian stud who bocomes worth 4 times that in two years. That lost opportunity cost is substantial, worth much more than the mere dollar value of the buy-out in 2002 money.
Secondly, why should Bayer profit from Landon's development in MLS? In your scenario, let's assume LD's buy-out is $5M and Roma is offering $10M. Why should Landon get $1M (approx. 10% of transfer fee) leaving the rest to Bayer, when he can pay Bayer $5M and pocket the other $5M for himself?!? That, my friend, is the only intelligent business move.
Of course, all this assumes that there's a pure buy-out at a fixed dollar amount...
Maverick, so you're a lawyer, eh??
Meanwhile, I have just a few inviolable rules in life.
One of them is "issues and ideas, not people and personalities." If you are discussing ideas, best to keep the personalities out of the discussion. Or, "it's about the 'this, these, those and thats' not the 'he, she, we, or they.' "
Not that I always follow the principles, but I try.
This way, the discussion doesn't get cluttered.
My guess is that MLS have very few rights in this deal. Their power resides in the fact that Landon likes it here; I am sure they are leveraging that power when appropriate.
By the way, as someone who has been involved, like you, in a few negotiations in my time, this one has all the classic issues and constraints.
When you are in a negotiating situation, one of the first questions you ask is, "What are the time constraints in this deal?" In this case, both parties have LOTS of time. Because they do, there's no need to barge right in and solve the problem.
Or, as one of my B-school profs once told me, "Do you let the stew simmer, or do you bring it to a boil?"
Things are on VERY low heat right now...appropriately so.
Re: Re: Re: Nice Post, Karl !
Not when they can sign him the next year and save that $13M.
What you're suggesting is that there's some clause in there that only makes sense if the water runs uphill. Hey, there was an earthquake around 1820 that caused the Mississippi River to run upstream. So it's possible.
But not likely.
Maverick, in the US, when a player is traded, his contract goes with him.
In European soccer, when a player is sold, the custom is that the team and the club sign a new contract.
Either you're unaware of this, or I have no clue at all what you mean about "getting him for a year" and an "extension."
Re: Re: Re: Nice Post, Karl !
It's not about what's fair, it's about power. The power each side had at the contract signing, for example.
You're assuming that Roma would just give Landon that $5M.
Why would they?
Overall, you strike a cord, but I doubt that there is really no pressure to come to a solution soon -- November 1, 2002 is a trigger date (at least as far as Bayer and MLS is concerned), whereby IF Bayer doesn't recall LD, THEN MLS shall have his rights for another two years (I glean this from the MLS press release trumpeting his new deal). The fact that the negotiating window closes for two years after Nov. 1 may put considerable pressure on one side or the other, depending on which one doesn't like the status quo.
I also think that you're understating MLS' importance as a contractual party. They are not merely a third party beneficiary, they are apparently a signatory, with concurrent negotiated rights that no-one here is aware of in the details. Trilateral negotiations are inherently more complex than bilateral ones, all other things being equal.
Lots of clubs, even in Europe, trade for players with only a year left on their contracts. While it is custom for players to renegotiate with their new club, it is not required, so any club could buy a player and refuse to renegotiate, thereby getting use of that player's skills for a set time. THAT has value. Furthermore, the exclusivity window is extremely valuable. Many clubs HATE waiting for a player to become available on a free, because that often starts a bidding war. For example, Kirovski's loyalty to Bruce when he moved to Birmingham is notable, but unfortunately rare. If that exclusivity window results in a new, longer contract being negotiated, that's even better. That could be worth much more than, say, $13 million.
If this logic appears to you to be equivalent to water running uphill, then don't take a MENSA test any time soon.
My question about Bayer reaping what MLS sows is all about power and nothing to do with morality. IF there is a buy-out, at whatever nominal sum (if that's indeed what the buy-out is), a player will ALWAYS exercise a buy-out when his market value is higher because it will result in a higher salary. As for Roma paying the full $5M to Landon in my hypothetical transfer, that's hypothetical. Even if they were to offer between $7-8M, then Landon would still exercise the buy-out because $2-3M is more than $1M. Why would Roma give Landon the whole $5M?
Think about it: Landon KNOWS his market value approaches $10M, so he buys out Bayer at $5M and says to the market, "make me whole, and then pay me the biggest salary you can." Market forces will pit Roma against, say, Barcelona and Liverpool, and Landon ultimately ends up with something close to his market value of $10M (which puts him right about where I stated). Of course, this assumes that his market value is $10M, but if you agree that's what Roma is willing to pay Bayer, everything else falls into place.
All things being equal, Roma doesn't care who they give the money to, so long as they get Donovan.
[shrug]If you still don't get any of my arguments, then I can't help you, and I'm not going to bother replying.[/shrug]
So you are talking about a signing bonus? Not sure if that is common place in Europe as few players of worth leave on a free. However, it seems unlikely to me that a team is going to give a transfer fee to a player they are signing on a free. The bidding war is usually based on wages.
Also, any time a club buys a new player they always renegotiate the players deal. Deals fall through because the buying team could come to personal terms with the player. No is going to agree to a move if the new club is refusing to renegotiate the deal.
Re: Re: Re: Good for MLS
And how would it help them to bring Donovan in? Hes not good enough to start for them. I dont think Leverkusen will have the trouples as you think they will, i dont think they will win the league but i think next season if they keep their young players together they will win the Bundesliga next season.
Do you have a link for this release? Couldn't find this on mls.net.
Yes, if Landon were to exercise his buy-out, he would be negotiating a signing bonus which would retroactively cover the cost of the buy-out. Actually, more and more players are taking advantage of the Bosman ruling for precisely that reason: once they are a free agent, their wages stand to go up considerably once a transfer fee isn't in the picture.
You're right that no-one is going to give a transfer fee for a player on a free, but a player with one year or more left on his contract is an entirely different story.
Renegotiations when players move "up" the club ladder inevitably results in a bump up in salary, whereas moves "down" the ladder, particularly down a division, often results in renegotiations for a smaller salary. That's why many players have a relegation clause in their contract, because a player would rather move on to a bigger club, while the club doesn't want massive wage obligations weighing the balance sheet when income (including television money) cuts back dramatically. Most recent example, Regis to Troyes from relegated Metz.
Sometimes things don't work out, that's right. In Lewis' case (which is what I think you're referring to), I think Tigana actually managed to screw him AGAIN. Let me explain.
Before the World Cup, Lewis was buried in the reserves, worth NOTHING to anyone, least of all Fulham. Then came his pretty good play, which caused Preston to become interested in a transfer (albeit a First Division English club). Widely expecting Lewis to be a free, they had no problem accomodating his salary because there would be no transfer fee. When Fulham, against expectations, saw an opportunity to cash in on Lewis' World Cup success, they demanded a transfer fee -- yes, Superdave, for a player with one year left on his contract! -- in the vicinity of $1M. Let's face it, Preston wasn't expecting to pay a transfer fee, so after budgeting for $1M to Fulham, they went back to Lewis and said, "hey, now we DO need to negotiate a lower salary, because we just agreed to pay $1M for your rights." Lewis, his family depending on a certain income level, rightly refused, preferring to collect a hefty paycheck in exchange for another year of reserve play. Bonus: he gets to kick Tigana in the proverbial gonads for trying to draw blood from a stone (i.e., the $1M).
Serves Tigana/Fulham right for trying to screw over Lewis with his new club, but I still feel bad for Lewis, who should be playing for the same salary (and no transfer fee) for Preston right now... and that's a subject for another thread.
You want a link, I'll give you two:
"Donovan signed a four-year contract with Major League Soccer as part of an agreement with Bayern Leverkusen of the German Bundesliga..."
Tom Neale on the terms of the deal
"The deal that has been struck is that Landon Donovan is with MLS for four years with the possible option that Leverkusen could exercise after two years. Before that four year term expires, MLS has Landon Donovan exclusively."
Notice the words, "with Major League Soccer" and "exclusively." Bayer has an "option." MLS is clearly a contractual party, not to be taken lightly. They have rights... Furthermore, the deal only works in two year increments. Now I suppose someone is going to argue that these quotes are irrelevant, I'm an idiot, etc.
From Soccer America MLS Confidential Newsletter (please don't ask for a link -- duh.):
"LOAN LOGJAM: MLS players will find it nearly impossible to go on loan to European clubs until January because of new transfer deadlines.
Loans and transfers must be completed by Sept. 1 and not until Jan. 1 will a second transfer window open up.
Players not registered with clubs by Sept. 1 cannot play for those clubs in official competitions until January and FIFA statutes prevent a player from being registered with more than one team at the same time.
The statutes also prohibit Bayer Leverkusen from registering Landon Donovan to play in 2002. MLS would have to issue an international registration transfer certificate for this to be done."
Kudos to Olaf for pointing out, correctly, the significant transfer issues. Unless Bayer/MLS gets a waiver, November 1, 2002 is irrelevant, because Landon can't so much as play reserve matches for Bayer until the January window opens.
Of course, my favorite line is the following:
"FIFA imposed this statute several years ago when Jorge Campos was bouncing back and forth across the border to play in MLS and the Mexican League."
So now it's MLS' fault?!? And the plot thickens...