Posted by
drpete on Tuesday, October 07, 2008 10:34:00 AM
Why does, say, the University of Florida pay millions for
its football coach, Urban Meyer or its basketball coach, Billy Donovan? Because it wants to win big-time games and
doesn’t want to play against those coaches. 99.99% of us cannot do what those guys
do. Most of us can stand, but very few
can bring us to our feet with what they do.
Sports-elite universities – Florida, Notre
Dame, LSU, Georgia, Ohio
State, and your school
for sure – know that their public persona and image is greatly enhanced by
their athletics successes . . . and it boosts fundraising big-time.
Why do, say, NBA teams pay humungous salaries and bonuses to
lottery picks? Because they’ll be
immediate-impact players who’ll help win lots of games and, maybe,
championships. And because those teams
don’t wanna have to play against those guys. 99.99% of us cannot do what those guys do. The teams pay big money to bring in big
money. Ditto for Tom Hanks or Brad Pitt. CBS and Katie Couric? I dunno.
Ok, so what’s with the platinum parachutes, you ask, the
golden handshakes? Smart buyers don’t
pay for what someone has done.
They pay for what someone can and will do in the future. Why pay tens of millions to a “retiring”
CEO? What’s he gonna do for you in the
future? He’s gonna be a model of what
you’ll do for his replacement, the next guy, that’s what. Another reason? It may be the price necessary, given contracts, to get rid of the the loser, the mistake that looked so good back when hired.
What’ll the impact be of congress – with the president’s
signature – capping CEO salaries and bonuses?
Said another way, what’ll the impact be of violating a company’s
unalienable right to liberty (ala
Title IX)? When applied to the big
investment houses in New York, the impact will
be to have the best and brightest go to work in London
and Hong Kong, and to have the center of the
financial world leave the Big Apple and cross the pond.
Prices are the messengers, explaining the relationship
between supply and demand. (I learned
that from Dr. Thomas Sowell.) The supply
of superstars is tiny while the demand to see, cheer, and drop big bucks to see
and cheer them is huge. It would be a
huge mistake to shoot the messenger.
Then again, “demagoguery beat data.” (Tom Delay said that.)