An Innovative Solution To Rewarding Managerial Failure

Since Arsene Wenger arrived at Arsenal, clubs have spent some £450m on sacking managers. Daniel Storey has a plan to stop them rewarding failure...

Last Updated: 06/01/14 at 09:44 Post Comment

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"Call it what you will, incentives are what get people to work harder" -Nikita Khrushchev.

Managerial pay-offs were very much the bête noir of 2013. The BBC's new director general Tony Hall promised to instigate a cap of £150,000 after his predecessor George Entwhistle had received close to half a million in 2012, disgraced Co-Op boss Paul Flowers received a significant pay-out despite his alleged misdemeanours and both Barclays and RBS forced the taxpayer to swallow a series of high-profile exposés of just how much departing directors were rewarded for their apparent underperformance. Public outrage inevitably (and understandably) ensued.

Football, not wanting to be excluded when accusations of greed and voracity are being bandied about, has its own issues with the rewarding of failure. Many Spurs fans may have felt sympathetic towards Andre Villas-Boas after his sacking at White Hart Lane, but a reported £4m settlement acts as a particularly sugary coating to an otherwise bitter pill. Malky Mackay may have been treated abominably at Cardiff, but was paid a rumoured £2m as part of his severance. He left the club one point off the bottom three after spending £45m in two seasons (although obviously achieved promotion), and his reputation was actually enhanced by the whole affair.

Some of the figures have reached eye-watering levels. In his decade at Stamford Bridge, Roman Abramovich has spent £60m on asking managers to clear their desks (including £12m on the aforementioned Villas-Boas), whilst Roy Hodgson and Kenny Dalglish at Liverpool and Roberto Mancini at Manchester City took home a reported £22.6m between them. England fans will shudder to learn that Steve McClaren received £2.5m simply for ensuring that we failed to qualify for a major tournament for the first time since 1994.

The principle of such pay-offs is obvious, and form part of basic employment law. Upon their appointment, Premier League managers are offered deals usually ranging from two to an Alan Pardew-shaped eight years. David Moyes was given six at Old Trafford. If a manager breaks the terms of his contract (through gross misconduct, say) he can be dismissed without compensation, and if he is approached by another club a severance fee will be owed. Conversely, if the club wishes to relieve an individual of his duties they are liable to pay up the full length of the contract, although in reality lower fees are often negotiated.

It is for this reason that Villas-Boas was never likely to resign as manager at Tottenham, and why Malky Mackay allowed himself to effectively be mocked by Vincent Tan at Cardiff rather than taking the moral high ground and jumping ship. "I have great admiration for our owners who have backed us and all the staff at the club who are trying to do their best for Cardiff City," Mackay said in September 2012, and that's after Tan changed the club's colours and badge. Say the right things to keep fans onside but know your place: no-one wants to talk themselves out of a windfall.

That's not to say that managers can be blamed for their approach. Football management is a fickle enough business, with careers brief depending on success. When offered the opportunity for significant dividend most would take it - it's a lot easier to advise others to thoroughly inspect a gift horse in the mouth than do so yourself.

The infuriation remains evident. If I was consistently underperforming at my job (don't even bother, wisecracks) I would expect a number of warnings from my superior before being told in no uncertain turns to leave - I probably wouldn't hang around to ask whether I would be paid for the rest of my contract. Yet football managers are continuously rewarded (handsomely) for their failure.

The conclusion is an unfortunate suspicion that managers suffer an inevitable lack of motivation to strive for success, particularly after being handed an extended contract. Obviously being successful increases both reputation and earning potential, but the financial reward for failure will undoubtedly cause a decrease in the desperation to commit to success completely - that is merely a conclusion on human nature rather than a slight at the greed of football managers.

The issue should be easily resolved through failing managers being unsuccessful in a bid to gain future employment and therefore suffer for their failure in the longer term, but even those that have enjoyed relative success have been sacked on multiple occasions. That fact that Neil Warnock, Paul Jewell, Paul Hart, Paul Ince, Peter Reid and Gary Megson (all suffering three sackings or more) so instantly spring to mind emphasises the point, and Villas-Boas' reported £16m for a combined 27 months of employment at Chelsea and Spurs does rather stick in the throat. Football management is almost unique insomuch as sackings are considered an unavoidable occurence rather than a true besmirching of reputation, record or character.

So what is the solution? How do we aim to curb the headline statistic that since Arsene Wenger joined Arsenal, English to- flight clubs have spent around £450m on managerial pay-offs? The Premier League pays big and, thanks to the diminishing of patience as a virtue, it pays more and more often. How do we avoid rewarding failure?

The obvious answer would be for clubs to offer shorter contracts to managers, negating much of the financial risk should things go awry early in a deal. This was the approach of West Brom chairman Jeremy Peace, who gave Steve Clarke a two-year contract upon his appointment, never extended throughout his tenure. When Clarke was sacked in December, there were just seven months remaining on his deal. Furthermore, Fulham are reported to have handed Rene Meulensteen a deal only until the end of this season. One suspects that should Fulham sink, so too will the Dutchman.

Unfortunately, whilst such a tactic may be available for novices keen to take their chance at the top level (see also Tim Sherwood's 18-month contract at Spurs), established managers (especially at the higher-profile clubs) may refuse to operate under conditions that increase the uncertainty surrounding an already tenuous existence - we're asking turkeys to vote for Christmas. In addition, shorter contracts also determine that should an alternative club approach a manager, the financial compensation received is dramatically reduced. Would chairmen be prepared to lose managers for such little recompense?

Another logical option would be to increase the number of clauses written in to a manager's contract in order to reduce the financial liability on the club's part, something utilised by Newcastle United when offering Alan Pardew eight years on Tyneside. It is reported that should Pardew leave at any point throughout the deal, he would only receive 12 months' salary.

This seems logical. When Rafa Benitez received a rumoured £5million from Inter in December 2010 just six months after being unveiled, the club were seventh in Serie A, 13 points behind leaders and rivals Milan. Having won the title in each of the previous five seasons, could Inter not have included a clause in the Spaniard's contract stating that he would not receive a full pay-out should Inter be positioned outside the top four at his time of sacking? Manchester City could have included a specification that Mancini could be relieved of his duties without the £7m compensation if he failed to win a trophy in a complete season, and a manager of a struggling club would suffer the same fate should the club be relegated.

Or why not take this idea further and change the way contracts are formulated? Rather than offering deals of fixed term according to the calendar, instead operate a project-based system whereby managers are given assignments and targets. A basic wage is offered, with large bonuses available should the targets be achieved or surpassed, evidently creating the incentive to succeed. The exact financial intricacies of the target-bonus ratio would be agreed prior to appointment, with the more determined individual able to negotiate higher reward for more lofty ambitions.

If the assignment is failed, a manager can be dismissed without pay-off, meaning that managers would have the motivation to give due thought to a club (and its owner) before accepting the role, also leading to increased transparency around sackings. If the club wished to remove the manager prior to his allotted project end point, bonuses must be paid out in full, hopefully eradicating some of the accelerated impatience currently blighting a league in which only two of the 20 managers have been in place for more than three full seasons.

So, for example, when Roberto Martinez promised Champions League football at Everton he could have been given three years to achieve his task. Sam Allardyce (the 13th highest paid manager in the world) could have been tasked with finishing outside the bottom six in every full season, and Gus Poyet given a short assignment (rather than his current two-year deal) that would lead to his sacking should Sunderland be relegated this season. If they did go down (and therefore Poyet failed), he would not be rewarded.

Clubs forced to create realistic (and documented) targets for incoming managers with the knowledge that those owners with unrealistic and unsustainable desires will be scorned. Clubs also rebuffed by managers who would reasonably estimate that the owner may try and interfere in their affairs. Managers forced to fully evaluate the potential for success in meeting targets rather than simply diving into the next available position, but still tempted by the possibility of large rewards for success. And clubs given a financial incentive to have patience until an agreed end date. There isn't a whole lot to dislike. Appointing managers on incentive-based assignments seems entirely logical - but since when did football revert to logic?

Daniel Storey - follow him on Twitter

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