Money Well Spent?

After a protracted holdout that spanned most of the preseason, the Tennessee Titans and running back Chris Johnson finally agreed to terms on a new contract last week. The pact gives the Titans use of the NFL's most productive running back of the past few seasons and Johnson, well, at least $30 million.

Johnson was holding out because his original rookie contract grossly underpaid him for his performance. The Titans, presumably, were concerned about the precedent set by upgrading an existing contract.

But here is where these deals never fail to baffle. NFL teams, and MLB and NBA teams for that matter, often mistake past performance for future performance, especially when it comes to passing out giant checks. Chris Johnson of 2008-2010 was worth every penny of his new annualized rate, and Tennessee benefited from that performance for pennies on the new rate's dollar. But 2008 has long since passed; just ask Barack Obama and Research in Motion.

The notion that players "deserve" new contracts is an emotion-fueled shell game. Players play under contracts that they willingly, and usually happily, sign. We may dress up the business relationship with gallant garnishes like passion and chemistry, but what we watch every given Sunday is the execution of a legally binding agreement. Players play, owners pay.

The problem for most players like Johnson is leverage. Most players, and especially running backs, are replaceable parts. Somewhere around Week 4, fantasy players will fight through a waiver claim mosh pit for a previously unheralded back poised to lead the league in rushing or get into the end zone 12 times. The ebb and flow of running backs from obscurity to prominence and back is inevitable.

And yet, teams continue to make large investments in players probably doomed to regress from their superstar performance levels. Why do they keep making this mistake?

The most reasonable explanation is that teams consider factors outside of a pure bang-for-buck. Chris Johnson, and other short shelf-life stars, benefit from the few players whose careers imploded later rather than sooner. Unlike the Pre-Crime unit in Minority Report, NFL fans and teams cannot withdraw their investment in a player before he washes out. A team can look foolish refusing to renegotiate the contract of a player when they can only say his expiration date is vaguely "soon."

Moreover, players can easily win a public relations battle with the team in the eyes of media and fans. Most fans will sympathize with the frustration of feeling underpaid, especially when a much richer organization is the one determining the size of the paycheck. This is only exaggerated for players who figure prominently in fantasy football, the area of sports where fans are most comfortable with the cold reality of numbers. Chris Johnson wanted to be paid much better? Considering he should have been drafted in the top five of every fantasy draft this summer, few fans would think he was off base.

And this is why, value be damned, NFL teams mostly ignore the risks and invest at high burn-rate positions. (New England's ever-rotating backfield committee is the best example of a team making value-first personnel decisions.) Consider how the Chris Johnson experience would have gone for Tennessee had they refused to renegotiate.

Johnson would have held out long into the season, knowing that he would have little future credibility if he tucked his tail between his legs and played under his old deal. This, of course, assumes that he could afford to miss the game checks and not experience a crush on his standard of living.

The Titans would have shopped arguably the top back in the league for trade offers. Because it became clear that the only way Johnson would return to play was at a richer rate, other teams around the league would know that Johnson had no value to the Titans under his current deal.

The dispute only would have been resolved by Tennessee trading Johnson — a scenario in which teams rarely recover full value anymore — or by allowing him to sit and litigating. In both outcomes, the Titans would have undergone months of criticism from media, fans, and worst of all, players, questioning why the team would not just pay such a dynamic star the market rate. Privately, Tennessee would become known as a place where players are just numbers and performances. Do you think that might matter when undrafted rookies and free agents decide where they want to play?

Interestingly, baseball teams have figured this dilemma out, albeit under very different pressures. With the growing budget gaps between teams, baseball executives have developed a strategy for players they do not want to pay at market rate (though in this case, the reluctance is because the teams cannot afford to pay any players that market rate, as opposed to the NFL, where it is a calculation of production during that contract). Baseball teams simply trade these players for prospects as it becomes apparent that they will not be able to retain them beyond their current contract.

So what would have been the optimal move for Tennessee? By the time Chris Johnson was holding out, it was too late. To continue the baseball parallel, Johnson was essentially already a free agent, as he was not going to play again at the rate of his previous contract. Knowing that Johnson would one day command far more money than they should pay a running back, the Titans should have a) worked on an extension at a more tolerable rate earlier on or, b) traded him.

You might say this sounds like a volatile strategy — and you would be right. But so is what the Titans have chosen. For each of the next four years, the Titans will effectively pay Johnson at least $7.5 million. They deserve credit for not considering even longer terms, but still, how likely is it Johnson will be their starting running back on opening day of the 2014 season? In any scenario where the timeframe of Johnson's contribution is reduced, the annualized rate increases and the Titans invest even more in a player that can be mostly replaced for loose change. There is a decent probability that the Titans will see the same turnover in their backfield with their chosen strategy as they would with mine.

Tennessee's strategy just costs much, much more money.