Monday, March 9, 2009

NFL exec apparently not well versed in finance

Jags GM Gene Smith on the recent signing of left tackle Tra Thomas:

"He’s the right kind of guy, and we signed him to a contract that is a good, fair deal for us and for him. This is a good value and we feel a logical move for both of us"

Mr Smith - a good value would indicate that you acquired an asset for less than its full market value. If oranges normally cost $5 but I happen upon some vendor offering them for $3 I have found a 'good value'. It is all relative.

Therefore, if Mr Thomas was acquired at the full market price, its not a good value, it actually means you gave him more than anyone else would (unless Mr Thomas rejected a higher offer from some other team which is doubtful, since players rationally tend to maximize their full market value (they sign with the team that "shows them the money" so to speak).



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