In a move that has shocked the sports world, today it was announced that Tom Brady is about to accept a more than 50% pay cut to stay with The Patriots for three more years. Brady signed a deal that will pay him $9 million per year instead of the $20 million he easily could have demanded on the open market. In total, Brady is leaving a mind boggling $30 million on the table by not seeking his fair market value. Why would he do this? Maybe Tom just doesn't care about money anymore. After all, he is married to one of the richest super models on the planet. Or maybe he just doesn't feel like changing uniforms because red, white, blue and grey match his dreamy eyes so well. Actually, in reality this discounted deal was a brilliant financial move that gives Tom the best chance at winning more Super Bowls which in turn will increase his value off the field by exponentially more in the long run.
Tom Brady is one of the best quarterbacks of all time, arguably the best of his generation. Brady has won three Super Bowls, two Super Bowl MVP awards, eight Pro Bowl selections and two NFL MVP titles (his 2010 MVP was a unanimous decision). He will also become a free agent at the end of the 2014 season. As a super star free agent, Tom Brady has every ability to seek out an enormous new contract from every team in the league that can afford him. As we wrote about a few weeks ago, free agent Joe Flacco guaranteed himself a raise from $4.6 million to more than $20 million per year thanks to his recent Super Bowl MVP victory. Brady easily was in line for a big contract that matched Drew Brees' $100 million five year deal with the Saints or Peyton Manning's $96 million five year deal with The Broncos. Instead, Tom will be signing a three year $27 million deal which will put him several million dollars below vastly inferior quarterbacks like Mark Sanchez of the Jets.
Why agree to such a huge pay cut when the iron is this hot? By taking significantly less money, Brady accomplishes several important things: First he guarantees that he will retire a Patriot which will endear him to every football fan in greater New England. Secondly he frees up a ton of salary cap room for the Patriots so they can lock down other key free agents like Wes Welker and go after new players who will give Tom the best chance possible to win more Super Bowls. Finally, and most importantly, if Brady succeeds in winning more Super Bowls for a high profile team like The Patriots, he will increase his long term endorsement value by potentially hundreds of millions of dollars. Brady currently earns around $10 million per year endorsing products like Under Armour, the Dodge Dart and Ugg Boots. That amount will increase immensely if Tom and The Patriots start winning Super Bowls again (their last victory was in 2004).
Let's also keep in mind that if this deal somehow goes sour, I wouldn't feel too bad for Tom Brady. He's already worth $100 million and if that's not impressive enough, he's relatively poor compared to his wife Gisele Bundchen who is worth $250 million on her own! Together, they are the third richest celebrity couple in the world with a combined net worth of $350 million. The second richest celebrity couple is Mariah Carey/Nick Cannon who have a combined $515 million (thanks predominantly to Mariah). The #1 richest celebrity couple in the world is Jay-Z/Beyonce who have a whopping combined net worth of $775 million ($475 from Jay-Z, $300 from Beyonce).
Finally, when Tom is done playing football, he'll be retiring with Gisele to this quaint $20 million, custom built, 22,000 square foot mansion that features eight bedrooms, spa, pool. Not bad…
What do you think of Tom Brady taking a massive pay cut? Do you think he'll make more from future endorsements than the $30 million he left on the table today?