Paid by the Yard : On Super Bowl Sunday, here’s how pro sports plays the pay-for-performance game.

When he has an opposing quarterback in his cross hairs, does San Francisco 49ers linebacker Rickey Jackson consult his contract before deciding how hard to smack the poor guy?

No, say pro football experts. You can’t put language in a contract that will affect a player’s effort from one moment to the next.

But the 49ers certainly didn’t dampen Jackson’s passion for victory by giving the defensive back an incentive-laden contract that paid him an $838,000 bonus--five times his base salary--for the team’s reaching today’s Super Bowl.

The playing fields of professional sports offer some of the best tests of a principle that has transfixed American business: that linking workers’ and executives’ pay to their performance is the path to achieving excellence.

“In America, there’s a great abiding belief that money motivates and people act purely in their own self-interest,” said consultant Graef Crystal, a leading national expert on executive compensation.

In corporate boardrooms and sales meetings alike, managers are always trying to harness Adam Smith’s famous “invisible hand” of capitalism and get it to peddle more hosiery or block more field goal attempts.

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Determining whether a CEO deserves the credit for his company’s earnings gains can be a complex calculation. But in many sports, the link between performance and pay couldn’t be more direct.

Golfers and tennis players, for example, get paid according to how they finish (not counting, that is, the product endorsement fees they collect from apparel and sports-equipment manufacturers).

Martina Navratilova, whose recent retirement ended what was arguably the greatest tennis career ever, never made much on endorsements. Fortunately for her, she won plenty of tournaments, collecting a record $20.3 million in career winnings.

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Rickey Jackson’s high-risk contract is unusual today in the National Football League, where career-ending injuries pose such a constant threat that players normally try to get as much money upfront as they can. Moreover, the NFL salary cap limits player payrolls to $34.6 million per team, a restriction that makes all-or-nothing bonus schemes “very tough to budget for,” according to Charlie Casserly, general manager of the Washington Redskins.

But before the cap was imposed last year, Casserly was a true believer in paying for performance. The great Redskins teams of the last decade often led the league in incentives, paying as much as $5 million in bounties--perhaps 15% of total payroll--for quarterback sacks, pass receptions and the like, he said.

“The players were conscious of it,” Casserly said. “You can’t say they were oblivious.”

For the sports world--like other industries--one challenge is isolating the factors that contribute to success, and thereby merit being rewarded.

It was Vince Lombardi, the legendary Green Bay Packers coach, who coined the immortal dictum: “Winning isn’t everything--it’s the only thing.” But some current team owners might reply: “With all due respect, Coach, it’s neither. Winning is great, but first get me a 40% annual return on investment.”

Baseball’s California Angels apparently had something similar in mind in the early 1980s when they concocted a unique incentive package for slugging outfielder Reggie Jackson.

Since profits depend more on putting people in the stands than putting home runs over the fence, the Angels paid Jackson 50 cents a fan once seasonal attendance hit the 2.4-million mark. If Reggie did well, the team figured, so would the Angels.

Jackson reportedly collected $203,000 under the deal in 1982, when attendance reached a club record of nearly 2.81 million.

Angels general manager Bill Bavasi recalled that the fiscally astute Jackson used to collect business cards from well-dressed autograph seekers and turn them over as leads to the club’s ticket salespeople.

Of course, it wasn’t the bonus that turned Jackson into one of the game’s great showmen. Rather, incentive-oriented individuals gravitate toward incentive pay options. That’s another key principle of executive compensation theory: self-selection.

The 49ers were attractive to a veteran such as Rickey Jackson (no relation to Reggie) because the team was talented enough to offer him a legitimate chance at a Super Bowl championship. And the high-risk, high-reward bonus contracts apparently appealed to the linebacker’s gambling soul.

The NFL once considered hiring the football-illiterate Crystal to help it design incentive plans. At one point in the discussions, when the name of a Hall of Fame running back kept coming up, Crystal silenced a roomful of team executives by asking, “Who is this Walter Payton?”

Crystal didn’t get the job, but he does endorse the theory that you can identify aggressive, go-for-broke managers by seeing if they’ll bite on a high-risk pay package.

That having been said, Crystal and other specialists note that designing incentives is a notoriously inexact science and can have unintended consequences.

“The problem with piece-rate schemes”--which link pay to workers’ output rather than their hours on the job--”is that they tend to be ‘gamed,’ ” explained Stanford economist John Pencavel.

Pencavel, a Briton, recalled that when the British national health system experimented with compensating dentists based on the number of cavities filled, the shriek of electric drills suddenly wracked the countryside.

The late Royal Little, who built Rhode Island’s Textron Inc. into the original American conglomerate, learned a similar lesson when he offered his divisional chiefs bonuses based on sales. Managers began slashing prices and tripling their sales staffs. Sure enough, sales skyrocketed--but profits fell through the floor.

Little quickly ditched his sales incentives in favor of ones rewarding profitability.

That was the same approach Crystal took during the years he spent designing executive compensation packages for some of America’s biggest companies.

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On the theory--which he has since rejected--that corporate performance can be improved by linking CEO pay to return on shareholders’ equity, Crystal fashioned deals for executives such as Michael D. Eisner, chairman of Walt Disney Co. whose base salary of $750,000 was dwarfed by a $7.3-million incentive bonus last year.

A year earlier, when losses at the Euro Disney theme park dragged down Disney’s returns, Eisner earned no bonus at all.

Even if the causal link between compensation and performance is suspect, such contracts at least avoid the unwholesome spectacle of an executive’s paycheck ballooning while the company’s fortunes go south.

Fans of baseball’s Seattle Mariners, to cite just one example, saw salaries jump when the team was bought by Nintendo a few years ago, but the team’s record has sagged.

Indeed, a look at the standings of Major League Baseball when the season-ending strike began last summer reveals virtually no correlation between total salaries and performance. The Montreal Expos managed the best record in baseball with a team payroll of $20.68 million, second-lowest among the 28 teams. The Toronto Blue Jays paid more than twice as much--over $46 million--but had a mediocre win-loss record of 55-60.

Lou Guth, a private economist in White Plains, N.Y., said that if he ran a pro sports team, he would aim for a compensation scheme under which the risk of losing would be shared more equally between teams and players.

“If all the players are under long-term contracts, all the risk is on the team,” he said.

Unlike baseball or basketball, where guaranteed contracts are the rule, the risk in pro football is more evenly spread.

Of approximately 1,600 players in the NFL, only a handful of top stars--a few dozen at most--can command fully guaranteed long-term deals. For the rest, if they are hurt or dropped from the team, the paychecks stop arriving almost immediately.

So players and their agents look out for No. 1. “The goal in a modern football contract is to push every penny of prospective compensation into the guaranteed column,” said sports attorney Leigh Steinberg of Newport Beach, who represents seven of the 49ers, including starting quarterback Steve Young.

Steinberg generally believes that most top athletes supply their own motivation, rather than responding directly to cash rewards.

He has, however, noticed an interesting trend: Players tend to have their best years in the final season of a long-term contract. It happened with quarterback Warren Moon, for example, who first made the all-star Pro Bowl squad in the final year of his first long-term contract.

“You assume players play their hardest all the time, but there’s just something magic about that final year,” Steinberg said.

Aside from attempts to “game” the system, another adverse side effect of incentive pay can be poor morale if a player’s financial situation worsens because of factors beyond his control.

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Houston Oilers wide receiver Webster Slaughter complained loudly this season when the Oilers dropped their pass-oriented “run-and-shoot” offense. The change meant less playing time for Slaughter and, consequently, less bonus money.

Slaughter was so frustrated by the turn of events that several times--when the coaching staff wasn’t paying attention--he ran onto the field and inserted himself into the lineup on his own.

Of course, even long-term, fully guaranteed deals can produce unhappiness.

Economist Irwin Stelzer of the American Enterprise Institute recalled a National Basketball Assn. salary negotiation he once attended. The player had decided in the middle of a multiyear contract that he wasn’t being paid enough.

When the team insisted on sticking by the terms of the contract, the player replied, “You can make me play, but you can’t make the ball go in.”

Field of Dream$

Sports is one American business in which it’s relatively easy to gauge individual performance, so the sports industry is a good place to field-test the “pay for performance” principle that is increasingly popular in executive suites. Some examples of athletes whose income is or has been “at risk” based on their on-field work:

* RICKEY JACKSON, pro football player

The San Francisco 49ers linebacker has one of the riskiest contracts in a risky sport. His base pay of $162,000 is minuscule by National Football League standards, but by getting to the Super Bowl he earns an $838,000 incentive bonus.

* LAURA DAVIES, pro golfer

Arnold Palmer and other male stars make more on product endorsements than in tournaments. But for female golfers--including such stars as the British-born Davies--side deals add a relative pittance to tournament winnings. Davies led the Ladies Professional Golf Assn. in 1994 winnings, with $687,201.

* REGGIE JACKSON, retired baseball star

In the mid-1980s, the California Angels paid the charismatic outfielder an incentive bonus of 50 cents per fan after annual attendance passed 2.4 million. The deal made Jackson $203,000 in 1982, but only about $1,500 in 1984.

* MARTINA NAVRATILOVA, tennis star

Never popular with advertisers, Navratilova has had to earn nearly all her pay between the chalk lines. But that has worked out all right: Her $851,082 in tournament winnings last year vaulted her career total to a record $20.3 million.

And off the field . . .

* MICHAEL D. EISNER, chairman, Walt Disney Co.

Maybe Eisner should host “The American Sportsman” instead of “The Magical World of Disney.” His pay package is as sensitive to Disney’s financial performance as Rickey Jackson’s is to the NFL standings. Eisner’s $7.3-million bonus for 1994 dwarfed his $750,000 base pay.

No Risk, High Reward

It’s far from every athlete whose income depends on his or her on-field performance. Here are some who thrive on a different formula:

* ARNOLD PALMER, pro golfer

It’s been 30 years since America’s favorite golfer won his last Masters championship. Palmer made only about $100,000 on the Senior Tour last year. Don’t cry for Arnie, though. The $13.5 million he collected from advertisers such as Cadillac and Pennzoil placed him No. 4 on Forbes magazine’s 1994 list of the world’s highest-paid athletes.

* STEVE YOUNG, football player

With one of the NFL’s few guaranteed, multiyear contracts--a five-year deal that paid him $4.5 million this season--the 49ers’ top-rated quarterback can focus on opposing defenses without worrying about his next meal.

* STEFFI GRAF, tennis champion

The No. 1-ranked women’s player made $1.49 million in tournament winnings last year. But she really cleaned up off the court, with an estimated $6.5 million in endorsement fees for pushing Adidas clothing and Wilson racquets, among other items.

DOES MONEY BUY SUCCESS?

You be the judge. Here is a list of the 28 Major League Baseball teams, ranked by 1994 player payroll, and their won-loss records as of last Aug. 12, when the season-ending strike began. (The payroll represents what the teams would have paid for a full season.)

NATIONAL LEAGUE

TEAM WON LOST PCTG. SALARY TOTAL (Millions) Atlanta 67 46 .596 $52.12 NY Mets 55 58 .487 $41.82 San Francisco 55 60 .478 $40.57 Cincinnati 66 48 .579 $40.22 Chicago Cubs 49 64 .434 $39.36 LA Dodgers 58 56 .509 $38.95 Philadelphia 54 61 .470 $35.09 St. Louis 53 61 .465 $31.63 Houston 66 49 .574 $29.46 Colorado 53 64 .453 $28.03 Pittsburgh 53 61 .465 $25.18 Florida 51 64 .443 $24.36 Montreal 74 40 .649 $20.68 San Diego 47 70 .402 $15.47

AMERICAN LEAGUE

TEAM WON LOST PCTG. SALARY TOTAL (Millions) Toronto 55 60 .478 $46.03 NY Yankees 70 43 .619 $45.54 Baltimore 63 49 .563 $43.35 Kansas City 64 51 .557 $42.27 Boston 54 61 .470 $41.78 Chicago White Sox 67 46 .593 $41.03 Detroit 53 62 .465 $39.45 Oakland 51 63 .447 $37.97 Texas 52 62 .456 $37.70 Seattle 49 63 .438 $31.03 Minnesota 53 60 .469 $30.43 Cleveland 66 47 .584 $28.13 California 47 68 .409 $26.04 Milwaukee 53 62 .461 $24.53

Sources: Major League Baseball, Times research