Marginal revenue product is a resource's contribution to revenue. For example, if company X earns $5,000,000 in revenue without Joe and earns $5,500,000 with Joe, then all else equal, Joe's MRP is $500,000. If the company in question is solely motivated by profits, then Joe is worth $500,000 to company X and it would be willing to pay him up to $500,000.
Unless you don't pay attention to NCAA basketball, you already know that former Memphis coach John Calipari left the Tigers to become the head coach of the Kentucky Wildcats. Despite the fact that the Tigers were the cream of the (mostly awful) crop in Conference USA, Coach Cal had over 30 million reasons to leave Memphis for the bluegrass of Kentucky.
Now suppose that you had perfect foresight and were able to calculate Coach Cal's future Ky. MRP. Suppose you calculate his MRP at $33,000,000 over the life of his contract. If he reaches all his incentives, he'll get paid about $31,500,000. You'd say he was underpaid relative to his MRP.
Ah, but not so fast, my friend. For there's more to the Cal Contract than meets the wallet.
The deal also gives Calipari:
•Two “late model, quality automobiles,” plus mileage.
•Membership in a country club of his choice, including monthly dues and initiation fees.
•Twenty prime “lower-level” season tickets to Kentucky home games.
•Eight tickets for each Kentucky home football game.
It's good to be Coach Cal.