The Fine Print of Rookie Contracts in the NFL
It’s mid-May, which means it’s signing season. Teams are locking up their rookie classes with CBA-mandated four-year contracts at a record pace (the Panthers had all their picks signed in a week).
When I negotiated rookie contracts for the Packers, from 1999 through 2009, I would call agents in May and June and try to do deals, only to hear that they wanted to wait until the market filled in and they would be “safe.” Some teams wouldn’t even call agents until the week of training camp.
That was then; this is now. The 2011 collective bargaining agreement assigned a value to each pick, meaning the only negotiable item fans and media tend to care about—the money—is basically preset based on where a player is drafted. Then why don’t all players sign quickly and easily? Well, “backside” issues could be equally or more important than the money. And with such limited opportunities to show their value, agents can separate themselves in these subtle and impactful areas.Here are a few.
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Deferrals
Media reports about a bonus rarely detail payment terms, which are often the source of tense negotiations. Agents want all or as much of the bonus as possible now, or hopefully within the calendar year. Teams prefer to hold on to the money for both interest reasons and for any issues that may come down the road, giving them a level of control with the player having to chase the money. If the team is chasing money from the player, a judgment in their favor can be a pyrrhic victory; good luck collecting it. For example, the Patriots have consistently denied paying the last installment of Aaron Hernandez’s $12 million signing bonus from his 2012 contract, a $3.25 million amount that was due in March 2014. Whether justified in withholding payment or not—to be decided by an arbitrator—the Patriots’ lengthy deferrals have given them leverage here.
The deferral issue played out last summer in the long-running contract dispute between the Chargers and Joey Bosa, until the Chargers moved up some money (after saying they wouldn’t), although it was much less than Bosa desired. This year, the Chargers had another top-10 pick (Mike Williams) represented by the same agency as Bosa (CAA), but the deferral negotiation moved swiftly, with Williams to receive 75% of his bonus now and 25% of it next March.
I treated deferral as a negotiable item: I would sometimes offer one bonus with payment now and another, slightly larger bonus with extended deferrals. There were mixed results. If players needed the money, they often would take the smaller but immediate bonus.
Guarantees
Though the CBA drastically reduced pay for top rookies, agents have extracted a measure of redemption with guarantees. Most first-round contracts are fully guaranteed for all four years. Second-round contracts are usually guaranteed for the first two years, although late in the round it appears only the first year is fully guaranteed, with a partial guarantee in 2018. Below the second round, only the signing bonus is guaranteed.
Guarantees for rookie players are a nice development since the 2011 CBA, although that positive outcome is tempered by…
Offsets
In simplest terms, offset language allows teams to recover future guarantees if the player is released and then signs elsewhere. Teams enforce/demand offset language arguing 1) past precedent and 2) their own veteran contracts have offset language. There are a few teams that choose not to enforce offset in their rookie contracts; the Rams are a notable outlier.
Offset language is now becoming non-negotiable by teams who can exert their leverage here.
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Splits, NFI
Split contracts are another way teams leverage players to protect against injury risk.
A split contract reverts to a “down” amount (far below league minimum) if the player is placed on lists such as Injured Reserve or PUP (Physically Unable to Perform). As with offset, splits for players taken below the second round are becoming less and less “negotiable.”
So far this year, signed third-round contracts have 2017 splits. Some fourth-round contracts have full splits in 2017 and 2018, although a handful of agents have wrangled a “preseason split” in 2018, applicable only if placed on the injured lists before the season. For lower rounds, full splits for 2017 and 2018 are common.
On the positive side for players, a couple of them have negotiated that if they are placed on NFI (Non Football Injury) this year—due to injury or illness not due to playing football—they will be paid full salary. NFI allows teams to pay any amount from zero to full salary; players such as John Ross and Sidney Jones have been ensured full pay. This is another area where agents can work the margins going forward.
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Voiding
A more sinister trend is developing: teams are negotiating language that voids—erases—future guarantees not only for suspensions, but also for a fine! Think about this scenario: a player is late to a meeting (perhaps because his car broke down or he had an accident) and is fined for being late, triggering the void of millions, or even tens of millions of future guarantees!
I always teach that negotiations are primarily about allocation of risk. Teams are forging terms that increasingly protect them from any and all future risk with the player. Why? Because they can.
NFL player agents are now in a business with downward pressure on fees due to rookie contracts that are preset financially. The “backside” is where they can separate themselves.
Bob McGinn Will Be Missed
I want to note the retirement of someone who never played for the Packers or worked for the team, but who had a big impact in Green Bay nonetheless. Bob McGinn, a self-described “newspaper man” for the Milwaukee Journal Sentinel, diligently served the vast Packers fan base for decades. I dealt with Bob regularly during my nine years there; he was knowledgeable, well prepared, and relentless with his coverage. As soon as I would come up for air in training camp, having just secured all signings for the season ahead, Bob would be calling for his column about next year’s cap and free agency outlook.
Many of us at the Packers felt that we were working for a public trust, and that we needed to act with that in mind at all times. Bob treated his job the same way. He was a grinder whose coverage never lacked for thoroughness. And not only did his vast reader base look forward to Bob’s positional grades for the game every week, we did so at the Packers as well!
Bob represented a move from an era in Green Bay where media was “chummy” with coaches and executives to one where they were more arms-length away, but also, certainly with Bob, mutually respectfed. Bob will be missed: by readers, by fellow media and by Packers employees past and present. He raised all of our games.
I think I speak for all Packers executives, coaches and players past and present when I say that Bob was a credit to both his craft and to the Packers. Best wishes to him and his family in retirement.
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