Silent Archimedes

What is the point of NFL contracts?

Posted by silentarchimedes on June 12, 2008

The integrity of NFL contracts is really becoming a nuisance to the game. For all the other three major sports, the contracts are guaranteed, and in most cases, even if the player gets cut, is injured, or can’t fulfill the contract due to some unforeseen incident (unless explicitly stated by the contract or the general league contract rules), he will get the entirety of the contract.

At first glance, it makes sense that football contracts are not guaranteed due to the violent nature of the sport. The probability of a player playing the whole contract injury free or not playing to the capacity of the contract is very high. Consequently, the player’s union has to be amenable to non-guaranteed contracts in the collective bargaining agreement.

However, the result of this is shifting the problem elsewhere and creating two new monsters – the signing bonus and the rookie pay scale. In other words either get as much money up front as possible (signing bonuses are guaranteed) or get as much money as possible right when you join the league. Additionally, these two new monsters have further side effects; the latter years of a contract are worthless because the prorated signing bonus is over, and either the team or the player never expects to come this far in a contract. The leverages are either the player holds out for a new or reworked contract or the team cuts the player.

THE TWO HEADED MONSTER

The signing bonus

The signing bonus has essentially replaced the non-guaranteed contracts in NFL, and become the guaranteed contract. Bonuses are even prorated so they act like guaranteed contracts. In many cases, players compare each other’s worth based on signing bonuses rather than the annual average value of their contracts. What is the point of all this extra paper work if the latter years of the contract are more worthless than the paper it is written on. If the player exceeds the worth of the contract in the first few years, he wants either an extension or a new contract (in either case, he gets a new signing bonus). For example, Plaxico Burress is refusing to participate in physical drills with the Giants because he wants a reworked contract from his original 6-year $25 million dollar contract he signed 3 years ago. In hindsight, the Giants got a great deal on him because he has been an important part of the Giants run and culmination to this year’s Super Bowl. He has shown maturity with a team-first mentality and does not exhibit the immature reputation that plagued him when he was a free agent when no other team wanted him. However, don’t the Giants get any credit for even taking the chance on him? Why should they now give him more money?

Now, on the other hand, if a player does not play up to par with his contract (even if it’s due to injuries), he is at the whim of the team. In many cases, the team cuts the player. A great example of this is LaVarr Arrington and the Giants. In early 2006, Arrington signed a 7-year $49 million contract with the Giants. He suffered a ruptured Achilles tendon in the seventh game he played for the Giants. He was released the next February. The Giants are hit with salary cap repercussions for releasing him, and Arrington does not have the comfort of the contract he signed. This makes the signing bonus that much more important. Get as much guaranteed money as you can when you sign those contracts.

What is making it even more interesting is how teams are now attempting to recoup portions of the signing bonus after a player retires or is suspended or jailed. The prime example here is the Atlanta Falcons and Michael Vick. In 2004, Vick signed a 10-year $130million contract with a $37 million signing bonus. When he was convicted of dog-fighting in 2007 and sentenced to 18 months in prison, he would not be able to play in the NFL for 2 years. The Falcons in an attempt to salvage their investment in Vick, successfully recouped $20million of the signing bonus through arbitration.

The rookie pay scale

I have briefly talked about the unfairness of the NFL rookie pay system in an earlier post. Most rookies (especially top first rounders) know that they better get as much money as possible on their initial contract because of the unpredictability of their future. This has resulted in top rookies getting the highest signing bonuses in the entire NFL without even playing a single down. For example, JaMarcus Russell, first pick of the 2007 Draft, signed a six-year $60 million ($30 mill guaranteed) contract… without throwing a single pass in the NFL! While veteran players are being held at gunpoint by the chaos of signing bonuses and non-guaranteed contracts, rookies are getting paid like kings based on what they did in college. This is a huge issue in the upcoming CBA talks, and it appears both sides understand the unfairness of it.

OPINION

You really can’t blame the players for holding out in an attempt to get as much money as possible as soon as they can. They play in a very popular, high-revenue sport, and deserve a large portion of the pie, considering they are the stars of the product. Add in the violent nature of the sport, and getting financially secured as soon as possible is only being practical. You also can’t blame the owners for cutting players if they feel that their performance is not proportional to the salary cap space they take. Most of our jobs in normal world is performance-based anyways. After all, football teams are business franchises and making money is very important.

In my opinion, football contracts have the same risks as any of the other three sports that have guaranteed contracts. The team takes a risk by locking in a player for x amount of years for fear he underperforms. The team is happy to lock in a player that could potentially outperform his contract. The player takes a risk by locking himself in a contract for fear that he outperforms the contract. The player is happy to lock himself in a contract because it’s insurance against possible injuries and underperformance.

If the signing bonus acts like a guaranteed contract, then just have guaranteed contracts with low number of guaranteed years, and add option years into the second half of the contract. This eliminates holdouts and cuts. Fans don’t have to hate players or teams for being selfish.

The other problem with NFL contracts that I haven’t really mentioned, is that a salary cap is not compatible with non-guaranteed contracts at all. You either have salary caps with guaranteed contracts or the converse. What happens in this case is that a select few star players get paid extremely well and occupy most of the salary cap. Some teams already complain that they prefer not having a top 5 draft pick because of the salary cap repercussions. You also have this new business of seeing who is most salary cap savvy.

The next collective bargaining session in a couple of years is going to be really really interesting…

*** UPDATE 06/19/08 ***
CNNSI.com has a new article proclaiming the period in which players complain about their contracts, the protest season. Heheh…

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