By: Joel Corry and Ari Nissim
Former NFL agent Joel Corry and former New York Jets Director of Football Administration Ari Nissim are going to give the NFP readers an in-depth perspective of how an actual contract negotiation between an Agent (Joel) and the Club (Ari) takes place in the NFL. Although condensed, Joel and Ari are attempting to take readers through a player contract negotiation from beginning to possible conclusion in weekly segments. Whether they can reach an agreement on the hypothetical contract extension is not known by anyone at this point. The player Joel and Ari will be negotiating over is Houston Texans pass rusher J.J. Watt, the 11th overall draft selection from the 2011 NFL Draft.
Below are our thoughts and impressions of the negotiation.
AGENT (Joel): I commend Ari in how he portrayed the team side in the negotiation. I didn’t have leverage with two years left on J.J.’s rookie contract. I knew early on that there wasn’t going to be a deal. It was obvious that Ari was only interested in a team friendly deal (and rightly so at this time), while I wasn’t going to agree to anything that didn’t make J.J. the highest paid non-quarterback in the league. Because of the value I placed on J.J.(redefining the non-quarterback market), Ari needed to accept my view of how the salary landscape for the NFL’s best players was going to change in the next couple of years as the salary cap increases (which he didn’t) to have a chance of reaching an agreement. Our negotiation was a good illustration of the challenges in signing great players to new deals with so much time left on their rookie contracts.
Typically, the earliest first round picks sign contract extensions is in their contract year when leverage starts to shift from team to player. Even then, there’s the threat of franchise tags looming over a player once his contracts expires.
The problem for Watt was that he still has two years remaining on his current deal.
I’m not expecting any of the 2011 first round picks that had fifth-year options exercised to sign new deals before the end of the 2014 season. Patrick Peterson’s case is interesting because of Richard Sherman and Joe Haden defining the top of the cornerback market. The best bets would have been Aldon Smith if he had stayed out of trouble since the San Francisco 49ers are one of the most proactive teams in signing core players to long term deals prior to the expiration of rookie contracts and Cam Newton without the ankle surgery. By the way, Anthony Davis is the only 2010 first round pick that had his contract extended after three years.
Ari had a valid point with the state income tax issue. It’s something that rarely came up in actual negotiations I was a part of when working for a sports agency. If it had been something that a team kept making a part of discussions, I would have consulted the player’s accountant and financial advisor for information to minimize the difference or rebut the contention. Another thing I didn’t give Ari credit for was making J.J.’s overall compensation through 2017 almost $2.75 million more with much better cash flow than playing out his contract and getting franchised for two years (assuming salary cap growth remains constant to this year). It would have taken on more significance if my contract demands had been lower.
The idea of an alternative structure with a voiding mechanism was an attempt to put more focus on the straight five-year extension by providing a less attractive option. I could have made the voidable deal a more viable option by giving Ari a general framework (length and overall dollars) where I asked him to provide the remaining parameters (yearly cash flow, guarantees, etc.) within my constraints.
An element that couldn’t be replicated in our mock negotiation was feedback or input I would get from the client in an actual negotiation. Since agents should work for the client, not the other way around, the client’s objectives would have shaped negotiation strategy. It’s a different strategy when the client is willing to take a reasonable deal now knowing the market could change dramatically during his new contract versus the client willing to be patient so he can potentially get a better deal or set the market.
It was also hard to introduce a holdout dynamic into the mock negotiation. Most players with more than one year left on their rookie contract aren’t willing to engage in a lengthy holdout to get a new deal. Chris Johnson and Darrelle Revis are the exceptions. I doubt directly threatening a holdout would have had much of an effect on Ari’s position.
Since there was too much of a gap to bridge our differences, setting the stage for future negotiations started becoming a consideration as the talks progressed. The starting point when talks resume, presumably after the 2014 season, would likely be at least Ari’s last offer (almost $14.225 million per year with $40 million of guarantees).
In reality, some time between the end of the upcoming season and before the start of the 2015 season, I expect J.J. to get a deal putting him near or at the top of the non-quarterback market barring a serious injury during the 2014 season.
CLUB (Ari): In any negotiation there needs to be give and take. The difficulty in this specific situation is you are speaking about arguably the best non-QB player in the league at a premier position. Thus, it creates a problem because from a team viewpoint, the only reason to do a deal with two years remaining is to get some sort of benefit ( lower average per year, less guaranteed money, more years, etc.), because without that there is no reason to do a deal early. If a Club can’t get some sort of benefit, then it’s better to let the player play out at least one more year of his current contract, which in turn keeps the potential risk of injury or poor performance on the player. By signing an extension, the club alleviates the risk of injury or poor performance by guarantying a significant amount of cash and typically significantly better cash flow than the payer’s current deal (for example, in our hypothetical, it was $20 million in first year cash and $30 million paid out in the two years remaining of the current contract).
When it comes time to finalize a new deal, Watt will most likely be the highest paid non-QB in the league.
If, in turn, the agent/player insists on being the highest paid non-QB in the league, in addition to having one of highest guarantees ever given out in the league with two years remaining, then there really is no middle ground. Whether I bought into Joel’s argument about salaries rising in the next few years for the top players (an argument he is likely correct on) is really irrelevant to this discussion because we are talking about doing the deal now. If a player wants the pay that will likely come in future years, then that player must be willing to wait to do the deal and take all the risks associated with that decision.
One way I could have presented to bridge this gap would be to add years so that you can give the average per year the player wants over the length of the deal and get the average per year for the years that a club actually thinks the player will play through for the Club. However, in this particular case, most if not all items I suggested were met with resistance which gives less of a reason to put something out there for them to argue over. It was interesting reading the comments that many people think acrimonious negotiations are the norm, but that’s typically not the case. In most successful negotiations there is an ebb and flow. There may be points of contention, however, most of the time they are dealt with professionally even when voices get raised in frustration.
Although I give Joel credit for trying to be creative in coming up with the void idea, it really was a non-starter as it gave absolutely no benefit to the club. Creative solutions need to be win-win, not win-lose as the void idea as presented. A more interesting concept would have been if he offered the same idea but the ability for the contract to void after 2018. Thus, the contract would give the club three additional years that J.J. is not currently under contract for, while giving the benefit of guaranteed money, cash flow and an out clause to the player. In the end it is unlikely the Club would take such an offer as I suggest, but it is a much harder thought for the Club to reject outright.
At multiple times throughout the negotiation I attempted to lead the discussion down a path that I thought might lead to a possible landing spot by saying we would consider a higher guarantee of X if the player’s average were to come down. However, the average never came down to what a club would consider a reasonable level with two years remaining.
What many people don’t realize is that most teams (not all) are looking for a fair deal with a player because they realize that the player plays a large part in whether the team is successful or not. The problem becomes that what is deemed fair by an agent and what is deemed fair by a club can be vastly different. I always got frustrated when I would get a deal signed and I would get a call from other agents congratulating me because they thought the deal was favorable for the club. At the end of the day most teams want a deal that will allow them to continue to build their team towards a championship while giving the player a contract that satisfies him.
Negotiations can go a number of ways, but one thing I’ve learned is that if people argue every point you make and don’t give you credit for valid arguments (i.e. the tax argument), or the fact that we were still arguing over the guarantee structure even though the majority of the deals done in the NFL have rolling guarantees such as I stated we would need in our deal, it makes it harder to get a deal done because conversations tend to get bogged down in minutia as opposed to big picture items. A negotiation is never going to give either side everything they would like. However, fighting tooth and nail on all issues is a sure-fire way to not get a deal done any earlier than it absolutely has to, in this case after the player was franchised for at least one year.
Follow Joel on Twitter: @corryjoel
Follow Ari on Twitter: @AriNissim
Joel Corry is a former sports agent who helped found Premier Sports & Entertainment, a sports management firm that represents professional athletes and coaches. Prior to his tenure at Premier, Joel worked for Management Plus Enterprises, which represented Shaquille O'Neal, Hakeem Olajuwon and Ronnie Lott. You can email Joel at email@example.com.
Ari Nissim worked with the New York Jets from 2006 through 2013, serving six years as Director of Football Administration. In addition, Nissim interned at the NFL League office and worked at Athletic Resource Management Sports Agency.
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