When I first started in the agent business, signing-bonus language was pretty simple. Maybe a paragraph. But as signing bonuses started to grow with free agency and the rookie pool allotment in 1993, so did the language. Team attorneys worked hard to protect their bosses’ investments.
The recent federal appeals court’s announcement upholding Michael Vick’s right to keep $16 million of his $20 million in bonuses is a blow to the NFL, but not so much to the Falcons.
Why did the ruling go in Vick’s favor? There are two reasons. One, the Ashley Lelie (WR Broncos) landmark ruling that was set in place by the special master in 2007. This ruling, which went in Lelie’s favor, was and is precedent-setting for bonus forfeiture. Two, the Collective Bargaining Agreement term letter that was signed and hastily agreed to in the 11th hour by former union executive director Gene Upshaw and former commissioner Paul Tagliabue. Article XIV, section 9 of the CBA extension titled, “Limitations on Salary forfeitures” is at best ambiguous. It states that if a player “willfully refuses to report” or “voluntarily misses the remainder of the season” or “willfully withholds his services,” he may forfeit his signing bonus on a prorated basis. The article even starts off by saying “no forfeiture of signing bonuses will be permitted…”
There are many owners who feel that this portion of the term sheet was hastily written and does not reflect their true intentions. On the other hand, Upshaw and the NFL Players Association have always tried to eliminate forfeitures.
After reading the language several times, I can see why the court upheld the decision. The language is vague. In addition, the language in the CBA also supersedes team contract language except in cases where very specific details are spelled out on forfeiture agreements between the player and the club.
What does this ruling mean for Vick? The bankruptcy account in his name will have to pay the Falcons $6.5 million because there was already a settlement agreement in place before the ruling was made. The Falcons and Vick agreed that if the ruling went in the team’s favor, the bankruptcy trust would owe them $7.5 million. If the ruling went in Vick’s favor, which it did, then he would owe the Falcons $6.5 million.
Since Michael has declared bankruptcy and has a line of creditors waiting for his money, the monies will only be paid to the Falcons from future earnings. So I’m sure Falcons owner Arthur Blank is hoping Michael lands a decent contract next year. He’ll be in line behind the secured creditors such as banks and mortgage companies.
Why is it $16 million and not $20 million? It was ruled by appeals court Judge David Doty and agreed to that Vick would forfeit $3.75 million of his signing bonus.
My guess is that because this ruling went in favor of the players, it will be another deal-breaking issue for the owners in the current labor talks. The plot thickens.
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