Chris Johnson and the 30-percent rule
When the “opt-out” provision of the renegotiated 2006 Collective Bargaining Agreement (CBA) allowed for an uncapped 2010, the idea of a year without a salary cap was thought to be a potential windfall for the players. Teams like the Redskins and Cowboys, it was thought, would engage in unfettered bidding for all the best players, becoming the Yankees and Red Sox of football. Spending on players would rise dramatically. Well, not so much.
The 2010 league year – the much-hyped uncapped year – has been, at best, business as usual in the NFL. More realistically, it has been business as management would like it. With no spending floor, teams have not had minimum spending levels and have each set their own “cap” at a figure likely lower than before.
Veteran players with high salaries are being shed; restricted free agency saw one player (Mike Bell) change teams, and benefits to players that totaled roughly $10 million per team last year have been cut. Now, another unfortunate side effect of the uncapped year is rearing its head on some of the league’s top young players.
30-percent rule restrictions
The 30-percent rule, found in Article XXIV, Section 8 (b) of the CBA, states that renegotiations/extensions entered into in the 2010 league year may not increase per year from 2009 to 2010 or beyond more than 30 percent of the 2009 salary. For example, if the 2009 salary is $2M, the maximum available in 2010 is $2.6M, in 2011 it’s $3.2M, etc.
The theory behind the rule was to prevent the dumping of disproportionate amounts of compensation into a year with no cap to regulate spending. The rule was another quid pro quo for what was expected to be an uncapped windfall for players.
Especially affected are rising players in the middle of their rookie contracts, all structured with low salaries and previously paid bonuses. The latest player expressing some discontent with his situation is Titans running back Chris Johnson.
Johnson is not attending offseason workouts, but his frustration is probably more directed at the system than the Titans. The 30-percent rule is stunting potential deals for young ascending players such as Johnson; receivers DeSean Jackson, Steve Smith (Giants) and Sidney Rice; running backs DeAngelo Williams and Joseph Addai; linemen Ryan Kalil and Nick Mangold; and linebackers Lamar Woodley and David Harris.
Frustrating for teams
Team officials – assuming there was a budget for extensions, which may be rare -- are equally frustrated about not being able to lock up these young players, as it would make good business sense to do so now rather than later. Whether it’s simply a convenient excuse or reality, their hands are tied. As Titans general manager Mike Reinfeldt told the Tennessean newspaper, “With all these deals, the 30-percent rule makes it very, very hard to do.”
Johnson made $385,000 in the second year of his rookie contract last season. Under the rule, he’s limited to an increase of $115,000 this year and each year beyond.
There is one way around the 30-percent rule, but no team wants to use it. According to Article XXIV (7)(b)(iv) of the CBA, a signing bonus (or a payment that is treated as a signing bonus) does not count toward the rule.
In the event the Titans are willing to give Johnson a five-year, $40-million extension, they could satisfy the 30-percent rule in the salary portion of the deal by giving him roughly $37M in signing bonus. No team wants to structure a deal with 80 percent or more in guaranteed signing bonus, money that is essentially gone the moment the player signs the contract. Teams are much more willing to structure large base salaries that may be guaranteed in the future to allow for the possibility of recovery and forfeiture.
Although players are frustrated, agents understand. As agent Ben Dogra of the powerful CAA group, which represents a few players in this situation, including Williams, Addai and Panthers lineman Ryan Kalil, said, “For this year at least, your hands are tied.”
The rule is a true impediment to getting something done with a rising young player, as these deals likely will not happen until next year at the earliest. As a result, these players become further casualties of the uncapped year.
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