The Rookie Sacrifice: NFL, NFLPA proposals unveiled
One of the major issues in the NFL-NFLPA collective bargaining negotiations has been compensation to rookie players. Unlike a lot of intricate issues of the bargaining process, this one resonates with fans and media.
As I have said often, rookies will be sacrificed in this negotiation. With so many other tough issues to iron out, the “rookie issue” should go smoothly. Owners think rookies make too much; veteran NFL players think rookies make too much; and save for a handful of player agents, no one is advocating for incoming players.
The truth is that not all rookies make too much. In fact, very few do. And the proposals of each side primarily address that group, albeit with some demands from ownership that affect the entire incoming class.
The challenge is reaching common ground. The union made a proposal in October that is more restrictive to rookies than the current system. The NFL formally rejected that proposal this week and countered with a more controlling system. Thus, even on an issue where it appeared there was a bond, there is disagreement, although not insurmountable.
Below are the highlights of each proposal, with my thoughts on each point:
The Players’ proposal
The NFLPA proposal, submitted to ownership in the fall, contained the following provisions:
- Maximum contract length of four years for players drafted in rounds 1-3; and three years for players drafted in rounds 4-7. This would allow players to hit their leverage points in free agency sooner. Current maximum lengths are up to six years for picks 1-16, up to five years for picks 17-32 and up to four years for all other rounds. Most teams, as I did with the Packers, negotiate five-year deals for first-round players and four-year deals for all others.
- A Cap on incentives and escalators. This gives ownership cost certainty and protects against the “exploding escalators” found in so many contracts of high draft picks. However, after the first round, most incentive and escalator packages are reasonable in the current system.
- A setting of the 2011 Rookie Pool to the level of the 2009 Rookie Pool. This re-sets the rookie compensation system to the last year of the Salary Cap, 2009.
- A savings in rookie compensation of $200 million, which would be funneled to three areas: veteran player compensation, rookie compensation for extraordinary performance, and increased pensions for pre-1993 retired players (the time where pension gains were made for players).
- Injury guarantees, protecting players in the rare case of career-ending injuries. There are no skill guarantees (protecting players if released for skill reasons) in their proposal. This is a meaningful give on behalf of the union.
The union, in an effort to procure gains elsewhere in the CBA, tried to answer owners' concerns about rookies who “bust”, leaving teams hamstrung with guaranteed cash out the door and Cap charges remaining.
The NFL proposal
The owners’ proposal is a true “wage scale”, similar to the no-negotiation format of the NBA. The NFL wants what the NBA has for rookies; the NBA wants what the NFL has for veterans.
The NBA, however, only has this scale for first-round players. The NFL is proposing to tie all draftees in contracts that are “pre-fabricated” according to scale. The proposal features the following:
- Mandatory length of five years for players drafted in the first round; mandatory length of four years for all other draftees. Unlike the present system, these lengths would be non-negotiable. The lengths would buy out a year of unrestricted free agency from first-round picks and a year of restricted free agency from other draftees. The NFLPA suggests these contract lengths will reduce the market value of 60% of all NFL players. However, as it currently stands in the NFL, the vast majority of drafted rookies are under contract for at least four years, so the change would not be drastic.
- Pre-defined bonus and salaries depending on draft position. This is a major request and would eliminate the need for player agents to negotiate for players and also the workload of team contract negotiators and Cap managers. Naturally, agents are imploring the union to not allow for a no-negotiation process for rookies.
- Incentive and escalators tied to All-Conference level of performance. This requires, depending on position, true elevated performance beyond the current level in most contracts.
- No renegotiations or extensions of the rookie contract until after three years of the contract. The present rule allows for renegotiations or extensions after two years of rookie contracts. This locks a player into his rookie deal no matter what performance in the first two seasons of his career.
- Signing bonuses payable in prorated amounts and subject to annual forfeiture (recovery) by the teams. This is part of the NFL’s ongoing quest to retrieve bonus money for bad behavior and insubordination, something lost in the last CBA and recent arbitrations (Michael Vick, Plaxico Burress).
- Minimum salaries for each year of the contract at levels below the current levels in 2010.
- No guarantees of any kind – skill or injury -- in any rookie contract.
As one example, the last pick in the first round, under the NFL’s proposal, would make a non-negotiated $1.5 million bonus with minimum salaries on a five-year deal. His $300,000 in prorated bonus would be subject to forfeiture for violation of team policies or negative behavior. The last pick in the first round in 2009, Evander Hood of the Steelers, received guarantees of $6.1 million, a difference of $4.6 million from the owners' present proposal.
The NFL has come out swinging here. Interestingly, owners have made this a high priority despite the fact that the vast majority of the 250 drafted players in the current system are reasonably paid. As someone who has negotiated over 100 NFL rookie contracts, many can represent great value for teams (I remember players such as Greg Jennings and Nick Collins making minimum salaries in their third and fourth years, providing tremendous value for the Packers).
Ownership is clearly embarrassed by the monstrous bonuses and escalators of the top picks, and they are using a broad brush to fix this. Never again will there be outlandish contracts for “busts” such as Ryan Leaf and JaMarcus Russell, outlier contracts that receive enormous attention and cloud the issue.
In addition to addressing the enormous top pick deals the NFL wants control over all incoming players, in two forms: (1) taking the negotiation process out of these contracts, avoiding any holdout situations, and (2) taking back the conduct issue with pre-determined forfeiture on an annual basis.
Here are three examples, with the 9th, 19th and 41st picks in the Draft, comparing to the actual picks in the 2009 Draft (the 9th pick was BJ Raji of the Packers; the 19th pick, which I negotiated, was Jeremy Maclin with the Eagles; the 41st pick was Darius Butler of the Patriots). Amounts are in millions (M):
Pick 2009 contract NFLPA proposal* NFL Proposal**
9 22.5M/5 yrs 18M/4 yrs 8.6M/5 yrs
19 12.5M/5 yrs 10M/4 yrs 6.7M/5 yrs
41 4.325M/4 yrs 4.3M/4 yrs 4M/4 yrs
*Assumes 35% playtime in one year
**Assumes 40% playtime in two years
There is almost $10 million of difference (and one year) between the two proposals at the 9th pick in the first round. However, there is only $300,000 difference between the two proposals at the 9th pick in the second round. Thus, some reason for optimism, as the proposals become much more in line once past the first round.
My compromise would be the following:
- Mandatory length of five years for picks 1-16 in the first round; mandatory length of four years for picks 17-32 of the first round. This gives half the first round each side's desired length.
- Mandatory length of four years for rounds 2-4; maximum length of four years for rounds 5-7 (teams could negotiate lesser amounts of years for these picks if they desire a smaller bonus).
- Rookie pool and minimum salary levels re-set to last Capped year of 2009, with increases pegged to overall Salary Cap increases each year.
- Scale contracts for all players, yet with negotiations for identified -- as per position -- incentives and escalators to begin after year three of the deals. These levels would be pre-set an mutually agreed. This allows the league its wage scale, which is huge for them, but provides some upsides for players at reasonable thresholds in return.
- Teams may renegotiate or extend one player from each Draft class after two seasons of performance. The rest must wait at least three seasons. This would provide more incentive to young players to be the one of the group that earns an early extension, and give teams a bit of leverage in playing one player against another for that one deal.
- $100 million of cost savings on rookie system distributed to high-performing rookies in form of a benefit similar to pre-2010 Performance-based Pay benefit.
- $50 million of cost savings on rookie system, starting in 2013, distributed to players as an incentive/escalator system with for players starting in year three of their contract. Players should not be restricted to scale contracts for life of deal without some upside for proven performance.
- $50 million of cost savings on the rookie system distributed to pensions of pre-1993 retirees.
- Recovery and forfeiture of prorated bonus for year of transgression by the player, although subject to appeal to an independent arbitrator. This answers the conduct issue for the league, but provides an independent voice for disputes. The Personal Conduct Policy, however, will still have an appeals process through the Commissioner.
As to the actual amounts of compensation to incoming players, the issue for the union is wrangling an appropriate amount of cash for its membership (to be discussed in next column). If a lesser amount of the, say, $4.25 billion going to NFL players is going to rookies, the key for the union is an equal or greater amount going to veteran players and/or a performance benefit.
These proposals, in actuality, are not that far off. The issue is, and has always been, at the top.
As has been clear from some time, top incoming rookies are going to be sacrificed; Sam Bradford will go down in history as the last bonus baby of the NFL Draft. The key for the NFLPA is having this rookie sacrifice work for the greater good.
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