Wednesday whys: A string of losses for NFL
Why was Michael Vick allowed to keep bonus money paid by the Falcons?
The scorecard for the NFL on the issue of conduct and forfeiture of bonus money is not good. Tuesday, a federal appeals court confirmed a lower court ruling that Vick does not have to repay $16 million in bonus money to the Atlanta Falcons after he was convicted in a dogfighting case that led to a prison sentence.
This follows a couple of similar player-friendly rulings in the past two years. The Giants failed in an attempt to recover signing bonus money paid to Plaxico Burress as a result of his willful misconduct last year. The special master ruled that the Giants owed Burress the remaining $1 million of his $4.5-million signing bonus, concluding that the money had been “earned” and was not subject to recovery by the team due to bad behavior. So Burress’ actions warranted a two-year jail sentence but no forfeiture of his signing bonus.
The Burress case continued the trend from an arbitration involving Ashley Lelie in March 2007 when the Broncos attempted to collect a portion of Lelie’s option bonus as a result of his holdout the previous year. The arbitrator ruled that option bonuses are not subject to forfeiture because they are “earned” at the time the team exercises the option and therefore not recoverable.
Now a higher court has confirmed the Vick case -- treating roster bonuses as “earned” at the time the player is on the roster and triggering their payment.
These results are clearly unfortunate for league and team management. As teams try to negotiate clauses to prevent bad behavior, they are extremely limited in efforts to retrieve money if misconduct takes place. Some ways that teams are now trying to circumvent these rulings include structuring contracts with a “salary advance” structure (part of rookie contracts for players such as the 49ers’ Michael Crabtree and the Broncos’ Robert Ayers) rather than signing, option and roster bonuses. Teams are also looking to put much of the guaranteed money in salary in the early years of the contract. Agents, of course, resist these measures intensely.
Conduct is clearly a problem. While Commissioner Roger Goodell has made the conduct of NFL players a top priority of his administration with the personal conduct policy, arbitrators and judges continue to encumber his efforts.
How does this get fixed? The answer, of course, is through collective bargaining. This is another issue teed up in shaping the future of the game. While conduct has always been an issue off the field, it is now becoming an economic issue as teams struggle to cope with risk management of malcontented players.
Why was the appeals court involving Michael Vick part of a much bigger issue at stake for the NFL and the NFL Players Association?
The Vick ruling Tuesday was part of something much larger that frustrated the NFL. The 8th Circuit Court of Appeals affirmed the status quo on oversight of the longstanding labor agreement between the NFL and its players. The status quo in this instance is good news for the players and a continued source of frustration for the league.
The continued oversight of the agreement will come from Judge David Doty, as it has since the inception of the agreement arising out of a settlement of a class action lawsuit against the league with the late Reggie White as the lead plaintiff.
Both sides agree that Doty has been no friend to the league/management/owners, with a string of decisions being made in favor of the labor side.
Based on the Vick ruling and other decisions (and public comments) favoring the players, the NFL appealed to the 8th Circuit Court to remove Doty from his jurisdiction over the agreement. Tuesday, that appeal was denied.
The NFL must live with Doty and the Vick ruling (which is good news for the line of creditors at Vick’s door).
There are a couple of bigger issues here.
First, the ruling is against a backdrop of negotiations – or lack thereof – toward a new Collective Bargaining Agreement (CBA) to forestall an uncapped 2010 and a locked-out 2011. The negotiations have begun with limited progress as the union continues to demand more financial specifics from the teams and the NFL continues to appear unfazed by the prospect of an uncapped 2010.
The presence of Doty on the bench theoretically is a chip for the players’ side, but in reality, it doesn’t have much meaning.
The bigger issue remaining, though, is American Needle v. NFL. This landmark case is careening toward the U.S. Supreme Court in February, when the highest judicial body in the land will rule on whether the NFL has “Single Entity” status, meaning it is one entity rather than a collection of 32-member competing entities, thereby entitling it to antitrust protection since it is not conspiring with anyone else. A favorable result from the Supreme Court would have dramatic consequences on any future labor agreement, giving the league tremendous leverage coming from the top.
Judge Doty was the judge who allowed former executive director Gene Upshaw and the NFLPA to adopt the masterful strategy to decertify as a union and end the NFL’s protections in labor law in order to pursue antitrust claims against the league. This strategy led to the Reggie White class settlement, forming the basis for the current CBA.
The American Needle case could potentially alter union strategy in many ways, both in labor and antitrust.
We’ll have much more on American Needle as it approaches.
Why is the Larry Johnson case another cautionary tale about signing older running backs?
In August 2007, the Chiefs rewarded Johnson with a sparkling new contract extension while he was in the midst of a holdout. Twenty-five days after not reporting to training camp, Johnson’s existing contract was torn up and replaced with a six-year extension worth a potential $43 million, with $19M guaranteed.
Although that $19M was reduced by $3.75M through an arbitration ruling that the Chiefs did not owe future guaranteed salaries based on Johnson’s misconduct last year, the contract is a chilling reminder of the risk of top-of-market contracts for that position.
Running backs simply have shorter shelf lives than other position players. For every Emmitt Smith or Curtis Martin who were productive for over a decade, there are dozens of running backs who decline past their first contract. From a team’s risk management point of view, running back may be the most difficult position to feel secure about.
With the Packers, I advised us to be careful to extend Ahman Green late in his career with the team. It was difficult, knowing all he had accomplished there, but the likelihood of declining production was much greater than it was for ascending performance. I’ll have more on Ahman – the Packers’ all-time rushing leader – in Friday’s column.
There’s a graveyard full of contracts for running backs that teams wish they could do over. The list includes deals in latter parts of their careers between the Titans and Eddie George, the Bengals and Corey Dillon, the Falcons and Jamal Anderson, the aforementioned Ahman Green and the Texans, and the mother of all regrettable running back deals -- Shaun Alexander with the Seahawks. Willis McGahee’s deal with the Ravens and LaDainian Tomlinson’s deal with the Chargers may join that group next year.
We can now add Johnson and the Chiefs to the graveyard of bad deals. Since he went unclaimed yesterday, his contract is now terminated. May it rest in peace with the others.
Join me today for a live chat at 3:30 p.m. eastern when I’ll take all your questions about Vick, Johnson and any other topics.
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