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May 15

Updated Primer on the Finer Points of the NFL Rookie Contract Negotiation

Not surprisingly draft picks have quickly begun signing contracts with their new teams so this seemed like a good time to dig up our article with a look at a few of the negotiating points that may still exist and update it for 2014. While the parameters of most deals are already decided (as you can see by our rookie estimates that were made months ago) this article should explain what some of the discussions will be about, how they impact the player, and why some deals may take longer than others. Remember nothing is going to lead to a holdout anymore but you want to gain the most protection you can for a player when doing these deals.

The Non-Negotiable Basics

Keep in mind that signing bonus money is essentially slotted and contract length is capped at 4 years.  Every 1st round and 2nd round pick will have their base salary determined by the 25% rule, which limits a players cap number from rising by more than 25% of his 1st years cap number.

Every 1st round selection will have a 5th year non-guaranteed option and every selection after the 2nd round will have a contract that includes a 4th year salary escalator, called the Proven Performance Escalator, that is earned by playing in 35% of the teams cumulative snaps over the first 3 years of the contract or 35% of the teams snaps in any 2 of 3 seasons.  This will escalate the players’ salary to that of the ROFR RFA tag. Punters and Kickers are the only exception and are not eligible for the PPE.

Every pick beyond the 3rd round will only earn compensation that is equal to the minimum salary for each year. That means base salaries of $420,000, $510,000, $600,000, and $690,000 over the course of the contract.

Offsets

Offsets were one of the bigger hangups in the 2012 and 2013 signings of top draft selections (basically the first 15 picks of the draft). The top picks in the draft will have their contracts fully guaranteed. What that means is if they are cut the team needs to pay them a check for future guaranteed salary and the player can then go find another job. If a contract contains offset language the team will get a credit, or payback, based on the amount of money the player earns with another team. If the contract contains no offsets the team does not get a credit for money earned elsewhere. As an example if a player has $5 million guaranteed, gets cut and finds a new job for $3 million the team that cut him is only on the hook for $2 million rather than $5 million if there is offset language. If there is no offset language the player earns $8 million as there is no payback credit to his original team.

In 2011 the only players to receive such a deal were Cam Newton, the number 1 overall pick, and Robert Quinn of the Rams, selected 14th. In 2012 agents were able to fight to get the first 7 picks to get deals with no offset language. In addition Luke Kuechley of the Panthers, selected at 9, and Michael Brockers selected 14th by the Rams also got no offsets in their deals. However in 2013 the teams won the battle over offsets with only Luke Joeckel, Ziggy Ansah, Tavon Austin, and (surprisingly) Eric Reid receiving them. Two of those players were selected by teams (the Rams and Lions) that have put up no fight against offsets, so in reality it was just two players who earned them.

Instead teams followed a model that was more or less developed by the Miami Dolphins when they struggled to sign quarterback Ryan Tannehill in 2012. This contract consists of paying the players all but the mandated minimum salary in the form of a guaranteed roster bonus due in training camp. This compromise allows players to be paid much earlier in the season rather than receiving the entire salary in weekly or bi-weekly installments over the 17 week regular season. This will likely be the system used again this year with the only no-offset contracts likely going to Greg Robinson, Eric Ebron, Aaron Donald, and possibly Blake Bortles.

 

4th Year Guarantees

Going into the 2013 draftee signing period it was a given that the first 16 picks would have their salaries fully guaranteed and last year it was pushed out to the top 18 picks in the draft. However, from 19-22 there will only be partially guaranteed salary in the 4th year of the contract and picks 23 to 32 will only have guarantees for the first three years of the contract. I’d expect a little movement this year in terms of full guarantees for the 19 through 22 picks with the interesting one being Johnny Manziel of Cleveland. In 2012 the Browns selected Brandon Weeden in the same slot and nearly guaranteed all four years of the contract. Manziel should be pushing to get the full guarantee and, while that occurs, other players selected around him may wait to sign to see what guarantee he gets.

 

Timing of 4th Year Payments

As those mid first round picks move from fully guaranteed to mostly guaranteed. Most teams have been able to get players to agree to a split salary with half coming in the form of fully guaranteed P5 salary and half coming in the form of a roster bonus due on the 2nd or 3rd day of the League Year. Due to the early timing of the payment it essentially guarantees the players full salary as he will either be released early in free agency or teams will simply pay the bonus. If those players selected 19-22 can not get the full guarantees they will likely look for nice sized roster bonuses in year 4.

By pick 23 the 4th year guarantees completely vanish. Despite just three teams in 2012 putting offseason bonus money into the contracts, last season every pick from 23 to 30 added in some form of final season roster or workout bonus. These bonuses either facilitate a quick release or give the player more financial security. Considering pick 32 is a quarterback (Teddy Bridgewater) I would say it is a lock that he receives some form of 4th year offseason payment. Can Bradley Roby of the Broncos get that as well?

2nd Round Offseason Bonuses

For the 2nd rounders guarantees end in the 2nd year and in many cases those are just partial guarantees. That makes getting offseason payments in 2015 and beyond worth an effort at the negotiating table. These bonuses were down, however, in 2013 compared to 2012.

3rd Round Salaries

While just about everyone’s salary is set in stone there seems to be some leeway in the salary earned by the 3rdround players. For example last year pick 7 in the 3rd round earned a larger contract than pick 6.

Low Draft Premium Position Salaries

As a QB earning the PPE can be a very difficult task if selected round 3 or below. It is the only position in the NFL where there is no rotation used at all. There is no package, outside of the occasional option package, where you see a QB exit. This is in stark contrast to a linebacker where teams rotate multiple players. The odds of a 3rdround pick starting in year 1 is small, though Russell Wilson clearly bucked the odds, and decreases with each subsequent round. If the player is seated for 2 years it makes earning the PPE impossible even if he becomes a starter in the third year so there is an argument to pay QBs more beyond the normal scope of QB premium pay.

In 2012 Wilson was selected with the 12th pick of the 3rd round of the draft. His total compensation was higher than the 4th pick in the round, due to increased base salaries in the final three years of his deal.  Nick Foles was selected with the 26th pick by Philadelphia and received a contract worth more than the 17th pick in the round via increased base salaries in the 2nd and 3rd years. Both examples of the QB premium.

The trend continued in 2013 with Mike Glennon of the Buccaneers earning the second largest contract of the round, despite being the 11th pick. Matt Barkley, the first pick of the 4th round, received a contract that was more on par with the 23rd or 24th pick in the 3rd round of the draft.

This year only Logan Thomas, selected deep in the 4th round by the Cardinals, might be impacted by this, but he will be fighting an uphill battle as neither Ryan Nassib nor Tyle Wilson got any premium salary as mid 4th round picks.

Split Salaries

Split salaries are essentially protection from having to pay a player if he lands on injured reserve. If a player has a split and lands on IR rather than paying him at the standard rate he will be paid at a reduced rate. For example a rookie is paid $420,000 in base salary in 2014. If he has a split his salary reduces to $303,000.

Splits can come in different forms. A more player friendly split is one where if the player lands on IR in the preseason the split salary kicks in, but if it occurs in the regular season he is paid at the full rate. Some contracts may have a split that disappears if the player fulfills some obligation the year before.

Basically all picks in rounds 5-7 will have contracts that contain split salaries in 2014 and 2015. What type of split can be negotiated. In round 4 players should fight hard for only having a split salary in 2014 rather than both years. Doesn’t mean it will happen but it’s worth an extra day or two of fighting with the team.  Those selected in round 3 should try to only get the pre-season type split in 2014 with no splits beyond that.

Salary Determinants

As the draft moves out of the 2nd round and deep into the 3rd round salaries are not necessarily set in stone. Not only may you be subject to the split if you land on IR, but if landing on IR early in the year you do not earn a Credited season, which is only earned, for the most part, if you are on the Active roster for 3 weeks. In that case you don’t earn a pay raise despite the year in the NFL. While those around you will earn $510,000 in 2015 you will simply be looked at as a rookie with your base salary reduces to $435,000.

Some players in round 3 will be forced to tie their 2015 base salary to credited seasons.  By round 5 some players will have both the 2015 and 2016 bases tied into that. These are small details that can help a player earn $100,000 or so more a year by trying to remove the reliance on staying completely healthy over the first two years of the contract.

  • NW86

    Great primer, thanks!

  • Bob Guerrin

    So while I was able to clearly follow your points , I was hoping foa an analysis for the Jets picks especially the first two and with Pryor landing right in that 18 slot. Do you see any problems with signing our picks.

    • http://www.nyjetscap.com/ Jason Fitzgerald

      There should be no issues with Amaro in round 2. That should be very straightforward. The only issue with Pryor is that the 49ers gave Eric Reid in the same slot a fully guaranteed deal with no offsets. To me thats an outlier (the offsets not the guarantee) and both sides should see it as such. If there is a holdup there its more about posturing by one side than a real holdup, IMO.