CBA Suggestion Number 2: Revamp the Rookie Contract Rules

While a clear focus of the next CBA negotiations should be shortening rookie contracts and rendering the Proven Performance Escalator (PPE) obsolete, if that cannot be done there has to at least be a fallback plan, a plan which begins to improve the system to make it fairer for all players.

In general, a player should be monetarily rewarded for being drafted higher than another player and while the current system does that through the mechanism of higher signing bonuses it fails to maintain that distinction over the four year contract term. To make it more equitable there needs to be certain inefficiencies that are addressed in the next CBA.

The way the current system works is that all players are signed to a four year rookie contracts upon being drafted. The value of the contract is primarily determined by where the player is drafted and the signing bonus on the contract is pretty much set in stone. For players drafted after the 2nd round it is more or less a given that the signing bonus is the guaranteed portion of the contract. Players drafted in the first round all have a mandatory fifth year contract option which has a price that is contingent upon where that player was drafted and the position they play. Players drafted in the third round or later are eligible to earn a raise in the fourth year of their contract called the “Proven Performance Escalator”, which increases their salary to the lowest restricted free agent tender. Drafted players are ineligible to sign an extension until after their third season in the NFL.

If you are undrafted the system works differently. Players who go undrafted sign mandatory three year, rather than four year, rookie contracts. Signing bonuses are not slotted but a cap is put on each team so that they can not use large signing bonuses for the players. However, in recent years more and more teams are guaranteeing high levels of salaries for undrafted’s essentially giving some a larger guarantee than players who were drafted in the 6th and 7th rounds. Undrafted players are allowed to be extended after just two NFL seasons rather than three NFL seasons. Finally after the expiration of the player’s contract they are eligible to either be tendered at one of three restricted levels or to become a free agent.

If you begin to play the money out you will see that there are clear benefits that are available to players who go undrafted and to a much lesser extent sliding from late in the second round of the draft into the third round of the draft. This was something that was exploited by Cowboys right tackle La’El Collins when his draft stock was impacted by an unfounded allegation and he made it known that he would not accept being drafted late in the draft and wanted to be an undrafted free agent (UDFA). By going undrafted Collins was going to have the ability to sign a lucrative extension earlier than anyone else or at the very least have the potential for a massive raise in the 4th year of his career. Collins signed his extension after his second year and did indeed “game the system”.

Here are how the current finances work out for players drafted at the end of each round assuming they reach the PPE thresholds. For UDFAs, we are looking at potential earnings for a player with no signing bonus and tendered at each RFA level. We are estimating just the minimal growth in the tender for the RFAs.

Draft StatusMax 4 year Compensation
1st round$10,098,282
2nd round$4,586,046
3rd round$4,922,164
4th round$4,588,380
5th round$4,334,872
6th round$4,227,832
7th round$4,174,580
UDFA (ROFR)$4,100,000
UDFA (2nd)$5,338,000
UDFA (1st)$6,857,000

It’s very clear the issues that exist here. The third round draft selection has potential to out earn the 2nd round draft pick despite the fact that both may very well play at the same level. The UDFA has the potential to out earn all but the top 42 or 43 (a mid-second round selection) in the draft. That doesn’t make any sense especially when you combine that with the fact that they can also sign extensions earlier than anyone else.

Fixing this should be relatively straightforward. All players should be eligible after their second season to sign a contract extension. That puts UDFA’s and draft picks on equal footing.  It also gives every player an opportunity to push their contract issues earlier if they can’t get rookie contracts completely knocked down to two years.

The PPE needs to have the criteria changed such that the escalator is not just the lowest tendered level but can reach each RFA tender level based on playing time and/or by achieving certain honors. By having the first and second  round tenders as a part of the contract it ensures that the draft pick will always earn more over their rookie contract than the undrafted player if they are playing at the same or a higher level, which is fair. The PPE also needs to extend to the second round draft picks, to prevent them from lagging behind their fellow third round counterparts.

Of course if you open the PPE up to second round draft picks it (also) means that something needs to be done with first round draft picks to improve their standing as well. What we would propose to fix this is a change to the option system. Our change would be to make the option year something that must be exercised after a player’s second season in the NFL with the value calculated the same way it is now. Except in this case the option is paid as an actual option bonus in the third contract season rather than in the fifth year of the deal and prorated over the remaining three years of the contract. The fifth year option value would then be equal to whatever the first round RFA tender is that season.

A system like this would not only make certain that the early career earnings of the first round pick remain higher than others who were drafted lower and are PPE eligible but would also put pressure on teams to extend players after their second season in the NFL rather than paying out a large bonus that increases cap charges, wouldn’t be used as a way to agree to “fake guarantees” when an extension is signed, and requires a large sum of cash to be paid early in a deal. At the very least it gives the players more financial stability to potentially deal with a holdout situation if they are in the fifth year of a contract with no deal signed.