Victor Cruz and Restricted Free Agency

A little while ago, ProFootballTalk.com posted their “Free Agent Hot 100” list, which, as you might guess, is their list of the top 100 NFL free agents this offseason. As I scrolled through the list, something stuck out to me: only 5 of the players on the list are restricted free agents (“RFA’s”). Although RFA’s historically generate little interest on the free agent market, it seems this year there are only a few quality ones to pursue anyway. For now, I wanted to focus on wide receiver Victor Cruz of the New York Giants, who is the only RFA in the top 50 (PFT has him ranked at #3). Obviously, the most ideal scenario for both Cruz and the Giants is to reach an agreement on a long-term deal or, at least a contract that’s more than one year. However, if they are unable to reach an agreement, Cruz will undoubtedly return to the team on a one-year contract in 2013.

Let’s take a look at RFA basics first. Article 9 (“Veteran Free Agency”), Section 2(a) of the CBA states that any veteran player with three accrued seasons, but less than four accrued seasons, at the expiration of his last contract is a RFA. At this point, the player can negotiate and sign a contract with any team. However, there are some protections built in for the player’s former club if the player signs elsewhere. In order to receive these protections, the prior club must offer the player a Qualifying Offer on or before the first date of the RFA signing period. This year, the deadline for an RFA’s prior club to submit a Qualifying Offer to the player is March 12th. It should be noted here that if the prior club does not submit a Qualifying Offer to their RFA, or if they withdraw the Qualifying Offer prior to the conclusion of the RFA signing period, the RFA becomes an Unrestricted Free Agent and whatever team signs him will not be subject to any compensation to the RFA’s prior club.

At this point, the question is, what exactly are the protections the prior club can gain by making their RFA a Qualifying Offer? The answer to that question is as follows:

1) If the prior club simply wants the right of first refusal to any offer sheet the RFA may sign with another club, the prior club must simply make the RFA a Qualifying Offer for one-year with a Paragraph 5 Salary (the player’s base salary) of $1.323 million.

2) If the prior club wants both the right of first refusal AND draft pick compensation in the round the RFA was originally drafted in, the prior club must make the RFA a Qualifying offer for one-year with a Paragraph 5 salary of $1.323 million OR 110% of the player’s prior year Paragraph 5 Salary, whichever is greater. Basically, if last year the player’s base salary was even a penny more than $623,00, then the prior club is forced to opt for the second option and pay the RFA 110% of his previous season’s base salary.

3) If the prior club wants both the right of first refusal AND draft pick compensation in the 2nd round of the upcoming draft, the prior club must make the RFA a Qualifying offer for one-year with a Paragraph 5 salary of $2.023 million OR 110% of the player’s prior year Paragraph 5 Salary, whichever is greater. For this option, the team will have to pay 110% of the RFA’s prior season base salary if that player’s previous season base salary was more than about $963,333.

4) Finally, If the prior club wants both the right of first refusal AND draft pick compensation in the 1st round of the upcoming draft, the prior club must make the RFA a Qualifying offer for one-year with a Paragraph 5 salary of $2.879 million OR 110% of the player’s prior year Paragraph 5 Salary, whichever is greater. For this option, the team will have to pay 110% of the RFA’s prior season base salary if that player’s previous season base salary was more than about $1,370,952.

So what does this mean for Cruz and the Giants? Let’s see what their Qualifying Offer to Victor Cruz will have to be for each of the four options listed above. Keep in mind that Cruz’ base salary in 2012 was $490,000.

1) Right of first refusal: One-year, $1,323.000.

2) Right of first refusal and draft pick compensation in the round the player was drafted in (Cruz wasn’t drafted, but let’s pretend he was for this option): $1,323,000. 110% of Cruz base salary last year would be $539,000, so the Giants would have to go with the greater number.

3) Right of first refusal and second-round draft pick compensation: $2,023,000.

4) Right of first refusal and first-round draft pick compensation: $2,879,000.

As you can see, all of the Giants’ Qualifying Offers would simply be the set amount designated by the NFL and not 110% of Cruz’ 2012 base salary because 110% of his base salary would be the smaller figure. There are still six days for the Giants to make a Qualifying Offer; they are expected to tender Cruz at a first round level (meaning a Qualifying Offer of $2.879 million). As I mentioned above, the most ideal situation for both sides is to come to an agreement on a longer contract. Signing Cruz long-term gives Cruz security and the Giants a high-level WR for years to come while a one-year deal means there’s a higher chance Cruz signs elsewhere after next season. Of course, even if parties are forced to settle on a one-year deal via a Qualifying Offer, that doesn’t mean they can’t agree on a longer contract immediately after. The one-year deal will likely just serve as a barrier to Cruz becoming an Unrestricted Free Agent (which would happen if the Giants didn’t make a Qualifying Offer) while the parties work out a longer contract.

To check out the Giants current salary cap situation, click here.

@AndrewOTC

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Victor Cruz and Giants Butt Heads Over Contract

Jenny Vrentas of the Newark Star Ledger has an update on the latest contract negotiations or lack thereof between the New York Giants and star WR Victor Cruz. The piece right now that I found of most interest was this tidbit:

Asked if Cruz’s asking price is unreasonable, Mara said, “Well, right now, but that’s his agent. But that’s what agents do, and we’ve got a lot of time to work something out, and hopefully we’ll be able to come together.

Cruz is in an interesting situation in that the Giants still control his rights to some extent because he only has 3 years of service in the NFL. As a restricted free agent the Giants have the right to tender Cruz a contract worth up to $2.879 million in non-guaranteed base salary for the 2013 League Year. If another team signs Cruz to an offer sheet the Giants can either match the offer sheet or decline to match and receive a first round pick in return for losing Cruz in free agency. Because the price is so steep rarely do we ever see RFA’s sign with other football teams. So clearly the Giants have negotiating leverage in this case.

There are two things that work against Cruz when it comes to getting a high priced extension from the Giants, IMO. One is that the historical precedence as it relates to the RFA tag is that Cruz will not be able to sign a deal with any of the 31 other teams. Mike Wallace of the Pittsburgh Steelers faced that same dilemma last season when he unsuccessfully tried to find a new home with the RFA tag hanging over his head. Wallace refused to sign his tender and missed almost all of the summer due to his unhappiness with having settle for a 1 year contract worth $2.742 million. Wallace had his worst year since his rookie season and likely damaged his free agency value in 2013. In hindsight he may have been better off signing a contract extension with the Steelers last season or at least reporting to camp on time. These are lessons for Cruz.

When Mara discusses high asking prices another issue that Cruz has to deal with may be the fact that he plays as a slot receiver rather than an outside role. While most people do not pay attention to that it seems to have a significant effect on the paydays received by players. When you look at your premier slot receivers such as Marques Colston of the Saints or Wes Welker of the Patriots their pay is not really in line with their production. Colston ranks close to 20th at the position in salary worth a base value of $7.26 million per year despite year after year 1,000 yard seasons. Welker has been unable to find a long term contract solution from the Patriots. In contrast Vincent Jackson, who puts up around the same yards per year as Colston and less than Welker, received a contract worth over $11 million dollars a season, 4th in the NFL, with $26 million in guarantees. While nobody has hinted at what the starting price that Cruz’ agent is, you can rest assured if its close to Jackson money the Giants are likely going to hang up the phone as soon as they receive the offer.

All in all it makes for an interesting negotiation between the two sides, one in which the Giants hold almost all the leverage to force a deal to happen more to their liking than Cruz’.