Voiding of Guarantees

The contract stalemates between Sam Darnold and the Jets and Roquan Smith of the Bears have certainly been discussed a lot in recent days as neither was signed at the start of training camp. Darnold’s contract issue has been resolved and he is now practicing with the Jets while Smith is still unsigned in Chicago. At the center of both players contract disputes is nothing financial in nature but instead the mechanisms to protect guaranteed salary.

Teams that negotiate guarantees for players also negotiate scenarios in which the guarantees will void. Though these vary team by team there are some pretty standard void mechanisms that are used across the board. Such mechanisms include non football injury caused by performing dangerous activities such as sky diving, suspensions for personal conduct, steroid, drugs, or conduct detrimental to the team, incarceration, holding out, retirement, and doing something to undermine the team.  As you go team by team you will see some different things that are team specific like failing a physical.

In Darnold’s case the wording in question had to do with fining. The Jets are one of I believe four or five NFL teams whose standard contract language does not void with just suspension but also fines.  To some extent I can understand that given certain situations that could arise but for the most part most egregious acts land in suspension anyway so it’s an easier one to take out which the Jets did.

Smith’s deals with suspension for an on field incident. What this means is that the Bears have a blanket policy of any suspension causing future guarantees to void.  Unlike the fine issue, which was uncommon, this is commonly applied. Id estimate 2/3 of the NFL has blanket statements regarding suspensions for any reason causing a guarantee to void. For some there may be some room for interpretation. So in this case it is not the Bears being way out of the norm with the policy. This is not some nefarious plot by the Bears or another NFL team. Basically this is a way of the team getting some assurance that the player will do everything in their ability to stay on the playing field for the contract.

The questionable aspect of this situation deals with a NFL rule regarding punishments for lowering the helmet which can come with harsh consequences including suspensions. This is a new rule and realistically nobody knows how it will or won’t be enforced. The rule is most likely to impact linebackers, running backs, and safeties so Smith is impacted.

A handful of teams have apparently included language for some of their picks to avoid this type of suspension voiding guarantees. I’m not sure I completely like that idea for three reasons. One is that it can start to open a larger negotiation window around what infractions do and do not cause a voiding of a guarantee. That is somewhat of a hassle when you get into all kinds of crazy things that could or could not cause a suspension. Secondly unlike the fine issue where it was agreed on you are also opening up the possibility of others on the team looking to modify contracts just for this purpose since this is a new rule that is now going to potentially impact a contract.  Finally at what point does it become an issue?  If Smith becomes Vontaze Burfict on the field that is at the point where clearly his guarantees should void. Once you know the rules it should be a consideration and that should be the case by next season.

Like with the offset issue from a practical standpoint this is likely much ado about nothing. We know as a top 10 pick his first two year’s salary are 100% safe. His 3^rd and 4^th year salary will be $2.16 and $2.99 million.  He would have to be so epically bad to not be worth that kind of salary.  This isn’t salary like for veterans that earn base salaries of over $10M a season, its low end compared to that.

This is why the concept of sitting out because of this, at least for any period of time, is pointless. For each game missed this year he will lose about $25,000. If he misses the whole year and re-enters the draft he stands to lose a lot more, including a year toward free agency. If he were to fall out of the top 10 he would lose millions in a 5^th year option salary and more than a few dollars in signing bonus money.  He also stands a good chance of being drafted by a team that uses the same clause regarding voiding of guarantees so you are back at square 1 over nothing.

If you want a happy medium that maybe caters to all issues either tie the loss of guarantees to games lost (I.e. 25% of the season- a 4 game suspension in a year) so that it hits the egregious mark for a hit or only have the language apply to 2018 where he won’t void his guarantees with a suspension. Beyond that timeframe it really should be second nature for the players to understand the new rules and comply with what the NFL has deemed making the game safer.

Agents should do everything in their power to protect a player and there are things worth fighting over. Trying to be the first to get a no tag provision is maybe worth fighting for. This is something that should be easily overcome by both sides and I think in this case the Bears are in the right to maintain what is a more common stance around the NFL.