Ann Heisenfelt/AP
Ann Heisenfelt/AP

The New Age of Rookie Contract Negotiations

Gone are the days of $40 million contracts being handed out to unproven players. When the NFL and NFLPA reworked the CBA three years ago, rookies lost leverage and the result has been first-year players hitting the field faster

By
Andrew Brandt
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It is a new day when it comes to rookie contracts in the NFL. The compensation system implemented by the 2011 CBA has created ready-made deals requiring little to no negotiations. These prefabricated contracts have eliminated any guesswork about compensation, leaving players without any leverage, and caused a sea change in the pace of rookie signings.

That was then

During my nine years with the Packers, from 1999 to 2008, negotiating rookie contracts at this time of year was largely an exercise in futility. Without predetermined rates, agents preferred to wait and let someone else set the market, fearful they would come in lower than other contracts around the league. I would shake my head at how the primary motivation for many agents was to not look bad rather than doing what was best for the client. It was frustrating, but as a former agent, I understood how cutthroat the world of recruiting players had become.

Before the new CBA, the NFL allotted teams a designated amount of salary cap room for its rookies, known as its “pool.” It was then up to the teams to determine how much of the pool went to the first-round pick, the second-rounder, and so on. The practical effect was that first-round picks leveraged a disproportionate amount of the pool, often as much as 60%. And that was just the start of what first-rounders were able to leverage.

Bears cornerback Kyle Fuller—selected 14th overall—was the first Round 1 pick to sign a contract. (Brian Kersey/Getty Images)
Bears cornerback Kyle Fuller—selected 14th overall—was the first Round 1 pick to sign a contract. (Brian Kersey/Getty Images)

Agents for top picks invented a “second pool” through creative player-friendly contract clauses: option bonuses, guaranteed salary advances, player voids, buybacks, exploding escalators, etc. These worked to construct substantial sums for top picks beyond the pool. Were these clauses legal? Technically, yes, as they did not affect the team’s salary cap number for Year 1 of these contracts, but they were clearly circumventing the spirit of the system.

Top rookies walloped NFL teams, coming and going. On the front end, tens of millions of guaranteed dollars flowed in, culminating in $50 million for the last bonus baby, Sam Bradford. More destructive, however, were easily earned escalators and contract accelerators that made the backend of the contracts unworkable for teams. Teams would then approach players with hat in hand begging for salary cap relief, resulting in even more startling player-friendly contracts. Players such as Larry Fitzgerald, Matthew Stafford and Calvin Johnson took full advantage of the continuing leverage from their rookie contracts, with similar player contract control ahead for players like Bradford and Ndamukong Suh.

This is now

Rookies had no voice in the 2011 CBA negotiation. The owners, embarrassed by the riches given to busts such as JaMarcus Russell and Ryan Leaf, were determined to change the system. And the NFLPA negotiating team, led by veterans who were frustrated with rookies entering the league and making more than proven players, was only too happy to shift funds to established guys. Of the myriad issues that were part of the negotiations, the rookie compensation system was the easiest to resolve.

Now, instead of each team having an allotment, each pick has a predetermined amount. In other words, a player and his agent know the exact dollar figures the moment he is drafted. They also know the length; every contract is for four years, with first-round picks subject to a team option for a fifth year, also at predetermined rates. As for salaries, the vast majority of drafted players have four years of non-guaranteed minimum salaries, accompanied by a signing bonus that’s not negotiated by the agent, but predetermined by the CBA. 

Bonus amounts have not changed during the four years since the new CBA: Jadeveon Clowney will receive the same bonus in 2014 that Cam Newton received in 2011. According to the NFLPA, the stagnation is due to the fact that the $15,000 per player rise in minimum salaries—the 2014 minimum is $420,000, up from $405,000 last year—has left no room for bonus increases, something the union predicts will finally change next year.

With no opportunity for negotiating, many players are questioning why they need to have an agent to handle rookie contracts.

With no opportunity for negotiating, many players are questioning why they need to have an agent to handle rookie contracts. Indeed, one first-rounder in 2013, the Ravens’ Matt Elam, opted not to use (ahem, pay) an agent because there would be no difference in the numbers. Unable to affect the bonus or overall contract, agents are now mining other ways to prove their worth. Here’s what and how they’re negotiating under the new CBA:

Payment terms for signing bonus amounts. While smaller bonuses are paid upon execution, larger amounts are usually paid in installments, with agents pushing for earlier payouts and teams wanting deferrals.

Guaranteed salary. The first half of the first round has been able to secure fully guaranteed four-year contracts. The fourth-year guarantee negotiations are integral further down the round. Second-round contracts usually have guarantees for the first and second year, and so on.

Offsets. Offset language allows teams to recapture guaranteed money if the player is released and signs with another team, preventing “double-dipping.” Teams are typically insistent on having this language, and they’ve been largely successful in getting it, trading better payment terms and/or cash flow to maintain their precedent.

Early roster bonuses. Agents try to separate out early roster bonuses from salary, payable in March, to force teams to make decisions on players during a month when they would enter a more open marketplace as opposed to later in the offseason.

While negotiating these items are important, especially during later years of the contract, they affect structure and administration of the numbers, but not the numbers themselves.

Pace

Preset contract numbers have made the pace of rookie signings in mid-May mimic the pace of rookie signings in mid-July in the NFL’s old way of doing business. The Bears, led by longtime contract negotiator Cliff Stein, signed their entire 2014 class of rookies in four days. The Raiders have already secured the fifth pick in the draft, Khalil Mack—a remarkably swift resolution for such a high pick. (I once negotiated the fifth pick of the draft, A.J. Hawk, in a three-month back-and-forth that resulted in a 63-page contract.) Indeed, where teams used to point to the start of training camp as a target date for having their picks signed, some teams are now targeting that date at the start of minicamp.

At 5 p.m. EDT on Wednesday, a mere 11 days since the 2014 draft concluded, more than half of the 256 selections were signed. The numbers, by rounds:

Round Picks Signed
1 7
2 12
3 11
4 28
5 27
6 32
7 34
  Total: 151

.
Rookie holdouts are now relics of a bygone era. While some negotiations will not resolve until the eve of training camp, the holdups will be about structure, not compensation. As a top union official told me, a “highly-trained monkey could negotiate these numbers.”

Welcome to the new age of rookie contract negotiations in the NFL. Don’t blink or you may miss all the signings.

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15 comments
Mech
Mech

I think what most of the players have realized is that this has also translated into lower salaries all the way around. Rookie contracts needed to be overhauled but with no negotiation they have held down contracts in the out years also. In my opinion that's a good thing but I see the NFLPA wanting to change that when a new contract comes up and get back some bargaining power. The lower tiers of the NFL are more like 4 years and out now, even good players can be replaced by the cheap labor of rookies. It is working to cause a caste system where there are the 4 year players and the big stars,,, the journeymen are looking for jobs.

pooterpita
pooterpita

Since the 2011 CBA has been in place it has really balanced everything. I personally think it is ridiculous that a player can make over 20 million period. Good, bad, right, wrong. That is to much money for a person who plays sports. It was getting way out of control there for a while. It took a Jamarcus Russell to show the league and NPLPA but only a fool didn't see that coming. Oh and now the question of Agents? Really? They were more than willing to hold a team hostage to get a 50 million dollar contract and now that it is gone they are upset about it? Actually the idea of a 20-23 year old kid not having an agent whispering in his ear (an agent that see's $$ and not a kid) would give that player time to grow, mature and not get milked for upfront money. When a Rookie deal expires than a now 34-28 year old Man can find an agent that he likes and has more experience and knowledge to work on. The added bonus is competition. You now have more teams that can be competitive and less dynasty. A Team can't buy players like they use to. The system in place is working. Let it work. 

premontb
premontb

I think its ironic to note that the veterans were all more than happy to help push rookie wages down, yet now those cheap rookie wages are the same thing that is costing a lot of veterans their jobs.

JackReacher32
JackReacher32

I knew that the new CBA had made things much easier for teams, because prices are set, but I was unaware that things had been that simplified. I applaud Matt Elam for choosing to forgo unnecessarily spending money when he knew the score [someone very smart was in his ear giving him very good advice].

The truth is agents are both parasites, and great tools, to be used by said athletes, but more frequently than not they give their players poor advice in key moments [before the combine, before pro-days, etc etc]. 

It is refreshing to read how little use they are during the most fragile stage of players' careers.

Edward8
Edward8

@Mech Not really. The NFL has a salary cap AND a salary floor. The total amount of money being paid to players is the same as it has always been. It has just been re-distributed from rookies to veterans.

Edward8
Edward8

@premontb Not really. The average length of the typical NFL career is shorter then the average length of the rookie contract. The league isn't awash in extra talent.It is always losing players to injury or decreased production/skill(from injury). The main incentive is still to win. Since the NFL has a salary cap and salary floor, the amount of money going to the players is set in stone. There is nothing new to be gained from dropping vets for rookies except rookies still have legs and vets are declining. Why have a less talented team at the salary floor of 118 million when you could have a winner with a team at the salary cap ceiling of 130 ,million? 12 million is not enough money when we are talking about a league with revenues of 9 billion a year. Besides the average super bowl winner since 2000 has been in the bottom 1/3rd in salary. Point is there isn't munch room to make money by having a few rookies instead of vets. You will lose triple what you make in reduced gate and swag if the team stinks.

eddie767
eddie767

In a way nothing has changed. The over paid rookies were forcing vets out, now it's the cheaper rookies doing the same. The only ones, this new CBA, helped were the owners. Like you said "how ironic".

tmadz
tmadz

@premontb That makes no sense. If you sucked, you wouldn't be a veteran. And rookies didn't get better just because the contracts got cheaper. 30% of the league is made up of non-drafted free agents.

eddie767
eddie767

It was his brother, who also happens to be an NFL player. Also, like you said , it's a shame you don't really want an agent but you do need one. The really good ones, imo, don't just go for 1st rndrs but all types since they realize a hungry player might end a being the better player.

Edward8
Edward8

@premontb Ask the Raiders singes if they think the rookie wage scale hurt them. Instead of the Raiders paying fair market for all those FA signings, they were forced to over pay every single one just to get to the salary floor or be fined gobs of money. 

Bongo
Bongo

@Ciscos @premontb Right.  The current system likely benefits star players, as teams theoretically have more money to spend on proven veterans and free agents.  The mid-career journeyman are the ones more likely to be passed over for cheaper, younger talent.

tmadz
tmadz

@eddie767 Agents are essential for veterans coming off rookie contracts and UFA's trying to get workouts or get signed.

JackReacher32
JackReacher32

@Bongo @Ciscos @premontb This is only if said journeyman have little, or nothing, to offer. If a player has been a career 2nd-3rd stringer, made most of his hay on special teams, it is likely time for them to move on to a regular job. The cycling in of rookie talent, and removing high priced special teamers, is essential if teams wish to stay competitive. There needs to be more room for potential stars to emerge.

The rookie wage scale was an absolute must: Sam Bradford making a guaranteed 50 million? was nothing short of ridiculous. He had done nothing to warrant that contract and as a result the Rams have basically had to tie themselves to him for longer than anticipated.

The fact is those players who prove their worth on the field deserve the real money. Additionally, veterans who can still produce will continue to get good 1-3yr deals [generally with a ton of the money coming in the way of signing bonuses or guaranteed money].

The NFL is in the business to make money and what better way to do that than constantly be looking for better talent. Be the best or step aside: there is no room for the average in this game, which is what makes it the number one sport in the US.

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