NFL Agent's Guide to Negotiating a Rookie Contract
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I am going to be very real for a moment here.
Three years ago, before the NFL players were locked out and the current collective bargaining agreement (CBA) was in place, this would have been a much better article.
But to be honest and fair, by the time you finish reading this, I probably could have started and finished a rookie contract deal. The NFLPA and NFL agreed to a rookie salary cap in the past CBA, and so, negotiations are more or less done for the agent.
As a competitor and someone who takes pride in my negotiation skills, this deal takes the fun out of the process. But being a former player, I see the value in the rookie pool and how the system keeps enormous salaries for unproven rookies to a minimum. So in this article, I will focus more on the rules of the rookie pool and how each draft position is slotted.
Each player drafted in the first round will sign a four-year contract with a fifth-year option. For the option to come into play, the team must give the player written notice after the final game of his third season but before May 3 of the next league year.
Each draft position is slotted with a certain amount of money that the particular draft position can max out. Therefore, the first overall selection will no longer receive a $20 million signing bonus.
In perspective, last year’s first overall selection, Indianapolis Colts quarterback Andrew Luck, received a signing bonus of just over $14.5 million, but his base salary in 2012 was $390,000. His total guarantee for his entire contract is just a little over $22 million. That is cheap for a franchise quarterback.
The fifth-year option is different for the top 10 selections and picks 11-32. For the first 10 players selected, their fifth-year option shall equal the Transition tender that applies in the fourth year of the rookie’s contract for players at the same position at which he participated in the most plays during his third year.
So, Luck would be compared with other quarterbacks. If a player played cornerback his third season but moved to safety his fourth year, he would get the Transition tender for cornerbacks.
The entire Paragraph 5 is guaranteed for cap, skill and injury at the start of the player’s fifth league year. The same standards hold true for picks 11-32 except how their salary is determined. These players, if the option is exercised, get a fifth-year salary that is average between the third- and 25th-highest salaries at their positions.
One thing this CBA did was try to equal out the pay for players in Rounds 3 through 7 who may out-perform their contracts. Players drafted in these rounds have a non-negotiable escalator called the Proven Performance Escalator. Players selected in Round 1 and 2 or undrafted free agents are not eligible for this incentive.
Players qualify for this bump in salary in year four of their contract if they participate in a minimum of 35 percent of their club’s offensive or defensive plays in two of his first three regular seasons. A player can also qualify for the escalator if he has a cumulative average of at least 35 percent of his club’s offensive or defensive plays over all three seasons.
If said player qualifies, his salary shall equal the difference between the amount of the Restricted Free Agent qualifying offer to a Right of First Refusal player in his fourth season and the player’s year four rookie salary. So if the tender amount is $1.4 million and the player who qualifies for the escalator has a year four salary of $1 million, his year for Paragraph 5 will be $1.4 million. This is calculated by $1.4 million minus $1 million equals $400,000. Add that $400,000 to the player’s original Paragraph 5, and it is a nice raise for achieving the escalator.
All players drafted in Rounds 2 through 7 have to sign a four-year contract. Undrafted players sign three-year deals. Since each team is allocated a maximum amount it can spend on all its rookies, the negotiations are quick and more or less fixed in place. This is why you will not see a player who was drafted 100 overall get more money than the player drafted in the No. 99 spot. That used to be a feather in the cap of any good agent: trying to get a better contract than the player drafted two or three slots ahead of your client. The new CBA all but eliminated that.
There is room for some performance incentives to be negotiated, but most teams will limit this after Round 2. The signing bonus for each slot is more or less set even though some NFL teams will try and low-ball newer agents to save some money.
The NFLPA does a solid job of breaking down the most each draft slot should make, so as an agent, if you follow the formula, you will max out the signing bonus for the client.
I wish I could sit here and say negotiating a rookie deal is as much fun as doing an unrestricted free-agent deal in March, but that would be a lie. Some agents will hold-out a first-round player in hopes of securing more guaranteed dollars since that is really the only straw the agent has. But holdouts are never good for anybody, and if anything, they put the player behind in his learning.
So negotiating a rookie deal has lost some of its luster in recent years, but the system in place should help players who earn the money see the big dollars in their second contract. That is where the fun negotiations for an agent have gone.
(Some information obtained for this article taken from NFL/NFLPA CBA.)
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