Battle over guarantees delays signings of some top draft picks
An interesting tug-of-war is brewing, postponing deals between teams and some of the top picks in the 2012 draft.
The debate is whether top draft choices should get a chance to get more money in 2013 or 2014 if they are cut. Salaries for the top 16 draft choices are fully guaranteed through the first four years of their contracts. As in baseball and basketball, if a player with a guaranteed contract is cut, he knows he is going to get the final year or two of his salary. For a top-eight pick in the NFL draft, that might be worth between $2.1 million and $3.4 million. For a pick in the low teens of the first round, you're talking $1.15 million to about $1.5 million.
Compared to the $30 million to $50 million guarantees of the previous collective bargaining agreement, you might wonder why teams are concerned. Losing a few million dollars for a bad first-round draft choice shouldn't be a huge issue. But in negotiations, it's all about leverage and power. We'll see if the teams or the agents win this tussle.
As of Friday at 5 p.m. ET, half the first-round draft picks had signed.
The debate is over the "offset." The teams who draft the first eight players want to be relieved of their guaranteed obligations if they cut a draft choice and he signs with another team. Agents say the player should be able to get all his guaranteed money from his first team and keep the new money from the new team.
Credit the Carolina Panthers for staying out of this debate. Last year, they signed Cam Newton to a four-year, $22.025 million guaranteed contract and gave Newton's agents no offset language. They figured he'd be a success, and so far they are right. They did the same thing with linebacker Luke Kuechly, the No. 9 overall pick in the 2012 draft, who already has signed a contract.
So far, the new restrictive draft pool is working well. The new system has minimized chances for holdouts. By Thursday, 215 of the 253 draft choices had deals, and 16 of the 32 first-round picks had signed. Also, only nine franchise players, including the Saints' Drew Brees, and one restricted free agent, Mike Wallace of the Steelers, are unsigned. General managers are heading to vacations with minimal unfinished business.
But the offset battle will linger.
It's an agent's job to poke as many holes in a system as possible. Offsets are considered no-brainers and are part of the standard language of contracts. Players and their agents consider it a victory when there is no offset language in contacts because it gives them a chance to make a few extra dollars.
The work of smart agents destroyed the first rookie salary pool. When the old CBA started in 1993, rookie salaries were supposed to be slotted around cap numbers. Agents came up with second-year option bonuses that kept the first-year cap number low and put the player in position to collect huge bonuses. Before long, option bonuses and guarantees grew to $50 million. When the Raiders fanned on No. 1 overall pick JaMarcus Russell, they had to absorb a $32 million mistake because of the option bonuses and guarantees in his contract.
Since it took a lockout and threats of losing the 2012 season to get the current rookie salary pool, teams don't want this new system ruined.
There was a small battle this year over which first-round contracts would be fully guaranteed, but that is pretty much resolved. Last year, the top 16 picks had fully guaranteed contracts. The next three players got roughly half of their fourth-year salaries guaranteed. Agents this year tried to pressure teams with picks 17 to 20 to fully guarantee the contracts, but they weren't successful.
The battle at the top will take longer. From the agents' standpoint, they would like to use the pressure of having an unsigned first-rounder because of the offset to get concessions. Agents would trade off the offset if the team would waive the right to franchise the choice in 2017. The top eight draft choices will make less in four-year salaries than the top eight choices from the old CBA were making just for guarantees, so it's easy to understand why agents want another way to get leverage.
Overall, these aren't huge battles. Just label the offset skirmish as unfinished business before training camps open.
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