Vikings inserting bonus provision in new deals
The Minnesota Vikings made defensive end Jared Allen the highest-paid defensive player in the NFL last month, but also provided themselves plenty of financial protection in the deal. It’s the type of protection that could become increasingly popular around the NFL as teams deal with high-risk players in the post-Michael Vick era.
One of the key elements to Allen’s six-year, $74 million contract is a provision, pre-approved by the player, that allows the Vikings to convert an $8 million roster bonus Allen is due to receive in 2010 into a signing bonus. In such a case, the team would recoup its money from the player and the signing bonus would count under the salary cap for the remaining years of his contract. Under rules of the collective bargaining agreement, signing bonuses can be recovered by a team when a player violates his contract; a roster bonus can’t.
That was a key issue in Vick winning the right to keep approximately $16.25 million in a federal court judgment handed down in February. That ruling came after the Atlanta Falcons had initially won the right to recover the money because Vick was sentenced to federal prison on charges related to dog fighting last year.
In light of the Vick decision, which the NFL has appealed, Minnesota has come up with this provision in contracts signed by multiple big-money acquisitions this offseason. According to an NFL Players Association source, several other franchises have utilized this practice, though specific examples were not provided. Minnesota included the provision in contracts for safety Madieu Williams and wide receiver Bernard Berrian, which made the clause acceptable to Allen, said his agent Ken Harris.
“This is something the Vikings did with other players they signed this offseason, so it was consistent with everyone,” Harris said. “Jared was not being singled out, so we were willing to do that.”
However, the talented Allen, who had 15½ sacks in 14 games last season despite playing with the 4-12 Kansas City Chiefs, comes with more baggage than the other aforementioned newcomers. He was arrested or charged for driving under the influence three times between 2002 and 2006, including twice in a five-month span in 2006. He spent 48 hours in jail for the latter arrest and was suspended for the first two games last season by the league as a result of the 2006 incidents.
Harris said Allen has taken his treatment under the league’s substance-abuse policy very seriously. In fact, he appealed the four-game suspension handed out by the league for violating the league’s substance-abuse policy and had his punishment reduced to two games. Still, there is no doubting that a relapse could be a serious problem for Allen.
Despite his history, the Vikings gave up the No. 17 overall pick in the first round, two third-round picks and exchanged picks in the sixth round to get Allen from Kansas City. That was all in addition to the contract. Allen was a franchise player for the Chiefs, meaning that he was allowed to negotiate a deal with other teams, but compensation was required if the Chiefs let him go to another team.
To protect themselves, the Vikings included language in the contract for the first two years that allows them to terminate the deal if he’s arrested or suspended. In addition, Allen’s $15.5 million signing bonus is guaranteed only for injury. Signing bonus money is considered payment as a promise from the player to fulfill the terms of his contract.
However, roster bonus money can’t be recovered because it is considered “earned” income under the terms of the collective bargaining agreement.
That issue was important not only in the Vick decision but also in a decision in a dispute between wide receiver Ashley Lelie and the Denver Broncos where Lelie was allowed to keep roster bonus money in 2006. In the Vick case, the Falcons had roster bonus money treated as signing bonus by guaranteeing it, but the language of the contract wasn’t formally changed, creating an obvious loophole.
In the case of the Allen contract, NFL Players Association lawyer Richard Berthelsen said the union would still likely fight the league if Allen were to ever lose the money. However, the fight might be more difficult this time because of the clause, which was deftly crafted by Minnesota vice president of football operation Rob Brzezinski.
The other key difference between roster bonus and signing bonus is how they are counted against the salary cap. In the case of a roster bonus, all of the money paid counts in that season. So for Allen, the entire $8 million roster bonus he is set to receive in 2010 will count that year. By contrast, signing bonus is counted in portions over the length of a contract. For example, if a player receives a $5 million signing bonus as part of a five-year contract, only $1 million is counted each year of the deal. There are stipulations if the player is released or traded before he finishes the contract, but that’s the basic idea.
So why don’t teams simply put all the money in signing bonus to protect themselves? For one, there’s no guarantee a player will stay with the team long enough to receive what tend to be lucrative roster bonuses. Then there are issues of cash flow. Some teams simply don’t have the lump sum to pay out at a given time or to put the money in a fund to guarantee it will be paid later on. In addition, because teams are finding themselves further and further under the salary cap, roster bonuses are a way of making sure that they spend to the minimum amount required under the collective bargaining agreement.
Minnesota has traditionally been one of the teams to have the most money available to spend under the cap, meaning that the Vikings might actually prefer to spend the money as roster bonus as opposed to signing bonus.
The question now is whether more teams will copy what the Vikings have done. In some cases, it will depend on the leverage the player has. For instance, cornerback Asante Samuel – a hot commodity on the open market who signed a reported six-year, $57 million deal with the Philadelphia Eagles at the start of free agency – didn’t have that language included in his contract.
But at least one agent expects the clause will eventually become standard.
“With the contracts getting bigger and bigger, it’s going to be hard to fight teams on that language, even if you have a client who doesn’t have a single issue,” one agent said. “A lot of players aren’t going to worry about it because they’re confident they’re not going to get in trouble. That means that the guys who do get in trouble aren’t going to be able to fight it. As an agent, you don’t want to do that, but what are you going to do?”