Teams Have All the Leverage On Rookie Contracts, Another Topic For Future CBA Negotiations

Roquan Smith's holdout from Bears camp shows us another issue that will come up in the next CBA negotiation

All but one of the 256 players selected in the 2018 NFL Draft were signed, sealed and delivered to training camp prior to the calendar turning to August. The lone player on the outside looking in is the Bears’ Roquan Smith, who is holding onto a slippery pole of hope for a modicum of change of contract language. In a system tilted heavily toward management, we wish Smith, the 8th overall pick in the draft, luck in his lonely crusade.

Now seven years into a 10-year collective bargaining agreement, the rookie compensation system has settled into a pattern of players signing earlier and earlier, with most contracts done by mid-June and only a rare player every couple of years missing more than a training camp day or two. And while agents seek to differentiate themselves with highly limited negotiating options, teams are finding more ways to impose their leverage on incoming players with no true ability to say no. Let’s examine.

Rookie sacrifice

Of the many issues facing owners and players during the 2011 CBA negotiations, it was always clear to me the issue that would be easiest to resolve: rookie pay.

Owners were embarrassed by the bloated contracts of high-profile, high-pick busts such as Ryan Leaf and JaMarcus Russell. Teams were frustrated with agents leveraging them with top picks signing the most player-friendly contracts in the league, with bells and whistles including second signing bonuses, player options, voids, buybacks and more. Having negotiated only one top 10 pick in my time with the Packers (AJ Hawk, the fifth overall pick in 2006), I can say firsthand that these were among the hardest contracts to negotiate of any players in the league.

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Team owners were not the only ones frustrated with the previous system of rookie pay. Veteran players were resentful of top rookies passing them in the marketplace before taking a snap. And, or course, veteran players were leading the NFLPA in CBA negotiations. Thus, the “rookie pay issue” was one for which there was no disagreement between the two sides: Rookies made too much; something had to change.

And change it did. The new CBA (1) predetermined compensation and signing bonus for all draft picks; (2) mandated that draft picks sign for four-years, even adding a team option for a fifth year for first-round picks; and (3) prevented any drafted player from renegotiating his contract until he completes three seasons in the league. In the past, renegotiations could happen at any time Now, players who produce early in their careers are saddled with fixed and undervalued pay until renegotiation is allowed. This leads to one-sided situations such as that of Cowboys quarterback Dak Prescott, now playing for $630,000 while comparable players make $25-30 million. And the Cowboys can hide behind the “no renegotiation” rule rather than address the inequity.

In the prior CBA, top picks were making up to $50 million in guaranteed money. Eight years later, top picks now make up to $30 million. While no one is crying for these players, the point is that rookie compensation was drastically altered and will likely never return to previous levels. Incoming players for 10 classes of rookies (and more to come) were an easy sacrifice.

Word games

While the CBA presets compensation for every pick, it does not preset the “back side” of the contract: language and terms that, in many cases, can be equally or more important than the money.

Player contract negotiations are ultimately about allocation of risk. No one truly knows if the player will become a superstar or a bust; a model citizen or an outlaw; a great value or an overpaid liability. The “back side” of the contract attempts to address potential “worst case” scenarios as team negotiators work to mitigating risk. And while guaranteed contract years certainly allocate risk to the team, NFL teams are finding new and different “back side” language every year to alleviate that risk. The Bears’ dealings with Roquan Smith are the latest example.

It had already become commonplace for teams to void future guarantees if a player were to be suspended by way of the conduct policy or steroid policy. Now emboldened by this precedent, teams like the Bears are looking to invalidate future guarantees based on discipline for on-field conduct (although unclear if the scope of the clause would include the murky new helmet-lowering rule). Roquan Smith and his agents are fighting the good fight for now, but we all know how this story will likely end: Smith will report to camp soon (if not by the time you read this) with no, or very limited, concessions.

Agent zero

Let’s give credit where credit is due: Agents for first-round players have managed to negotiate more secure guarantees for first-round picks than for any NFL veteran player. The first 20 or so draft picks now regularly achieve fully guaranteed contracts for the entire four-year contract term (with players lower in the round getting partial guarantees in the fourth year). A fully guaranteed four-year contract is something that no veteran NFL player—including Kirk Cousins, who had as much leverage as any NFL player in history and only received a three-year guarantee—has been able to negotiate.

With these full guarantees, teams have found ways to mitigate their risk. They do so with language voiding such future guarantees due to conduct off (and on) the field, as described above, as well as something that has become a staple in these negotiations: offset clauses. These clauses, a non-negotiable item for virtually every team, give teams financial relief if players are released at some point during the four years and subsequently signed by another team, in which case the new team’s pay reduces what is owed by the original team.

With such limited opportunity to separate themselves with compensation terms in rookie contracts, agents have been pushing back against offsets (without success) and imposition of these voiding of guarantees (with little success). CAA, the agency that represents the most first-round picks (including Smith), has been particularly vigilant on these issues. They held firm in talks with the Jets regarding Sam Darnold, ultimately negotiating better present and future cash flow in exchange for the Jets’ back side demands. CAA also represented the Chargers’ Joey Bosa, the rookie player who stayed out of camp the longest in this present CBA environment, ultimately making some modest gains in signing bonus payment cash flow. CAA uses these gains—as modest as they may be—in the recruiting of potential top picks which, judging by their success in first-round signings, seems to be working. Yet even the most powerful sports representation agency has very limited ammunition against NFL teams in rookie negotiations.

You, I, CAA and the Bears know that Smith will be in camp soon. The business of football always wins…

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Whither the NFLPA

In any discussion such as this, I am repeatedly asked about the players union. Many wonder whether the NFLPA is (1) sufficiently pushing back against such onerous clauses and (2) preparing to collectively bargain more player-friendly language into the next CBA. As to the first question, the union does talk to agents and advise them to stay strong, but we all understand the leverage equation between teams and rookies. As to back side language becoming a bargaining issue, well, we can add it to the list.

Potential areas for the NFLPA to try to fight back against the league include, but are not limited to: curbing commissioner power and demanding independent arbitration, improving minimum team spending requirements and inspections, re-setting the players’ revenue split, elimination or adjustment of the franchise tag, elimination or adjustment of marijuana testing, continued improvement of safety and concussion protocols, meaningful inclusion in new revenue streams such as gambling income and further allowance and tolerance of social activism. We can add advocacy toward more equitable contract language to the list.

The list begs the obvious question: What exactly does the union now have to bargain with in order to make these gains? Standing for the anthem? 99% of players are already doing that. More practice time in the offseason? Coaches care about that, owners can take it or leave it. It is hard to find areas where players are in a superior bargaining position in order to trade for gains elsewhere in the CBA.

Leadership extended but dormant

The two principals of this CBA negotiation, Roger Goodell (NFL) and DeMaurice Smith (NFLPA) now have contracts that extend past the current CBA. There is nothing holding them back from talking about the next CBA at any moment of any day. And although there appears to be some discussion around the current anthem policy fiasco, there has been no evidence that any CBA negotiations are occurring. Rather, we continue to hear ominous predictions about Armageddon in three years with lockouts, strikes, etc. While those types of headlines make for some clickbait, such predictions are unnecessary and pointless.

Goodell and Smith’s relationship has been characterized by a lack of trust, with Smith recoiling at the suggestion of a more of amicable relationship with Goodell such as the one his predecessor, Gene Upshaw, had with former commissioner Paul Tagliabue. I get it; Smith does not want to appear “chummy” with Goodell, but there should be some kind of relationship to be able to talk directly—rather than through lawyers—to smooth issues, large or small.

I suppose we can understand why Goodell has not been proactive toward a new CBA; owners have a team-friendly deal in place and are reaping the benefits. However, it is hard to see why the union hasn’t engaged in trying to find some future common ground.

While NFL teams may not see it this way, more equitable contract language would be a good thing for everyone involved; one-sided bargaining relationships never end well. Players and agents would not feel taken advantage of by teams and teams would still have forfeiture clauses, just not as harsh as the present language they have. Unfortunately, compromise is rare in a relationship that will require it in three years and, hopefully, well before that.

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