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Good Piece On New Contract Structures In '05


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A few days old, missed it somehow. Helps explain why Pollack took so long, Bengals were forced to change things this year (horrors!). From Lenny @ espn...


Option bonuses, incentives bigger part of deals

Since tailback Cedric Benson remains without a contract, there still is a chance that the aggregate signing bonuses accumulated by this year's first-round draft choices can top the $95.5 million bounty in upfront money hauled in by the Class of '04.

Provided, that is, the Chicago Bears are willing to ante up a record $67.5 million signing bonus to get the former University of Texas star runner, and the last first-rounder without an agreement, into camp.

Such largesse on the part of the Bears, who have publicly declared they have made their best offer, isn't likely. Fact is, with $2.48 million in rookie pool funds left for Benson's deal, and the constraints that the dwindling collective-bargaining agreement has placed on negotiations this year, it's impossible. And so this year's first-round signing bonus haul, which currently stands at $28.01 million, will be one of the lowest in recent history, even after Benson ends his lengthy contract impasse.

Even at that level, though, don't worry about planning any telethons for the players taken in the first round this year.

Because, folks, they aren't exactly starving.

"I think the way we look at contracts, given the parameters of the collective-bargaining agreement and all the hoops we had to jump through this year, has changed," said veteran agent Jimmy Sexton, who this year represented Dallas Cowboys first-round defensive end Marcus Spears. "In the past, we always talked about the signing bonus, that was the big deal. Now the emphasis has become on the total guaranteed money in a deal: signing bonus, option bonus, roster bonus, one-time [incentives]. And in that regard, if you look at the first round [this year], the increases definitely were there."

Indeed, in a year when some teams were privately contending that the increases in the first round would have to be capped at 8 to 10 percent over corresponding 2004 deals, most first-rounder players fared far better than that. The permutations of first-round contracts this year make their value a little more difficult to divine but, just on rough numbers, it appears the average increase is in the 13- to 14-percent range. Nearly every first-rounder got a double-digit increase over the player in the same slot a year ago. And when the experts said that Tom Condon and Ken Kremer of IMG Football couldn't come up with a way to top themselves, the pair negotiated a 20 percent increase for the No. 1 pick in the draft.

All of which certainly reduces the impact on the fact that 16 first-rounders this year agreed to contracts that included zero signing bonus money. Nope, that's not a typo. Zero bonus money. So no matter what transpires in the Benson negotiations, fully half of the first-round choices in 2005 did not receive signing bonuses.

Last year, when there were just two deals in the first round with no signing bonus money, those signed by New York Jets middle linebacker Jonathan Vilma and Bills quarterback J.P. Losman, the 32 first-round selections averaged $2.98 million in signing bonuses. Five rookies pocketed signing bonus checks of more than $5 million. The average signing bonus this year is $903,387, down two-thirds from a year ago, and the only player to get a signing bonus of more than $3 million was wide receiver Braylon Edwards, who received an upfront payment of $6.5 million from the Cleveland Browns.

The first pick in the draft, San Francisco quarterback Alex Smith, got a signing bonus of just $1 million. In the top slot a year ago, Eli Manning got a $3 million signing bonus. But here's why: In 2005, signing bonus money became all but irrelevant in negotiations, because in terms of total guaranteed money, Smith will earn $24 million, a 20 percent bump over the $20 million in bonuses and guarantees that Manning received in 2004.

Why all of the financial gymnastics this year? Well, on June 10 in this space, we noted that, because of the limitations resulting from the lack of an extension to the collective-bargaining agreement, and other related constraints, first-round negotiations figured to be significantly more difficult this year. Eleven weeks later, with everyone but Benson now signed in the first round, it's obvious that team negotiators and agents found mechanisms for overcoming esoteric yet challenging hurdles like the five-year proration limit, the so-called "Deion Sanders Rule" and tight rookie allocation pools. Many of the techniques they used were the ones they suggested to us nearly three months ago.

While signing bonuses weren't huge, creativity was considerable this summer. And although the number of first-round picks absent from the first day of training camps reached the highest level in a decade, holdouts weren't particularly lengthy and contract agreements were struck with a notable lack of public acrimony. The key in most cases: maximizing the total guaranteed money in a deal, even if it meant totally bypassing the standard signing bonus that had historically been so essential to first-round contracts.

"The trend this year definitely became all about guaranteed money," Dan Ferens, the director of negotiations for the Houston Texans, who signed first-round defensive lineman Travis Johnson to a zero signing bonus deal. "Two or three years ago, all we heard from agents was, 'OK, what's the value of this contract for the first three years?' I doubt many teams heard that this time around. Everyone was out to absolutely maximize the total guaranteed dollars. It was different."

Different, in fact, on a lot of levels. In the past at ESPN, we characteristically reported three elements of first-round contracts: the length of the deal, the total value, and the signing bonus money. More often than not this year when NFL reporters phoned the news desk with a contract agreement, the pertinent numbers were length, total value and total guaranteed dollars. Why? Because with the intricacies of the contracts this year, and everyone involved trying to overcome the special circumstances built into the system for 2005, it was the only fair barometer for assessing most contracts.

This was, for all intents and purposes, the year in which the signing bonus was rendered all but insignificant. In addition to the 16 contracts negotiated without a signing bonus, another nine deals included signing bonuses of $1.5 million or less. In one stretch of the first round, 14 of 15 contracts include zero signing bonus money.

Holding to what they had told us 11 weeks ago, many agents simply inverted the initial singing bonus with the second-tier option bonus, payable next March in most cases. Some teams included double option bonuses. Others guaranteed base salaries, in some cases even after the option bonus is exercised, when bases generally are reduced. There were a lot of so-called "one-time incentives" -- bonuses that are tied to a player reaching predetermined playing time and/or performance levels -- included in first-round deals. And base salaries were larger in some cases, which allowed for bigger increases under the rule that limits salary bumps to 25 percent.

Because franchises could amortize signing bonuses over just five seasons this year, as opposed to being able to prorate for either six or seven years in the past, most contracts are shorter. Of the 31 completed deals, 19 are straight five-year contracts. There are 10 more contracts that are longer in term, but which void to five years. What is obvious is that every agent was looking to strike the best deal for his client and that what worked well for one didn't always fit for another.

Ben Dogra of SFX Sports, for instance, represented four players in the first round. Two of his deals include signing bonuses and two don't. Of IMG Football's four clients in the first round, three received signing bonuses and Cincinnati linebacker David Pollack got no signing bonus among his $7.65 million in guarantees.

“You basically had to look at the individual case, the rookie pool number of the team, all the factors, and come up with a strategy for guaranteeing the most money possible for your [client]," Condon said. "There was a lot of give and take."

From both sides, it seems, of the bargaining table.

"I think most teams had to be more flexible than in the past in terms of the amount of guaranteed money in the contracts," acknowledged Mark Levin, the director of salary cap and agent administration for the NFL Players Association, and a man who very closely scrutinizes every contract that crosses his desk. "That was a key to getting deals done."

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