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How binding is Vick's contract?
Falcons have trade, release options, but salary cap issues are substantial
By TIM TUCKER
The Atlanta Journal-Constitution
Published on: 07/09/07
On that giddy day in December 2004 when the Falcons signed Michael Vick to a 10-year, $130 million contract, Arthur Blank gushed: "He's a Falcon for life."
If, theoretically, the Falcons wanted to trade or release their embattled quarterback, his contract would not necessarily preclude it.
The biggest hurdle would be the impact against the team's salary cap, but that impact, although still hefty, shrank as of June 1. The hit would be $6 million-plus for 2007 and about $15 million for 2008.
Property owned by Vick is at the center of an ongoing investigation of an alleged widespread dogfighting operation. The Falcons repeatedly have declined to comment on the situation and did so again Monday, three days after federal investigators executed a second search warrant at Vick's Surry County, Va., property.
The Falcons have given no indication of any inclination to unload Vick, who has been involved in a series of off-field controversies. But from a contractual standpoint, what would happen if the team got to that point with him?
NFL contracts, unlike those in Major League Baseball, the NBA and the NHL, are not fully guaranteed. That means football players are assured of receiving only the portions of their contracts that are stipulated to be guaranteed — generally signing bonuses. Vick's contract included $37 million in guaranteed bonuses.
The rest is in base salary, which increases each year, payable only as long as he remains on the team.
The NFL's standard player contract stipulates various grounds under which clubs may terminate the contract. One such stipulation: ". . . f player has engaged in personal conduct reasonably judged by Club to adversely affect or reflect on Club, then Club may terminate this contract."
If a contract is terminated under that clause, the player has the right to file a grievance and have an arbitrator decide whether the club acted reasonably.
Aside from "personal conduct," other grounds for termination of NFL contracts are "unsatisfactory" skill or performance by the player and a "need" by a team to make "room" under the salary cap for other players. The standard contract also stipulates that if an injured player is released, he'll be paid for the balance of the season in which the injury was suffered.
While NFL teams usually can terminate player contracts at will, they cannot escape the salary-cap ramifications.
While the guaranteed bonuses generally are paid at the beginning — or in the early stages — of long-term contracts, teams are allowed to amortize the bonuses over the length of a contract (up to a maximum of six years) for salary-cap purposes. Rather than taking the full hit against the cap when the bonus(es) are paid, teams spread out the impact by counting a portion against the cap each year. (It's not necessarily the same amount each year, depending on how creatively the bonuses are structured. In Vick's case, the Falcons exercised for cap purposes a clause to convert "roster bonuses" to "signing bonuses" in 2005 and 2006.)
But here's the rub: When a player is traded or released, the cap impact "accelerates," as the NFL's collective bargaining agreement puts it. All bonus money previously paid to the player, but not yet counted against the cap, has to be accounted for within one or two years, depending on the date the player is unloaded.
The key date is June 1.
Trading or releasing a player after June 1 is cap-friendlier than doing so on or before June 1:
• If a player is released or traded on or before June 1, the full unamortized portion of his bonus(es) count against that year's cap. In Vick's case, if he had been released or traded before June 1, roughly $22 million would have counted against the Falcons' 2007 cap — a hit that would have crippled the team's financial competitiveness for the coming season.
• If a player is released after June 1, the portion of the bonus(es) that were originally scheduled to count against that year's cap still do so, but the remaining cap impact is deferred until the following year. If the Falcons were to trade or cut Vick later this summer, $6 million-plus would count against the 2007 cap and the rest ($15 million-plus) against the 2008 cap. Spreading the impact over two years might make the impact somewhat more manageable, although still daunting.
The NFL salary cap is $109 million this year and is expected to rise by at least $5 million next year.
Also, a team saves the salary-cap charge of a player's base salary when it trades or releases him. Vick is due a base salary of $6 million this year and increasing amounts each year through 2013. Of course, a team would incur cap charges for a traded or released player's replacement.
If the NFL were to suspend Vick for one or more games, he would not be paid but his salary would count against the cap. The Falcons would be allowed an exemption to replace him on the roster for the length of his suspension.
When the Falcons jubilantly made Vick the NFL's highest paid player in December 2004, the potential — even hypothetical — impact of cutting ties were on no one's radar. Laughing that day about the mega-dollars in the contract, Blank told the media: "It should be officially understood and known now that I work for Michael Vick."
http://www.ajc.com/sports/content/sports/falcons/stories/2007/07/09/0710vick.html
Falcons have trade, release options, but salary cap issues are substantial
By TIM TUCKER
The Atlanta Journal-Constitution
Published on: 07/09/07
On that giddy day in December 2004 when the Falcons signed Michael Vick to a 10-year, $130 million contract, Arthur Blank gushed: "He's a Falcon for life."
If, theoretically, the Falcons wanted to trade or release their embattled quarterback, his contract would not necessarily preclude it.
The biggest hurdle would be the impact against the team's salary cap, but that impact, although still hefty, shrank as of June 1. The hit would be $6 million-plus for 2007 and about $15 million for 2008.
Property owned by Vick is at the center of an ongoing investigation of an alleged widespread dogfighting operation. The Falcons repeatedly have declined to comment on the situation and did so again Monday, three days after federal investigators executed a second search warrant at Vick's Surry County, Va., property.
The Falcons have given no indication of any inclination to unload Vick, who has been involved in a series of off-field controversies. But from a contractual standpoint, what would happen if the team got to that point with him?
NFL contracts, unlike those in Major League Baseball, the NBA and the NHL, are not fully guaranteed. That means football players are assured of receiving only the portions of their contracts that are stipulated to be guaranteed — generally signing bonuses. Vick's contract included $37 million in guaranteed bonuses.
The rest is in base salary, which increases each year, payable only as long as he remains on the team.
The NFL's standard player contract stipulates various grounds under which clubs may terminate the contract. One such stipulation: ". . . f player has engaged in personal conduct reasonably judged by Club to adversely affect or reflect on Club, then Club may terminate this contract."
If a contract is terminated under that clause, the player has the right to file a grievance and have an arbitrator decide whether the club acted reasonably.
Aside from "personal conduct," other grounds for termination of NFL contracts are "unsatisfactory" skill or performance by the player and a "need" by a team to make "room" under the salary cap for other players. The standard contract also stipulates that if an injured player is released, he'll be paid for the balance of the season in which the injury was suffered.
While NFL teams usually can terminate player contracts at will, they cannot escape the salary-cap ramifications.
While the guaranteed bonuses generally are paid at the beginning — or in the early stages — of long-term contracts, teams are allowed to amortize the bonuses over the length of a contract (up to a maximum of six years) for salary-cap purposes. Rather than taking the full hit against the cap when the bonus(es) are paid, teams spread out the impact by counting a portion against the cap each year. (It's not necessarily the same amount each year, depending on how creatively the bonuses are structured. In Vick's case, the Falcons exercised for cap purposes a clause to convert "roster bonuses" to "signing bonuses" in 2005 and 2006.)
But here's the rub: When a player is traded or released, the cap impact "accelerates," as the NFL's collective bargaining agreement puts it. All bonus money previously paid to the player, but not yet counted against the cap, has to be accounted for within one or two years, depending on the date the player is unloaded.
The key date is June 1.
Trading or releasing a player after June 1 is cap-friendlier than doing so on or before June 1:
• If a player is released or traded on or before June 1, the full unamortized portion of his bonus(es) count against that year's cap. In Vick's case, if he had been released or traded before June 1, roughly $22 million would have counted against the Falcons' 2007 cap — a hit that would have crippled the team's financial competitiveness for the coming season.
• If a player is released after June 1, the portion of the bonus(es) that were originally scheduled to count against that year's cap still do so, but the remaining cap impact is deferred until the following year. If the Falcons were to trade or cut Vick later this summer, $6 million-plus would count against the 2007 cap and the rest ($15 million-plus) against the 2008 cap. Spreading the impact over two years might make the impact somewhat more manageable, although still daunting.
The NFL salary cap is $109 million this year and is expected to rise by at least $5 million next year.
Also, a team saves the salary-cap charge of a player's base salary when it trades or releases him. Vick is due a base salary of $6 million this year and increasing amounts each year through 2013. Of course, a team would incur cap charges for a traded or released player's replacement.
If the NFL were to suspend Vick for one or more games, he would not be paid but his salary would count against the cap. The Falcons would be allowed an exemption to replace him on the roster for the length of his suspension.
When the Falcons jubilantly made Vick the NFL's highest paid player in December 2004, the potential — even hypothetical — impact of cutting ties were on no one's radar. Laughing that day about the mega-dollars in the contract, Blank told the media: "It should be officially understood and known now that I work for Michael Vick."
http://www.ajc.com/sports/content/sports/falcons/stories/2007/07/09/0710vick.html
