cowboyjoe
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Option bonuses could be a sticking point for first-round contracts
Posted by Mike Florio on July 15, 2010 9:50 AM ET
As talks continue to progress slowly, if at all, between first-round picks and the teams who love them (but not so much to overpay them), one of the sticking points for most of the round-one contracts comes from a phenomenon that has been used in recent years to maximize the money paid to players taken at the top of the draft.
Due to the nuances of the rookie salary pool, which makes it difficult if not impossible to satisfy the player's full range of financial expectations via a large signing bonus (we'd provide more details, but you'd be asleep quickly), the option bonus has become a key tool.
The option bonus is paid routinely in the second year of the contract. Technically, the option bonus adds another year onto the player's contract, as it did with Bucs quarterback Josh Freeman, a 2009 first-rounder who per PewterReport.com received his option bonus earlier this year, expanding his deal from four years to five. But it's primarily a vehicle for paying the players; indeed, most contracts containing option bonuses have a "non-exercise fee" in the same amount of the option bonus, meaning that the only real option for avoiding the payment is cutting the player.
So what's the problem in 2010? With labor uncertainty running rampant in league circles, it's unclear that there will be a 2011 league year. And this has raised concerns that first-round rookies signed in 2010 could be stiffed out of their option bonuses if there's no football in 2011.
The problem, as it's been explained to us, is that the teams aren't willing to agree to contractual terms that would result in the option bonuses being paid in 2011 regardless of whether a work stoppage occurs. And so the compromise used by first-round picks could end up being the same one used by the Jets in the D'Brickashaw Ferguson deal.
In that contract, a copy of which we obtained last week, the option may be exercised "not earlier than the first day of the League Year immediately following the 2010 League Year, and not later than the day after the 1st regular season game the Club has played in the same League Year." In English, "Sure, there might be a lockout, but you'll get your money whenever football comes back."
For the players, it means that they'll have to settle for waiting to get paid, if there's a work stoppage. They may not like it, but it's likely the best that they'll be able to.
Of course, they can also sit out the entire year, re-enter the draft in 2011 and not get paid at all if there's no football, and when they get paid it's be subject to a new rookie wage scale.
So, yeah, we suspect they'll end up agreeing to defer the option bonuses in the event of a work stoppage.
Posted by Mike Florio on July 15, 2010 9:50 AM ET
As talks continue to progress slowly, if at all, between first-round picks and the teams who love them (but not so much to overpay them), one of the sticking points for most of the round-one contracts comes from a phenomenon that has been used in recent years to maximize the money paid to players taken at the top of the draft.
Due to the nuances of the rookie salary pool, which makes it difficult if not impossible to satisfy the player's full range of financial expectations via a large signing bonus (we'd provide more details, but you'd be asleep quickly), the option bonus has become a key tool.
The option bonus is paid routinely in the second year of the contract. Technically, the option bonus adds another year onto the player's contract, as it did with Bucs quarterback Josh Freeman, a 2009 first-rounder who per PewterReport.com received his option bonus earlier this year, expanding his deal from four years to five. But it's primarily a vehicle for paying the players; indeed, most contracts containing option bonuses have a "non-exercise fee" in the same amount of the option bonus, meaning that the only real option for avoiding the payment is cutting the player.
So what's the problem in 2010? With labor uncertainty running rampant in league circles, it's unclear that there will be a 2011 league year. And this has raised concerns that first-round rookies signed in 2010 could be stiffed out of their option bonuses if there's no football in 2011.
The problem, as it's been explained to us, is that the teams aren't willing to agree to contractual terms that would result in the option bonuses being paid in 2011 regardless of whether a work stoppage occurs. And so the compromise used by first-round picks could end up being the same one used by the Jets in the D'Brickashaw Ferguson deal.
In that contract, a copy of which we obtained last week, the option may be exercised "not earlier than the first day of the League Year immediately following the 2010 League Year, and not later than the day after the 1st regular season game the Club has played in the same League Year." In English, "Sure, there might be a lockout, but you'll get your money whenever football comes back."
For the players, it means that they'll have to settle for waiting to get paid, if there's a work stoppage. They may not like it, but it's likely the best that they'll be able to.
Of course, they can also sit out the entire year, re-enter the draft in 2011 and not get paid at all if there's no football, and when they get paid it's be subject to a new rookie wage scale.
So, yeah, we suspect they'll end up agreeing to defer the option bonuses in the event of a work stoppage.