Originally appeared in the July 1999 issue of the ABA Journal.
BY ANDREW J. McCLURG
As sports fans look forward to another season of exciting NFL football, the slow process of coming to contract terms with this year’s draft picks continues. Why does it take so long to sign players to contract? These sports law insights help explain it:
High-Low. As with all contract negotiations, the basic negotiating strategy in the NFL is the high-low method. The draftee’s sports agent starts high and the NFL team starts low. Each side compromises until agreement is reached. Here’s a typical negotiation:
Agent: We demand a $50 million signing bonus, title to the stadium, a new Ferrari and renaming of the city after my client.
NFL team: Hundred dollar Wendy’s gift certificate, free stadium parking on game days, new Huffy ten-speed and we’ll rename the offensive line coach’s cat after your client.
Agent: $40 million signing bonus, all stadium concessions, vintage Corvette with fuel injected engine and rename a major highway after my client.
NFL team: Ten thousand dollars, all non-alcoholic beer concessions, vintage Pinto with fuel injected passenger compartment and rename the alley behind the mayor’s house after your client.
This continues for months, sometimes through a bitter training camp holdout, until the parties agree on what they were willing to accept at the beginning.
First Round Pick Exception. A major negotiating exception exists for first round draft picks. Signing these players is seen as so vital to a team’s success that they get just about whatever they demand.
Look at the compensation package obtained by a hot first-round quarterback in the ‘99 draft: “In consideration for his running and throwing, Player shall receive the Chrysler Corporation, Bill Gates’ checkbook and a major country to be named later.”
Incentives. NFL teams assume a huge risk when signing players of unproven pro potential to fat contracts. Lots of big bucks signees turn out to be busts. As a protective measure, NFL lawyers now routinely insert incentive clauses in contracts that provide for higher payments upon players attaining specified goals. Here’s a commonly used clause:
“Player shall be paid incentive bonuses according to the following schedule: 1. Avoiding DWI charges: $10,000; Avoiding drug charges: $100,000; Avoiding assault charges: $500,000; Avoiding Three Strikes and Your Out sentencing: $1 million.”
Sports Agents. Although sports agents get criticized for being stubborn negotiators, they can’t help it. It’s apparently part of their genetic makeup as I learned last week when visiting a sports agent friend. He told his kid to take out the trash and this colloquy ensued:
Kid: I’ll do it for twenty bucks and unlimited Nintendo privileges.
Agent dad: You’re outta your mind. I’ll give you fifty cents.
Kid: You insult me. And after all I’ve done for this organization. Perhaps my services are no longer valued here. Maybe I should call the Hammersteins next door and see if they’re in the market for an exceptional kid.
Agent dad: Alright, alright. Five bucks, but that’s my final offer.
Kid: Dad, I’m going to pretend I didn’t hear that.
While we anxiously await the season opener, I have a great programming tip for ESPN—televise the contract negotiations. No need to worry about losing viewers with a boring defensive struggle. Rumor has it the negotiations can get quite offensive.