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Signing rookies may be tricky this year
By Pat Kirwan
National Editor, NFL.com
(May 10, 2005) -- The collective bargaining agreement (CBA) is up for an extension and I have very little doubt that the extension will happen. If it happens in time to negotiate and sign the 2005 draft picks is another story.
In the next few weeks, you are going to start hearing about the ripple effects of negotiating rookie contracts without a CBA extension. It can have an impact on how deals are structured and it can put stress on a team's salary-cap situation if they are not creative.
Last year, for example, a rookie contract with a big signing bonus could be spread out over six years for salary-cap management purposes. If a player received a $6 million signing bonus and signed a six-year contract, you simply divided the years into the bonus to determine the cap charge -- $1 million of cap space per year for the $6 million dollar bonus. That is not the case this year, which can be problematic for cap management.
This year, no matter what the bonus is, the most you can spread it out over is five years. If you take the same $6 million bonus you gave out last year to a first-round pick and divide it by five, the cap charge is $1.2 million a year. So what's the big deal about an extra $200,000 of cap space? Well, let's take a look at the impact for a team's entire draft class.
To be fair, second-day draft picks usually sign shorter deals and it has no effect on them, but the shorter amortization period can impact the first three rounds, where the real money is spent any way.
Let's use the 2004 Oakland Raiders rookie contracts for the first three rounds:
Marcus Spears was one of two first-rounders for the Cowboys, which could stress their salary cap.
All three of their picks (Robert Gallery, Jake Grove and Stuart Schweigert) received six-year contracts. Their combined signing bonus equaled $11.37 million. The Raiders are paying off that bonus money at a rate of $1.89 million a year. If they gave the same amount of bonus money out this season, it would be a $2.27 million cap hit. An extra $380,000 against the cap is starting to be significant and it gets more stressful. Let's assume the rookie contracts go up five percent, which is about the normal growth, although it could be more. All of sudden, teams could be hit for close to an extra $500,000 of cap space to sign the rookies. That is the price of one decent player on your roster.
Of course, teams are discussing ways to work around the extra cap charges by giving some option bonus money in the second year and less signing bonus in the first year. Many teams will still want to get players signed to six-year deals and suffer the lack of ability to spread out signing bonus.
Finally, it is important to point out if the CBA were not to be extended, then players who finished four years and expected to become unrestricted free agents looking for a huge pay day would find out that in uncapped years, they would not be unrestricted free agents after four years. In uncapped years, players need five years minimum to gain free agency. There are reasons for both sides to work diligently to get the extension done.
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