PDA

View Full Version : Complicated Contract Extensions for Key Players


Chidi29
04-02-2010, 11:53 AM
Just finished up reading an interesting article from the Charlotte Observer regarding major contract complications with two of their young players. This is due to the "30 percent rule" that exists, which isn't anything new, that states base salaries can increase by more than 30% a year while a player is still under contract.

Normally, that isn't too much of an issue and the rule is a pretty good idea, preventing teams from heavily backloading deals and cutting players before they get the "big money". But for players that are coming off their rookie deals, such as Holmes and Woodley, who have small base salaries, $755,000 and $550,000 respectively, their base salaries would continue to be minimal if a new deal is reached before they become free agents next season. Panthers center Ryan Kali is in the exact same boat as Woodley. Both make the same amount of money in base salary this year. The article illustrates how Kali's base salaries would be set up if he were to sign a five year deal.

"A market-rate, five-year, $30 million deal for Kalil beginning at a $663,000 base salary this season would top out at a $1.275 million base in 2014. His base pay would total $4.845million for the life of the deal, requiring the Panthers to give him a signing bonus of more than $25million to get to the market rate."

As for Willilams, who is makiing just 25K less than Holmes will this season,

"Williams' basis for determining his base pay is a 2009 figure of $1.61million, 30 percent of which is $483,000. His base salaries in a five-year, $45 million deal would total $15.295 million, leaving nearly $30 million to be paid via signing bonus."

What this all means is that in order for the deal to be of fair market value, the signing bonuses in all these contracts are going to have to be HUGE. Casey Hampton only got about $11 million guaranteed from us (Granted, the circumstances are a bit different). Kali would have to make more than double that just to get fair market value.

Similar situations will occur for Holmes and Woodley. We knew that they weren't going to be cheap as is, but this will only further complicate things. Omar, once again, you'll have your work cut out for you.

LINK to the orginal article I read
http://www.charlotteobserver.com/2010/04/02/1350953/williams-kalil-in-payday-limbo.html

HughC
04-02-2010, 12:33 PM
I thought the two sides could still get around that, to a certain extent, by including other options such as a roster bonus, workout bonus and likely to be earned incentives. Those are common in NFL contracts but the article fails to mention them.

Chidi29
04-02-2010, 02:24 PM
I thought the two sides could still get around that, to a certain extent, by including other options such as a roster bonus, workout bonus and likely to be earned incentives. Those are common in NFL contracts but the article fails to mention them.

Those are all virtually guaranteed money.

The point the article is trying to make is that it would take a huge investment of guaranteed or nearly guaranteed money to stop these guys from hitting the open market.