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27 Jan 2010

Under the Cap: Poison Pill

by J.I. Halsell

By now, most of us are aware that 2010 is going to be an uncapped year. Because of this, a number of players who would have been unrestricted free agents this offseason are going to become restricted free agents, much to their chagrin. The uncapped year changes the requirement for unrestricted free agency from four accrued seasons to six. During my time with the Redskins, our offseason film review mainly consisted of reviewing and scouting unrestricted free agents; it was rare that we would make the effort to review restricted free agents. However, with the most talented players with expiring contracts in 2010 being restricted free agents, you must do your due diligence on restricted free agents in the event that a player is tendered at a lower level than expected.

By the end of February, we will know at what level teams have tendered restricted free agents. The tenders in 2010 are as follows:

  • Right of First Refusal (also known as the low tender): $1,176,000 or 110% of previous year’s salary
  • Right of First Refusal With Original-Round Compensation: $1,176,000 or 110% of previous year’s salary
  • Right of First Refusal With Second-Round Compensation: $1,759,000 or 110% of previous year’s salary
  • Right of First Refusal With First-Round Compensation: $2,521,000 or 110% of previous year’s salary
  • Right of First Refusal With First- and Third-Round Compensation: $3,168,000 or 110% of previous year’s salary

Who are some of the more interesting names in restricted free agency this year who, had 2010 been a capped year, would have signed potentially market-setting or at least top-tier contracts in unrestricted free agency?

With all of the talent listed above, we could possibly see more movement in this uncapped year than is normal for the restricted free agency market. Historically, very few players have switched teams via restricted free agency. In recent memory, cornerback/return specialist Chris Carr moved from Oakland to Tennessee and tight end Ben Utecht moved from Indianapolis to Cincinnati. Given the value placed on draft picks in today’s NFL, those players who have moved via restricted free agency were tendered at the low level -- right of first refusal only. In the cases of Carr and Utecht, neither player was drafted when they came into the league. Their original teams could therefore only match their offer sheets and not receive any draft compensation for their departure. A study that I conducted while at the Redskins determined that since 2007, when the second-round tender was introduced, no player tendered at the second-round level or higher (first-round tender or first- and third-round tender) had ever received an offer sheet. (Wes Welker would have qualified as a second-round tender in 2007, but the Patriots worked out a trade with Miami rather than let the Dolphins match their offer sheet.) It will be interesting to see if this changes in the 2010 offseason, given the quality of the restricted free agent market.

One way to controversially encourage movement in the restricted free agent market would be a reintroduction of the "poison pill" concept. Rewind to the 2006 offseason: You may remember that guard Steve Hutchinson, who was given the Transition tag (essentially Right of First Refusal with no compensation for an unrestricted free agent), moved from Seattle to Minnesota by virtue of an offer sheet that contained a poison pill. The poison pill is a device that makes it virtually impossible for the original team to match the offer sheet. In Hutchinson's case, the poison pill language would have guaranteed the full contract value of $49 million if Hutchinson was not the highest-paid offensive lineman in Seattle, which was impossible due to Walter Jones' contract. Subsequently, the Seahawks signed restricted free agent wide receiver Nate Burleson to a poison pill contract containing language stating that, if Burleson played five games in the state of Minnesota, his full contract value of $49 million would be guaranteed. Clearly, the Minnesota Vikings could not match this provision since they obviously play their home games in Minnesota. However, unlike the Hutchinson transaction where Seattle received no compensation, the Burleson transaction netted the Vikings Seattle’s third-round pick due to the fact that Burleson, a former third-round pick, was tendered at a low level -- right of first refusal plus original round.

Let's say Denver tenders the talented yet troubled Brandon Marshall at the second-round tender. If you are a club looking for a legitimate No. 1 receiver and are willing to give up a second-round pick in exchange, why would you not ensure your acquisition by inserting a provision that makes it impossible for Denver to match? Some have said that the disappearance of the poison pill after 2006 confirms collusion on the parts of clubs. That said, in today’s unique free agency market with its unique set of rules, nothing would be too surprising, not even a club using the poison pill to acquire a high-end restricted free agent. I can’t wait for those tenders to come out and see who might be a viable target for such a mechanism.

Follow J.I. Halsell on Twitter: @SalaryCap101

Posted by: J.I. Halsell on 27 Jan 2010

44 comments, Last at 02 Feb 2010, 4:11pm by bitter hawk fan

Comments

1
by DrewTS (not verified) :: Wed, 01/27/2010 - 1:12pm

"During my time with the Redskins, our offseason film review mainly consisted of reviewing and scouting unrestricted free agents"

Why does that not surprise me?

9
by C (not verified) :: Wed, 01/27/2010 - 3:22pm

I would love to take a shot at the Redskins front office draft picks, but I can't. Their draft picks of the last 5 or so years have been pretty good, the problem is that their crazy owner trades them all away when he doesn't even have to. They wasted something like 11 draft picks over the years bringing in guys like Archuleta, Brandon Lloyd, Brunell, TJ Duckett and others when they could have got some of these guys for free when released. I heard Steve Czaben break it down and they wasted a lot of resources they didn't have to because their owner didn't value the mid/late round draft pick. This left obvious holes on their roster as it hollowed out.

Joe Gibbs first player aquired though was the old veteran Mark Brunell who was pushed out of Jacksonville to make room for the future... Byron leftwich. Brunell seems more like a "Gibbs move" and less of a "front office move". The Gibbs regime did also trade up to take Jason Campbell in round 1, which is a mistake I'd love to point out to the people who want to say that Joe Gibbs is anywhere near the coach that Bill Parcells is. Other than that their high draft picks were pretty good, can't complain.

I think signing restricted free agents can be a good idea if you are "close" to a championship and are missing that one piece ( say a pass rushing DE), but it's not a good way to build a franchise. Then again you could say that exact statement about free agency in general and mail it to Daniel M. Snyder.

12
by Will Allen (not verified) :: Wed, 01/27/2010 - 3:53pm

I think Parcells is the best roster builder and coach I've ever seen, but let us not forget that he also put his faith in a washed up Bledsoe once, which may not be as bad as trading up for Campbell, but it ain't good. Nobody bats a thousand.

I think Parcells once said that Gibbs is the best he ever came up against, which is pretty darned good.

38
by Anonymouser (not verified) :: Thu, 01/28/2010 - 5:31pm

Better than Polian?

40
by MJK :: Thu, 01/28/2010 - 8:36pm

Polian is one of the best roster-builders (I have to admit this, much as I detest him as a person), but the commenter was putting forth that Parcells was the best roster builder AND coach. Polian doesn't coach.

If we're talking about personnel guys who either coach or don't, the top of my list in recent memory would be:

1). Parcells
2). Polian
3). Walsh
4). Belichick
5). Gibbs
6). Andy Reid (or whoever in Philly has final say on personnel)
7). A.J. Smith

I may be forgetting someone obvious...this was just off the top of my head of team builders that I respect.

39
by CandlestickPark :: Thu, 01/28/2010 - 6:38pm

Ironically Bill Walsh said Gibbs was the best he faced as well. Not surprising when you consider how much Walsh and Parcells didn't like each other.

16
by mattymatty :: Wed, 01/27/2010 - 5:08pm

Coaching and talent acquisition are two separate skill sets. Gibbs had the first one in spades. The second, well, not so much, but I'd take Gibbs as a head coach over just about anyone else ever, for what that's worth. I wouldn't want him picking the groceries though.

17
by Will Allen (not verified) :: Wed, 01/27/2010 - 5:15pm

I mostly agree, but keep in mind that the talent evaluation done by a head coach in his final roster cuts, with largely young players, often has a huge impact on a team, over time.

Of course, this is an area where Parcells was/is simply outstanding.

18
by C (not verified) :: Wed, 01/27/2010 - 5:41pm

The key phrase was that nobody bats 1000

Going to the playoffs with cracked out Quincy Carter as your starting QB and Troy Hambrick as your starting RB is amazing. 1-15 to the AFC Championship in 2 years, a nearly winless team upseating the Patriots for the AFC crown, etc.

Gibbs is a coach no doubt, but not in the same league as Parcells.

19
by Will Allen (not verified) :: Wed, 01/27/2010 - 5:52pm

Always nice to have a point of agreement, C. That 10-6 team with Quincy Carter and Troy Hambrick as offensive playmakers, and a defense which racked up a whopping 32 sacks, is still unbelievable.

21
by C (not verified) :: Wed, 01/27/2010 - 8:37pm

If I remember correctly their schedule wasn't easy either. They really had about a 4-12 team and went 10-6. I'm Parcells #1 fan, and I can remember thinking that if he could go 7-9 with that team he was a miracle worker. Dallas exceeded everybody's expectations that year. Dallas fans would probably almost wish they did worse, to get better picks earlier on in the Parcells era for rebuilding but oh well.

24
by Will Allen (not verified) :: Wed, 01/27/2010 - 9:26pm

Well, then the guy picks up a Romo, Austin, and Ratliff either as free agents or 2nd day drafts. Hell, even Witten was a third rounder.

2
by Joseph :: Wed, 01/27/2010 - 1:43pm

Mr. Halsell, correct me if I'm wrong, but wasn't there some sort of mandate from the Commisioner that clubs weren't going to do that any more? (Maybe some type of verbal order/unwritten rule). Even if there were some type of collusion between the owners on this, it isn't like collusion to "drive the market down" or something similar. It's just the owners saying, "We're going to agree to not screw each other over." [Aside: Wouldn't it be good if they would adopt this attitude regarding the CBA?]
Seeing as the original club gets to match the offer sheet, the player still gets paid. As he signed the offer sheet, maybe he wants to get out of town, but since the original team has the seven days to match, I would think that the RFA and the team would work out a good agreement for both parties, similar to the Pats/Fins agreement on Wes Welker. Either way, he still gets a pretty good payday.
Another factor is that probably teams have learned enough from the Seahawks blunder to tender their players properly in order to avoid the "egg on their face."

43
by bitter hawk fan (not verified) :: Tue, 02/02/2010 - 3:59pm

The Seahawks blunder was having poor arbitration.

I say screw everybody. We lost a HoF'er by acting with goodwill. I hope the Hawks go out and poison pill EVERYBODY this year, league be damned. Saying it isn't okay now is a little god damn late as far as we're concerned.

I just hope the hawks brass is looking at things and figuring out how to best exploit Paul Allen's money in an uncapped year to bring us back into the league's upper tier.

Oh, and Minnesota? You deserved to lose, and I hope you never get as close again, until Hutch retires.

3
by MJK :: Wed, 01/27/2010 - 1:55pm

One other interesting aspect of RFA this year is that the tender levels can get messed up by certain players.

The standard structure that Halsell outlines above is designed to have the proffered salary increase with the amount of compensation protection a team wants to apply to a player. Because of the rules limiting the length of rookie contracts for 1st and 2nd round picks, any RFA would normally be a player that was drafted in the 3rd or lower round. Hence the "Right of First Refusal With Original-Round Compensation" tender level would require less compensation (no more than a 3rd round pick) than either "RFR with 2nd" or RFR with 1st" round compensation, and proffer a correspondingly lower salary.

However, because under the uncapped year rules, players entering their fifth or sixth years after finishing a 4- or 5-year rookie contract (i.e. players drafted in the 1st or 2nd round) are now RFA's. That means teams can use the "original round compensation" level to get the same protection as the 2nd or 1st round compensation level for less money (extra-shafting the players above and beyond becoming RFA's instead of FA's).

For example, Logan Mankins was drafted #32 overall, the last pick in the 1st round, if I recall correctly. If the Patriots want to protect him by requiring 1st round compensation, they can just tag him with the "original round compensation" and only offer him $1.1M instead of $2.4M, costing him (and saving themselves) $1.3M and getting the same protection that they would have gotten from the higher tender level. (This would especially sting, because he was almost a 2nd round pick, which would only allow the Patriots to save about $700k).

This probably will happen unless there's something in the contract language that I'm not aware of that would prevent it.

5
by dryheat :: Wed, 01/27/2010 - 2:06pm

I was thinking about this same thing. Mankins made 1.4 million last year, so the original round tender would be 1.54 million, but your point stands. I was curious if there was anything, other than a pissed-off Logan Mankins, to prevent the Patriots from doing this.

23
by MurphyZero :: Wed, 01/27/2010 - 9:05pm

The player best response to a tag or low tender is not a holdout. It's the promise that you'll be in camp, you'll show how good you are in practice, and how you'll set the record for penalties at the absolute worst time during the year. You don't even need the 15 yarders either. A good holding call (offensive or defensive) can be a killer for a team. Randy Moss taking plays off is not anywhere as bad as inopportune penalties. If sabotage is too bad, the lingering injury is always a good one, and can be the excuse for bad penalties. There is the negative that a player that engages in this activity might get blackballed (appropriately), but see Moss, Randy if the player has enough or plays a key position.
Now it seems extreme to all of us who don't see 6 digits in a salary, but see what happens when someone gets screwed out of an hour's wage. The payback could easily cost a company 10-20 times as much, either in damages or more likely, slacking. For some of these NFL guys, we are occasionally talking millions in 'missed wages', which given a real injury could never be matched in their lifetime. How much does a lost game cost a franchise compared to winning it? Screw over their players in compensation and that money could easily be lost to the team in other ways. It's easier to pay a new, undrafted player the minimum, because it's more money than they'll see otherwise and their true value is unknown. But a proven player knows his approximate value (though they're usually overestimating it, sometimes significantly).
NFL teams expect players to throw their bodies around recklessly. A guy who feels underpaid is likely to limit their future risk, making them less useful-you get what you pay for in many cases, even if you don't buy the sabotage angle (I admit it's probably a low risk, but it has to be a non zero one).

30
by tuluse :: Thu, 01/28/2010 - 12:24am

I think you missed the "or 110% of previous year's salary"

I'm going to guess that Mankins salary as a first round pick is more than 1.1 million, so it should help close that gap.

4
by Will Allen (not verified) :: Wed, 01/27/2010 - 1:57pm

The Vikings have very little reason to be inhibited from spending tens of millions of dollars, since doing so gives them leverage for obtaining hundreds of millions in stadium subsidies, either in Minnesota or somewhere else. That doesn't mean you want to Snyder-up the situation, of course, but it certainly means giving Edwards a contract, along with being willing to load the Gulfstream with cash and fly it down to Hattiesburg in mid-August. Then they should take a look at the tenders in a month, and get the posion pharmacy up and running for any player the personnel department, which is generally pretty good, thinks could make the roster significnatly better, without sacrificing too much draft value. That would probably mean offensive line, even if just for depth, and defensive backs.

13
by darthgoofy :: Wed, 01/27/2010 - 3:58pm

Another of the limitations of this uncapped year is that the final 8 teams have further restrictions on the number and quality of the free agents they can sign (IIRC), with the Vikings being one of those 8.

15
by Will Allen (not verified) :: Wed, 01/27/2010 - 4:23pm

I may be wrong, but I think the limitations only apply to unrestricted free agents.

6
by pouringlizards (not verified) :: Wed, 01/27/2010 - 2:39pm

I would think that the main thing stopping poison pills getting out of hand would be the retaliation factor. If you're signing someone by pulling shit like that, then you're fair game for that team doing exactly the same right back to you, as Seattle actually did. Not that I'm suggesting Nate Burleson was equal to Hutchinson, but I think that's what you'd see. You'd have to be certain that you had no-one good to lose.

The only other situation would be if you were a power-mad despot with a losing team, and a history of reckless and questionable decision making. Not that I have any particular owner in mind.

Plus, even then you'd need to be sure you didn't have any significant free agents on your roster. Anyone heard any news about Richard Seymour's contract status?

7
by Will Allen (not verified) :: Wed, 01/27/2010 - 2:48pm

Well, that's just it. You lock up the guys on your roster you think are critical, and then very aggressively pursue those available who you think would add value to your roster, without sacrificing too much draft value.

Eveybody is fair game, within the context of contractually allowable behavior.

8
by The Guy You Don't Want to Hear (not verified) :: Wed, 01/27/2010 - 2:58pm

Aside: I knew a Seahawks fan at the time and we had an ongoing argument about whether Burleson was equal to Hutchinson. He insisted Burleson was a top-5 wide receiver. I think I have, for once, ended up being right.

I've also always thought poison pills could be an issue if you want to trade the players later on. If, say, the Seahawks had decided 2 years later to trade Burleson and the Vikings would be interested from a pure football standpoint, they would quite possibly have refused to make the deal because of the poison pill. Especially when they're written more generally, like in Hutchinson's case, they could inhibit your own flexibility later.

22
by John Doe (not verified) :: Wed, 01/27/2010 - 8:38pm

As far as I know there is nothing stopping the poison pill clause from applying to the first year of the contract only.

29
by The Guy You Don't Want to Hear (not verified) :: Wed, 01/27/2010 - 11:47pm

However, unless someone more creative than I can say otherwise, that necessarily makes them less of a restriction for the other team. As I understand it, Hutchinson's deal says that the entire deal becomes guaranteed if he's not the highest paid offensive lineman on the team. I see two ways to make it a one-year provision. The first way is you say that it only happens if he's not the highest-paid offensive lineman this year. If that were the case, Seattle could have (a) restructured the deal so that he would get paid more than Walter Jones year one but then not thereafter or (b) restructured Jones's deal to make his number lower for that year. The other way is you say that it only guarantees his salary for that year. In that case, Seattle could go with either above option or just guarantee his salary for one year. That doesn't seem like much of a "poison pill" to me.

Maybe I'm just not creative or knowledgeable enough to see a way to make such a provision that would only operate for one year but would still be enough of a hindrance to keep the other team from being able to match it, but I don't see how to do it.

32
by tuluse :: Thu, 01/28/2010 - 12:51am

For Burleson's deal just write it so it says "if Burleson plays 5 games in Minnesota in 2005 his deal is guaranteed."

Hutchinson's would be more difficult to work in this manor, but lawyers can get quite creative.

37
by Tracy :: Thu, 01/28/2010 - 1:21pm

In the Hutchinson case, I believe it was a first-year provision guaranteeing the entire contract. And (a) is out as a remedy, since their right of first refusal only allowed them to match the offer sheet as written, not restructure the schedule of payments to meet their needs. And as for (b), I just can't imagine a player agreeing to restructure his contract for no other purpose than to limit his teammate's mobility.

44
by bitter hawk fan (not verified) :: Tue, 02/02/2010 - 4:11pm

The Seahawks DID work to restructure Jones' contract.

The piece of sh*% arbitrator ruled that the Hutch poison pill stipulation was valid at the moment it was signed by the Viks, not when the Seahawks matched it (which they waited to do until the restructure of Jones, given the short period between signing and club decision to match they still got it done to no avail).

Personally, I don't see how that was at all a fair ruling given that the two players play different positions.

10
by bmerryman :: Wed, 01/27/2010 - 3:34pm

Antoine Bethea is finishing his 4th year as well. I wonder if the Colts will offer him a long term deal or a tender.

11
by Tarrant :: Wed, 01/27/2010 - 3:43pm

Question - is there a limit to how many of these tenders that can be used?

I ask because according to this list, the "low tender" and the "low plus original round" tenders are identical. I'm not sure why a team would ever use the first one, if it knew that it could get a low draft pick back for free by using the second.

14
by Hurt Bones :: Wed, 01/27/2010 - 4:06pm

They are identical. I don't no why J.J. listed the low tender twice. I think most people know that some players were not drafted originally, so in such cases the team would get no compensation.

20
by Packerpalooza (not verified) :: Wed, 01/27/2010 - 8:20pm

I am willing to wager serious money that someone goes after Nick Collins. He's young, solid, stays in the lineup and plays a position that is not rich in options.

He's also more than a bit disgusted given that Ted Thompson has thrown money at the likes of Brandon Chillar and Brady Poppinga while not even hinting at an offer to Collins.

25
by Will Allen (not verified) :: Wed, 01/27/2010 - 9:30pm

The Vikings are purely crazy if they don't take a run at him, depending on how he is tendered. Money should be no obstacle.

26
by Mr Shush :: Wed, 01/27/2010 - 10:26pm

I'd expect Collins (and indeed most of these guys) to be tendered at least at the first round level, and very possibly first and third. Even at the top tender salary, they'll still represent excellent value for money. A 1 and a 3 is a lot to give up for a safety, even an excellent one, when you'll also have to hand him a big contract.

28
by Will Allen (not verified) :: Wed, 01/27/2010 - 11:35pm

Yeah, a one and a three is likely too much for a safety, even a young one like Collins. Since Scott Studwell, their director of college scouting, has had his board more closely adhered to, the Vikings have drafted with some success.

27
by Mr Shush :: Wed, 01/27/2010 - 10:39pm

One restricted free agent who is a notable omission from Mr. Halsell's list: all-pro Saints guard Jahri Evans. I actually think that guy might be good enough to be worth trading for even at the top tender - just look at the difference Hutchinson made in Minnesota (and by his absence in Seattle). I wouldn't complain if that was what Houston's first round pick ended up being used for. Could be a credible move for the Steelers, too. Will we see teams trading down below par well in advance of the draft to secure picks late in the round to send away for RFAs?

I'd also like to nominate Kevin Walter as perhaps the best RFA signing of recent years (excluding Welker who as explained above was not technically signed as an RFA). Quality WR2 acquired on a cheap medium term contract at the cost of only a 7th round pick. Any other suggestions?

31
by vcn (not verified) :: Thu, 01/28/2010 - 12:49am

Does RFA compensation require a team to give up its own first round pick? Or could, say, Seattle trade that #6 to NO/Indy for #32 and some other picks, and then give up #32 in compensation for an RFA?

Or is that too much of a Madden GM move?

34
by Mr Shush :: Thu, 01/28/2010 - 9:07am

As far as I'm aware, any first round pick will do, so that is precisely the strategy a team with a high first round pick ought to employ, if they desperately want some RFA. Although I suspect they'd get better value by trading down in stages, rather than one massive drop.

41
by IanWhetstone :: Mon, 02/01/2010 - 4:22pm

I'm pretty sure that the pick in a given round must be of the level of the team's "natural" pick in that round, or higher.

33
by deep64blue :: Thu, 01/28/2010 - 7:57am

>>>During my time with the Redskins, our offseason film review mainly consisted of reviewing and scouting unrestricted free agents; it was rare that we would make the effort to review restricted free agents.<<<

Wow - I thought most teams had profiles of every player in the League and know who's playing well and who isn't? Or are you just saying you specially went back and looked at those particular players to confirm their grades.

35
by Harris :: Thu, 01/28/2010 - 10:58am

For the record, both sides have expressed interest in getting Weaver a long-term contract.

Hail Hydra!

36
by Rich Conley (not verified) :: Thu, 01/28/2010 - 12:02pm

I don't think its a big deal, honestly.

I think almost every one of those players above is going to get :

"Right of First Refusal With First- and Third-Round Compensation: $3,043,000 or 110% of previous year’s salary"

They're all worth more than $3M.

42
by IanWhetstone :: Mon, 02/01/2010 - 4:29pm

I've read the sentiment in various places that the NFLPA should be in favor of the use of such poison pills because they "promote player movement." That seems quite backwards to me; player movement is only worth something to the union if it results in more favorable contracts for players. These poison pills, on the other hand, offer teams a way to get players away from other clubs WITHOUT having to give out more favorable contracts.

I mean, without a poison pill, the best chance to pry an RFA away from a team is probably to just pay him more than the original team wants to pay him. But with a poison pill, they can make a deal impossible for the original team to match without taking on any additional burden themselves, whatsoever. What's so good for the players about that?

Now, if the union wants to make a fuss about poison pill collusion just to rattle their sabers at the league during CBA negotiations, that's one thing. But in direct service to the players? I don't see it.