It is kind of a curious segment of the NFL draft to pick a fight, but the negotiation battle line between agents and team salary cap experts seemingly has been drawn in the third round, and might end up being every bit as contentious and protracted as the looming tussle over first-round deals.
Through Friday morning, there were just as many unsigned selections in the third round (14) as in the first. And the impasse at the top of the third round, where none of the first nine choices has a deal yet, was even longer than that the stalemate at the outset of Round 1. No pick in the top eight of the first round has signed.
None of the other rounds includes more than three unsigned prospects.
A few weeks ago, we cracked the code on the lack of action at the top of the first round, initially reporting that a disagreement over so-called “offset language” was the primary source for a logjam which still exists. The dearth of agreements at the top of the third round has nothing to do with “offsets” but might be a matter that is every bit as esoteric to most fans.
But it is clearly significant to the men on either side of the bargaining table.
The third-round gridlock has flown below the public radar screen so far – with more than 85 percent of the 253 picks exercised in April having already come to contract terms well in advance of July training camps – but the bone of contention is a remaining sore spot among agents and club negotiators.
The holdup, The Sports Xchange has confirmed through agents and club officials, is, instead, over the so-called “25-percent rule.” Or, more accurately, over the agents’ desire to maximize their clients’ base salaries given the restrictions of the rule, and the reluctance of the top eight teams in the round to allow them to do so.
“It’s just a crazy situation,” veteran agent Eugene Parker, who represents Denver third-round running back Ronnie Hillman, told The Sports Xchange.
It’s also, though, a situation that doesn’t figure to be easily resolved.
Simply put, the 25-percent rule allows a team to increase a player’s base salary by 25 percent every season. The formula for determining the 25 percent: Divide a player’s signing bonus by four (the number of years for which a third-round pick must sign), add the first-year minimum salary ($390,000 for 2012), and then take 25 percent of that total. For tight end Dwayne Allen of Indianapolis, the first choice in the third round, for instance, the annual 25 percent bumps would be $141,456.50. That’s one-fourth of Allen’s signing bonus (slotted at $703,304), plus his 2012 base salary of $390,000 (total: $565,826), multiplied by 25 percent.
So, provided Allen was able to maximize his annual increases of 25 percent, his base salaries would be $390,000 (2012), $531,456.50 (2013), $672,913 (2014) and $869,369.50. That comes to $2,408,739 in base salaries. But the minimum base salaries for the four seasons are $390,000, $480,000, $570,000 and $660,000, a total of only $2.1 million. That’s hardly to suggest the Colts have proposed just minimum salaries for the four years. Neither, though, have they agreed to offer the full 25 percent increases permitted by the CBA.
For agents, the differences are critical.
“With the (rookie) wage scale, there’s not a lot of wiggle room or much chance for subjectivity,” said the agent for one of the unsigned third-rounders. “The third round is kind of the beginning and also the end for subjectivity . . . and both sides seem to know that. It might be an unusual place for the kind of logjam we have right now, but that’s where the battle is being waged.”
Another agent even employed the “C-word” reference, alluding to “collusion,” to describe the stalemate.
“How else would all eight teams be holding the line together?” he said.
Of the 18 choices signed so far in the third round, 10 have agreed to deals that pay them the minimum base salaries for all four seasons of the contracts. That is not unusual in the second half of the round. Six choices signed contracts that included some sort of additional funding, usually in the form of offseason workout bonuses, but very few have been able to “max out” the 25-percent increases.
Last year, four players among the top 10 in the third round received annual salary increases that either permitted the maximum 25-percent jumps, or close to them. But in 2012, despite the relative warp-speed at which draft contracts have been completed, the third round has been a difficult slog.
In fact, two first-round picks have signed since the last time a third-rounder agreed to terms a week ago. After a early flurry in the stanza, just four third-rounders have completed deals this month.
As noted in this space last week, the dramatically below-market contract signed last year by the third choice in the third round, linebacker Nate Irving, is causing some problems. It’s not nearly the hang-up, however, as the continuing battle over the 25-percent rule.
Acknowledged one team negotiator: “The 25-percent (rule) is causing a 100-percent headache for the teams at the top of the round right now.