Tuesday, July 28, 2009

Possible Contract Structure for Mike Vick

With Michael Vick’s conditional reinstatement, the question is now what club will take a chance on him. Clearly, the question marks that revolve around Vick are what type of player is he today, given that he hasn’t played in the NFL since 2006, and then, from a PR standpoint, how is the fan base going to react to a Vick signing. That said, it’s inevitable that a club is going to take a flyer on Vick, the talent of his past is too enticing for a club not to.

The structuring of a Vick contract is an intriguing dilemma. On one hand, you want to guard against Vick being washed up; while at the same time serving your best interest if Vick doesn’t skip a beat and returns to his Pro Bowl form.

Without talking about the dollar amounts, one way a Vick contract could be structured is similar to that of the contract signed by Saints quarterback Drew Brees when he arrived in New Orleans. Remember when Brees came to New Orleans in 2006, he was coming off a shoulder injury suffered in his final game as a Charger in 2005. The injury required surgery and five months of rehab. It was under those circumstances that Brees signed a one year contract with an option for five additional years. The spirit of this structure was for Brees to prove in 2006 that he was fully recovered from the shoulder injury and capable of being the franchise quarterback that they had hoped for, which would in turn lead the Saints to pay Brees’ 2nd year Option Bonus amount. However, if Brees proved to not be the same quarterback he had been, then the Saints simply would not exercise the Option for the additional five years, resulting in Brees becoming a free agent after one season in New Orleans. In terms of how this structure impacted Brees’ compensation, he was paid an $8 million signing bonus, a 2006 salary of $1.9 million, and a $100,000 workout bonus, meaning if the Saints chose to walk away after 2006, Brees would have cost them $10 million. However, if the Saints chose to exercise the option, they would pay Brees a 2nd year Option bonus of $12 million and have him under contract for an additional five years.

In the case of Vick, you have a player, who, due to incarceration and not injury, has been away from the game for two seasons. However, similar to Brees, Vick has to prove he still has the ability to be a starting quarterback in this league. That said, it would not be far-fetched to think that a club would want to structure a “prove it” contract for Vick that allows the team to try the “Mike Vick experiment” for one year, without obligating them contractually or financially for an extended amount of time. If Vick proves that he still has it, then, similar to the Brees deal, Vick’s contract could be structured to include an Option bonus that compensates him as a starting quarterback and contractually binds him to a team for multiple seasons. Regarding that Option bonus, clubs are unable to collect forfeiture on Option bonuses paid to players who default on their contract. Given this dynamic, clubs now insert language into their bonus language that allows the club to convert this option bonus to signing bonus, as clubs can collect forfeiture on signing bonus amounts in the event of default.

In the case of Brees, his bonus money of $20 million was split 40-60, $8 million in signing bonus (40% of bonus money) and $12 million in Option bonus (60% of bonus money). Given the Vick circumstances, maybe his split is 25-75 or even less, but this structure allows a club to keep its options open.

No comments:

Post a Comment