Thursday, September 17, 2009

What Free Agency Will Look Like in an Uncapped Year: The Final Eight Plan

In my August 26th entry titled “Uncapped Leverage” on I discussed the change in the Accrued Season requirement from four seasons to six seasons in order for players to be eligible for free agency. This change is mandated by the Collective Bargaining Agreement to take effect in the uncapped year, currently slated for 2010. As I discussed in my earlier column, this tremendously hinders free agency from the players’ perspectives by forcing them to wait longer for their much anticipated second pay day. The uncapped year obviously presents the players and clubs with an environment without a salary cap or team salary minimum; this environment has been discussed extensively in the media. However, another aspect of the uncapped year that has received very little coverage in the media is what is called the Final Eight Plan; this change mandated by the Collective Bargaining Agreement completely changes the rules of free agency for clubs.

As it is today with a salary cap, when free agent season begins in March, all 32 clubs have the opportunity to acquire unrestricted free agents (UFA) in an open, competitive market. In an uncapped year of 2010, the Final Eight teams in the 2009 playoffs, meaning those teams participating in the Divisional round in both the AFC & NFC, will be limited in their ability to acquire free agents in the offseason after their post-season run.

For the four clubs that make it to the Conference Championships in the 2010 offseason, they can sign the following three types of UFAs: any UFA who became a free agent by virtue of their contract being terminated before its expiration; any of the club’s own UFAs; and a UFA to replace each UFA lost by the club. Regarding this one-for-one UFA replacement, the contracts signed by the UFA replacement player must fall within the following parameters: the first year salary must not exceed the first year salary contained in the new contract of the UFA lost by the team; salaries in the future years of the replacement UFA’s contract may not increase by more than 30 percent of the first year’s salary; and the contract cannot be renegotiated until one year after the signing date.

For the four clubs that lose in the Divisional round, they can sign the same three types of UFAs as the clubs that advanced to the Conference Championships. However, additionally, these four clubs may also sign one UFA for a first year salary of more than roughly $6 million and any number of UFAs for first year salaries of no more than approximately $4 million. The $6 million and $4 million amounts are approximations because they will be determined by projected Total Revenues in the uncapped year.

So lets say the Arizona Cardinals lose in the Divisional round of the 2009 playoffs, and they subsequently lose their kicker Neil Rackers via free agency to a contract that has a first year value of $3 million. Under this scenario, the Cardinals could sign a replacement UFA to compensate for Rackers’ departure. This replacement UFA does not have to be a kicker and their first year salary cannot exceed $3 million. Moreover, the replacement UFA’s contract cannot provide for annual increases in excess of $900,000 in order to comply with the 30 percent provision. Additionally, in free agency, the Cardinals would be able to sign the other types of UFAs available to Divisional round clubs.

Another rule applied to the Final Eight clubs is a prohibition of the those clubs from trading for UFAs they otherwise would not be eligible to sign as a result of the rules of the Final Eight Plan.

The Final Eight Plan takes the NFL from an even-playing-field version of free agency to an unleveled playing field that is designed to be in the favor of the 24 clubs that do not make it to the Divisional round; the spirit of which is to try to keep some level of competitive parity in an uncapped world. Essentially, the Final Eight Plan, amongst other things, places a salary cap on free agency for the final eight clubs, despite the non-existence of a league-wide salary cap. It’ll be a brave new free agent world in the 2010 uncapped year; should be very intriguing if we get to that point.

Follow J.I. Halsell on Twitter: @SalaryCap101

Friday, September 4, 2009

Injury Settlements for Waived Players

The deadline to cut down to 53-man Active rosters is upon us; meaning clubs will have to waive or terminate 22 players. For those players who are vested veterans, upon being cut they instantly become free agents. For non-vested players, they must first pass through waivers, where they can be claimed by another team, before becoming a free agent. But what about those players who may have gotten hurt in their final preseason game and are subsequently waived by their club?

In this case, the club will waive the player with the designation "Waived-Injured." This designation means that if the injured player clears waivers, then that player will revert to the club's Reserve-Injured list. So in the case of Redskins quarterback Colt Brennan, who tweaked his hamstring in the club's preseason game against Jacksonville, if the club were to waive Brennan (and I'm not saying that Brennan's going to get waived), then, upon the certification of the athletic training staff, the club would waive Brennan injured. Assuming he passes through waivers, he would then revert to & remain on the club's IR list until he's given a clean bill of health.

In an effort to cut ties with the player and to allow him to pursue opportunities once he's healthy, the club and agent will then initiate Injury Settlement negotiations. So in the case of Brennan, if he's diagnosed with a 4-week hamstring injury, then the club and agent will work towards a settlement that compensates Brennan for those 4 weeks; once a settlement is agreed upon, then the club can waive Brennan with the designation "Waived-Injury Settlement," which then severs ties between the player and club. Brennan can then pursue opportunities with another club.

Sometimes a player who is compensated for, say, a 4-week injury by virtue of his injury settlement, may sign a contract with another team within those 4 weeks because he (surprise, surprise) got healthier faster than expected. To manage this scenario, a lot of clubs will put "off-set" language in their settlements that articulate that the club will no longer be responsible for the amount of money due to him while he's receiving payments from his new club as a result of his new deal. This prevents the player from "double-dipping," meaning receiving payments from his old team and new team simultaneously.

With these settlements available to players who are on the bubble, there's a certain up-tick in the number of players who report to the training room the day after a club's final preseason game. There are definitely legitimate injuries, but one would be naive to think that some "injuries" are in the "milk-this-thing-as-long-as-I-can" vain.

It's definitely an interesting dynamic to the weekend of final roster cut-downs.