Structuring Kindle’s New Contract

Salary Cap Structuring Kindle’s New Contract

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With news that Ravens’ rookie Linebacker Sergio Kindle has a fractured skull and is unlikely to be reporting to the Ravens any time soon, the team has entered unprecedented waters with regard to how to handle their unsigned 2nd round pick.

Owner Steven Bisciotti has indicated that the team will sign Kindle, ending the speculation of some that the team would look to simply cut ties with the talented, but trouble-plagued,  former Texas Longhorn.  However, Head Coach John Harbaugh disclosed that the Ravens’ Front Office has had discussions with the NFL Management Council about what options the team may have.  This would seem to indicate that the team may be interested in pursuing options other than simply signing Kindle to a slotted, rookie contract.

Normally, Kindle would have been expected to sign a 4-year contract, with a signing bonus, perhaps a smaller option bonus, and minimum base salaries of $320K, $405K, $490K and $575K.  Now, with Kindle likely to miss a significant portion of his rookie year – if not all of it – what options are available for Bisciotti, Ozzie Newsome and Pat Moriarty?

Two overriding factors immediately come into play – (1) the Ravens hold all of the leverage in these negotiations and (2) rookie contracts are prohibited from increasing on an annual basis by more than 25% of the player’s rookie “salary” (defined as base salary, roster, and option bonus prorations, but not signing bonus prorations).  This second factor will severely limit the team’s ability to try and defer paying any sizeable money to Kindle until they are sure of his future availability. 

What the team would likely prefer to do is to not pay any bonus money to Kindle this year and then pay him a bonus in 2011, once he’s proven to be able to play again.  This would however run afoul of the 25% limitation.

Now that is a bit of a quandary.

It does bear repeating – the Ravens hold all of the leverage in this situation.  They aren’t obligated to give their first selection in the 2010 NFL Draft a slotted deal and they would have a solid basis to argue that they shouldn’t have to pay Kindle a bonus based on a 4-year deal, when in reality, they are likely only going to be getting 3-3 ½ years, at best, of availability. 

On the other hand, as pointed out in his blog yesterday, Tony Lombardi makes the point that the team is likely to be cognizant of any appearance of unfairness (real or perceived) in their dealings with Kindle.  I think it’s fair to say that the Ravens have a pretty good reputation with regard to how they deal with players, and there’s no need to give other teams any ammunition to use against the Ravens when competing for players in the future.

With that in mind and as the dust settles it leaves the Ravens with essentially two options:

1. They could decline to sign Kindle now and wait until they get a better idea of his health and future availability.  If the medical reports are uncertain as to Kindle’s recovery, this may be an option to pursue, since they would have until next year’s draft to reach an agreement with him.  However, Bisciotti’s comments would seem to indicate that Kindle will be signed sooner, rather than later.

2. Find a creative way to sign Kindle, while not exposing themselves financially in the event that he cannot return.  Given Bisciotti’s comments, this would seem to be the most likely scenario.

One thing must be remembered, though – Kindle is a 2nd round draft pick, so he a blockbuster deal isn’t in the cards for him anyway.  If healthy, Kindle could have expected a deal that totaled around $4.4M over 4 years.  So, the Ravens could either offer him a discounted contract, based on his lack of availability this year, or they could work out a structure that would allow him to make the $4.4M, while still protecting the team’s investment in him. 

But, again, the 25% limitation rears its ugly head and handcuffs contractual creativity. So unless the NFL and NFLPA agree to some sort of relaxing of that rule (which is unlikely), the Ravens are going to have to give him more money upfront than they’d prefer. 

One way to at least protect their interests to some extent somewhat would be to forego giving Kindle a “signing” bonus, but instead given him a “reporting” bonus that would only be paid when he was healthy and passed his physical.  The reporting bonus would all count as 2010 “salary” (there is no proration), so there would be no problems with the 25% rule.  Under that scenario, he would still receive his base salary while either on PUP or IR, but the more substantial money would be deferred until he actual proved healthy (although with head trauma injuries, it remains to be seen if he could have future, recurring problems) or the team felt more satisfied with the prospects of his recovery.

Another option would be to put yearly roster bonuses in the deal, in lieu of a signing bonus, which would allow them to avoid some of the upfront money (but again, the 25% limitation would dictate that he first year salary be enough to accommodate the future roster bonuses), while paying him more on a “if, as and when” basis.

The team will also likely look to put some sort of forfeiture language in the deal that would allow them to recoup any bonus money paid in the event that his health does not allow him to play in the future.  The team has never sought the return of bonus money in the past (when players retired before the ends of their contracts – Jon Ogden, Steve McNair), but this may be a case where they would be wise to do so.

So, the Ravens do have some options, but much of what they can accomplish will depend on the cooperative spirit of Kindle’s representatives.  Even though they have little leverage, that doesn’t mean they will just roll over and accept any deal. 

Considered in that light, perhaps John Harbaugh’s comment about GM Ozzie Newsome being in contact with the NFL Management Council, taken together with Bisciotti’s comments about the team’s intentions to sign Kindle long term, can be viewed as sort of the “good cop, bad cop” routine along the lines of:

“We love you, but because you put us in this spot, we’ll consider our options if you fail to be reasonable.”

 

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Brian McFarland

About Brian McFarland

Known on Ravens Message Boards as “B-more Ravor”, Brian is a life-long Baltimorean and an avid fan of the Ravens and all Baltimore sports.  A PSL holder since 1998, Brian has garnered a reputation as a cap-guru because of his strange (actually warped) desire to wade through the intricacies of the NFL’s salary cap and actually make sense of it for those of us who view it as inviting as IRS Tax Code. 
   
Brian, who hails from Catonsville, MD and still resides there, is married and has two children.

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