Understanding the Evolution of Signing Bonuses and Guaranteed Money in the National Football League: Preparing for the 2011 Collective Bargaining Negotiations
Glenn M Wong
University of Massachusetts Amherst - Isenberg School of Management
Harvard University - Football Players Health Study
August 1, 2009
UCLA Entertainment Law Review, Vol. 18, p. 179, 2009
After significant labor strife and multiple work stoppages through the 1980s and early 1990s, the National Football League and the National Football League Players Association (NFLPA) negotiating a landmark collective bargaining agreement (CBA) 1993. That CBA, extended and slightly modified four times since, established many of the rules and systems that govern the league today.
The NFL has a very unique compensation structure, due in large part to its “hard” salary cap. Due to the fact that most NFL compensation is not guaranteed, players and their agents and union have continuously fought to obtain more guaranteed money, often in the form of signing and other bonuses that may be paid when or shortly after the contract is signed.
Nearly all of these bonuses are subject to “forfeiture” clauses in their contracts requiring return of certain portions of the bonus should the player “default.” Most defaults have occurred when a player has refused to attend training camp, has committed conduct detrimental to the team or league or has retired. Consequently, many teams have sought, through internal grievance procedures as well as the United States court system, to have portions of the previously paid bonus money returned. The meaning of the term “signing bonus” itself is an issue of debate.
Teams’ attempts to recover portions of bonuses have been met with fierce resistance in both arbitration and the courts and the players have prevailed, sometimes unexpectedly, more often than not. As the league is threatened with its first work stoppage in over 20 years, the amount of bonuses and the teams’ rights with respect to previously paid bonus amounts is a significant issue of contention. This article will examine the history of compensation, signing bonuses and bonus forfeitures in the NFL, while offering a potential solution to the problem via collective bargaining.
Number of Pages in PDF File: 56
Keywords: NFL, Salary Cap, Signing Bonus, Forfeiture, CBA, NFLPA
Date posted: April 11, 2010