Money Matters: Harrison's Patron Saints

SteelCityInsider.com's salary cap expert and resident good guy Ian Whetstone sees a way for the Pittsburgh Steelers to get the deal done with NFL Defensive Player of the Year James "Deebo" Harrison. Read on and be enlightened, Steeler Nation:

On Saturday, Mike Triplett of the Times-Picayune reported on the novel use of "completion bonuses" by the New Orleans Saints in the contracts for linebacker Jonathan Vilma, cornerback Jabari Greer, and offensive lineman Jon Stinchcomb. The report met with little fanfare, but the revelation of these bonuses could potentially impact negotiations significantly for other cap-strapped teams. They represent the first legitimate loophole in the 30% Rule that I've seen successfully implemented in veteran player contracts this year.

The 30% Rule is a tool by which the league limits the cap dollars that teams can push into potentially uncapped league years. It states that portions of a player contract other than the signing bonus can increase in any year by no more than 30% of the player's compensation in the Final Capped Year. This includes base salaries, roster bonuses, workout bonuses, reporting bonuses, likely-to-be-earned incentives, and prorated portions of option bonuses.

It does not, however, include completion bonuses. The collective bargaining agreement under which teams and players operate refers to such bonuses as "any bonus to be paid to a player solely for fulfilling his obligations to play under his Player Contract without seeking to renegotiate and/or ‘holding out.'" As outlined by web blogger AdamJT13, these bonuses can be guaranteed for skill and injury, prorated forward from the point at which they're earned, and not factor at all against the 30% Rule.

This offers teams a vehicle by which to deliver significant bonus money after the first year of the deal beyond the usual constraints of the rule. For the Steelers, this presents possibilities for any of their remaining contract negotiations, including a potential for breakthrough on an extension for All-Pro linebacker James Harrison.

Negotiations with Harrison and agent Bill Parise have been slowed beyond even the typically deliberate pace of Pittsburgh's front office by significant salary cap constraints. The Steelers simply don't have a lot of room available, and a new deal for Harrison will consume much more than his current 2009 salary of $1.4 million.

It's hard to peg a precise dollar value for Harrison, in part because of the disparity in salary between the league's top linebackers and its top pass rushers. No linebacker currently makes much more than $8 million a year on a long-term deal, but top pass rushers earn upwards of $12 million annually. Hypothetically, let's assume that Harrison requires a $45 million deal over five years, with at least $27 million of that amount paid in the first three years of the new deal. The actual amount may ultimately differ, but the structural principles I'm about to examine still apply. Guaranteed money would also be a consideration, but any of the following arrangements could be tailored to any reasonable level of such guarantees.

Under a conventional structure, that kind of deal in 2009 requires about a $10 million signing bonus coupled with a first-year base salary of at least $4.375 million. That means a first-year cap hit of $6.375 million, almost $5 million more than Harrison's current salary, and more space than the Steelers can realistically commit. The base salary must be that high to accommodate, at a 30% increase per year, future salaries of $5.6875 million (2010), $7 million (2011), $8.3125 million (2012), and $9.625 million (2013) to reach the total contract value of $45 million.

Still looking at a conventional structure, the team might bring that first-year cap number down slightly by offering a lower signing bonus and an option bonus in the second year. With a $6 million signing bonus and a $4 million option bonus paid the following year, even with a necessary increase in the first-year base salary to $4.875 million, the 2009 hit dips to $6.075 million, a modest $300,000 cap savings. The option bonus in year two would prorate over the final four years of the deal, and those amounts would count against the 30% increase limit, so the subsequent base salaries on such a deal would have to be $5.3375 million (2010), $6.8 million (2011), $8.2625 million (2012), and $9.725 million (2013).

But using the structure devised by the Saints, that big second-year bonus could be paid out as a guaranteed completion bonus without being counted against the 30% limit. This would allow for a significantly smaller first-year base salary, because the base would not have to accommodate prorated dollars from the second-year bonus against future years' limits. A signing bonus of $5 million could be coupled with a first-year base of $4.375 million, with a guaranteed completion bonus of another $5 million paid in the second year. This setup allows for remaining base salaries of $5.6875 million (2010), $7 million (2011), $8.3125 million (2012), and $9.625 million (2013).

That makes for a first-year cap hit of just $5.375 million, a full million less than a conventional signing bonus structure, while matching the three-year payout benchmark of either conventional setup. They could couple this completion bonus approach with a maneuver being used by Dallas—the Cowboys have signed deals this off-season using option bonuses payable in the first year in lieu of any signing bonuses—to drive that first-year cap number even lower.

Now, it remains to be seen whether the Steelers organization will be open to such unconventional arrangements to iron out a deal with Harrison. At times, the Rooneys have been unwilling to make moves in technical compliance if they sense a violation of the rules in spirit, and that could certainly come into play. I do know of at least one use of a completion bonus in their history, though; former AP Defensive Player of the Year Rod Woodson, in the final year of his last deal with the Steelers, received $400,000 in such a bonus, and more than a decade later a similar bonus might provide the flexibility necessary to get a tough deal done with the next Pittsburgh defender to boast such honors.


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