John Clayton's Poison Pill Story
LAKE BUENA VISTA, Fla. -- Steve Hutchinson earned three trips to the Pro Bowl and one to the Super Bowl by blowing holes in defenses as a member of Seattle's offensive line. With the help of his agent, Tom Condon, and the Minnesota Vikings, Hutchinson also blew a big hole in the NFL free agency system.
Named a transition player by the Seahawks, Hutchinson was free to negotiate with any team, with the Seahawks retaining the right to match any offer. But the Vikings used a so-called "poison pill" to prevent the Seahawks from matching the seven-year, $49 million offer sheet Minnesota got Hutchinson to sign. The pill was quick and deadly. It called for the matching team to guarantee Hutchinson's contract if he wasn't the highest-paid offensive lineman on his team. At $7 million a year, Hutchinson became the highest-paid guard in NFL history, but he would have been the second highest-paid on the Seahawks after left tackle Walter Jones.
Faced with possibly guaranteeing all $49 million, the Seahawks didn't match the offer and let one of their best players go to the Vikings, where the only guarantee on his contract was his $10 million signing bonus and the base salary and $6 million roster bonus he collected.
Ã¢â‚¬Å“ I think these issues raised by offer sheets by Seattle and Minnesota need to be addressed. I think it's not what is contemplated. ... We will be addressing it with the players' association. I will be talking to Gene Upshaw about it next week. Ã¢â‚¬Â
Ã¢â‚¬â€ Paul Tagliabue, NFL commissioner
A week later, the Seahawks struck. They wanted Vikings wide receiver Nate Burleson, a restricted free agent tendered low at $712,600 by the Vikings. The Seahawks returned the favor to the Vikings and loaded their offer sheet to Burleson with poison pills. They gave Burleson the exact same long-term numbers the Vikings gave Hutchinson, seven years and $49 million, and loaded the offer with provisions that would make the entire amount guaranteed if the Vikings matched. Burleson's contract would be guaranteed if he played five or more games in the state of Minnesota or if his average salary were more than that of the highest-paid running back on the team.
With Chester Taylor just getting a four-year, $14.1 million contract, the Vikings will be hard-pressed to match unless they want to give Burleson the biggest guarantee in NFL history. They will lose him for only a third-round choice. Suddenly, the NFL has a poison pill problem and no antidote.
"First of all, I think the poison pill business stinks," Seahawks coach Mike Holmgren said. "That's too bad in our opinion. I think something has to be done about it. To my way of thinking, you compete like crazy on the field and the rules are in place contractually. I don't like the idea of agents dictating to us what they are going to do."
Commissioner Paul Tagliabue, who is trying to retire in July, isn't happy about the concept, either. Days after getting a new collective bargaining agreement that was painful to owners, Taglibue now has to go to the NFLPA and try to use yet another bargaining chip to fix the hole.
That's a huge problem. To get labor peace through 2011, Tagliabue had to take the union's last offer to the owners for a vote or lose the salary cap system. Because it was the union's last offer, the owners and front offices lost a lot of procedural gains. They gave back a lot of the grievance victories won over the years. They gave away a higher percentage of total revenues than expected.
Even though the rules involved in the Hutchinson situation have been in place for years, Tagliabue has to give a little more to fix the hole in the system that has been exposed. "What's there to give back?" Colts general manager Bill Polian said.
"I think these issues raised by offer sheets by Seattle and Minnesota need to be addressed," Tagliabue said. "I think it's not what is contemplated. ... We will be addressing it with the players' association. I will be talking to Gene Upshaw about it next week."
Clearly, Tagliabue is disturbed by the problem. So are front offices across the league because this was a significant loss for the NFL teams. If transition tags and restricted free agency can be worked around so easily, it hurts the ability of teams to keep young players in their prime. Vikings vice president Rob Brezinski, who wrote the poison pills in Hutchinson's deal, clearly looked beleaguered as he arrived at the owners meetings in Orlando.
"It's not something we like to talk about," Brezinski said.
His peers weren't happy for two key reasons.
Ã¢â‚¬Â¢ The Hutchinson deal effectively kills the use of the transition tag. Each year, teams are given the use of the franchise or the transition tag as a way to keep their best unsigned player. Thanks to Hutchinson, any team can create a poison pill that won't be matched because a special master isn't going to veto a guarantee. If the clause triggers a salary escalation, the deal doesn't have to be matched. But guarantees are a different story.
"I don't think it's good for football," Eagles owner Jeff Lurie said. "The Seahawks lose a terrific young player like Steve Hutchinson. That was not the spirit of restricted free agency at all and wasn't in the spirit of the designations. It's a shame. The whole idea of the designation system in a salary cap with unfettered free agency, you at least know there are one or two players internally that you will have. When we drafted Donovan McNabb, we were fortunate enough to re-sign him at an early state to the largest contract in the NFL at the time. But if we couldn't come to an agreement, we knew our fans would still be able to have Donovan because we would franchise him."
Ã¢â‚¬Â¢ Thanks to Hutchinson, the restricted free agency system also became more costly. The NFL has four levels of restricted free agent tags that are progressively more costly to teams. Low tenders go at $712,600. The next level is at $1.573 million. If the restricted free agent is a bigger star, teams might have to jack up the price to a first-and-third tender at $2.069 million. To deter restricted poison pills, every team now will have to offer first-round tenders to restricted free agents.
But even if teams go up to that maximum level in this market, poison pills still will leave them vulnerable to losing their player to an offer sheet they won't be able to match.
"The minds of creative people have no limits," Tagliabue said.
Front office executives expect a change in the system from Tagliabue's meetings with Upshaw. But it won't come for free. It likely will cause adjustments in the franchise and transition systems. Players don't like the franchise and transition tags because the tags weren't used as expected. When the salary cap started, the players gave owners the tags essentially as a way to protect franchise quarterbacks. Teams came back and used them on kickers and safeties and as a way to threaten top free agents to try to get them to sign long-term deals.
In the latest round of bargaining, the union got a minor concession. The third time a player is franchised by a team, the required tender will now be the average salary of the top five players at the position with the highest average salary or 120 percent above his applicable salary from the previous year, whichever is higher.
Upshaw does have some incentive to close the poison pill loophole. If things stay the way they are, teams will try to get around having restricted free agents by signing all rookies from the second to the seventh round to four-year deals. Players are restricted free agents after three years, so that would take away a year of restricted free agency.
One trade-off could be to limit the use of franchise and transition tags to once or twice in the lifetime of a player. Upshaw might accept that. But now that the Hutchinson poison pill extends into restricted free agency, too, he might ask for more.
"It's strange from both ends," Vikings coach Brad Childress said. "From our end, we've added a good player and may lose a good player. That's the long and short of it."
The long and the short of it for the NFL is that it doesn't have a cure for the current poison and will have to pay for it in another labor negotiation.
John Clayton is a senior writer for ESPN.com.
Re: John Clayton's Poison Pill Story
"This one time I ate cyanide because I thought it was a jelly bean"
Re: John Clayton's Poison Pill Story
Yep, the loophole is now widely known. Oh well, at least it was used for a quality player.
...The long and the short of it for the NFL is that it doesn't have a cure for the current poison and will have to pay for it in another labor negotiation...