Saved by the Judge

Embattled quarterback Michael Vick, who has not had much good luck lately, received an unexpected gift from God when U.S. District Judge David Doty of Minneapolis ruled Monday that the former Falcons' quarterback can keep all but $3.75 million of the nearly $20 million in bonus money that Vick received from the Falcons from 2004-2007. The Falcons sought to recover the bonuses after Vick pleaded guilty in August to charges in a dog fighting operation. A special master had ruled in October the Falcons were entitled to recover the bonus money. The Falcons argued Vick used proceeds from a contract he signed in 2004 to finance his illicit activities.

Judge Doty determined that recovery of most of the money by the Falcons would violate the National Football League's collective bargaining agreement with the players union. The agreement does not allow roster bonus money to be forfeited once it's been earned, the judge wrote. The Falcons argued that even though the bonus was labeled a "roster bonus" that it was actually a "signing bonus" and was only earned once Vick fulfilled all the terms of his contract, i.e. played the entire 5 year period of the contract. The NFL, which has suspended Vick indefinitely without pay, criticized Doty's ruling. "It makes no sense that an individual who willfully violates his contract is entitled to be paid tens of millions of dollars even though he is in jail and providing no services whatsoever to his employer," NFL spokesman Greg Aiello said in a statement.

You may be asking yourself how is it that the special master ruled in favor of the Falcons if the NFL collective bargaining agreement does not allow roster bonus money to be forfeited once it's been earned. Technically, a roster bonus is due and payable only if a player makes the 53-man active roster at the end of training camp. Since the NFL really means "Not For Long," there is an element of risk for all players in making a team's roster from year to year, even marquee players. Every year around September 1 players who have given their all to their NFL team for years find out that their services are no longer required either because of a deteriorate on of their skills or in a cost-cutting move.

For salary cap purposes, the roster bonus is not counted unless and until earned. It is also not paid unless and unless a player is on the 53-man active roster either at the beginning of the regular season or, depending on the terms of the provision, at some point during the regular season. However, where the signing bonus is guaranteed, as was the case with Vick, the element of risk of making the team in order to receive payment of the bonus is eliminated and the NFL collective bargaining agreement requires that the "roster bonus" be treated like a "signing bonus" for purposes of the salary cap. In other words, if a bonus looks, smells and acts like a signing bonus it will be treated as such notwithstanding how the parties decide to label the bonus in a particular contract.

For salary cap purposes, a roster bonus is counted towards the cap in full in the year it is earned. A signing bonus on the other hand may be prorated over the life of the contract for salary cap purposes. In other words, instead of taking a $20 million salary cap hit in 2004, the agreement of the Falcons to guarantee Vick's roster bonus effectively turned the roster bonus into a signing bonus for purposes of the salary cap. As a result, instead of a single, $20 million salary cap hit, the Falcons were able to prorate the "roster" bonus over the life of Vick's 5-year contract and apply only $4 million of the "roster" bonus for each of the 5 years of Vick's contract for purposes of the salary cap.

While I am happy to see Vick get a break after the NFL the courts and the public have attempted to break his manhood, the ruling is in fact contrary to the spirit and intent of the NFL collective bargaining agreement and will no doubt spur immediate attempts by the league, i.e. all contracts negotiated from and after today, to shore up the language of roster and signing bonuses going forward to make sure that Vick is the last guy whose guaranteed roster bonus is not in fact treated like a signing bonus.

Just got back from Super Bowl XLII where I witnessed poetic justice. The media has buried Barry Bonds and Mike Vick alive all while professing that the Partiots were about to complete a perfect season…even though, after the first game of the season the Patriots were fined $750,000 and the loss of a first round draft pick for cheating. A perfect season? An asterisk behind Bonds' name in the Hall of Fame. Please, give me a break.

If you have questions or require additional information, please contact Everett L. Glenn, Esq. at eglenn@espsportslawpro.com or call 562.619.8460.