Can someone explain the "poison pill" to me?

[jefmblrd]

From PFT

"The bigger question, as we see it, is whether New England will include in the offer sheet a poison pill provision that makes it impossible for the Fins to match. If, for example, the offer sheet says that the full value of the deal will be guaranteed if Welker's team plays five games in Miami in any year of the deal, the Pats can as a practical matter get Welker for less total exposure -- especially if the deal also includes some phony high salaries on the back end."

I don't quite understand how this works. What does it mean when it says "the full value of the deal will be guaranteed if Welker's team plays five games in Miami in any year of the deal."

 

[MrBigglesWorth]

the patriots could insert large fake years at the end of a contract that would neve rlikely be payed out. then they insert language that these years are guaranteed if the player plays 5 games in the home state which the patriots will never do in a given year.

so in essense the team that has tendered the player can't do so because it has to guarantee the contract where the team who wants him doesn't

 

[primetime]

Basically, under the new CBA, you can put weird provisions in contracts, which are basically useful in RFA offer sheets. For example, last year, the Seahawks signed Nate Burleson to an offer sheet that had a couple of years at the end of it with high salaries that Burleson will likely never see (he will be extended or released before they come without a cap hit). However, the "poison pill" was that if Burleson played 5 games in the state of Minnesota in any year of the deal, the entire contract would be guaranteed. Therefore, if the Vikings chose to match, they'd essentially have to guarantee his entire contract, including the high, originally fake salaries at the back end.

The Vikings then turned around and did the same for Steve Hutchinson. The NFLPA and the league tried to come to an agreement to get rid of this, but the two sides came to an impasse and no settlement was ever reached, which means the poison pill is still a legitimate option for RFA offer sheets.

 

[dryheat44]

From PFT

"The bigger question, as we see it, is whether New England will include in the offer sheet a poison pill provision that makes it impossible for the Fins to match. If, for example, the offer sheet says that the full value of the deal will be guaranteed if Welker's team plays five games in Miami in any year of the deal, the Pats can as a practical matter get Welker for less total exposure -- especially if the deal also includes some phony high salaries on the back end."

I don't quite understand how this works. What does it mean when it says "the full value of the deal will be guaranteed if Welker's team plays five games in Miami in any year of the deal."

Because New England can add on a bunch of phony big-money years on the end of the contract, which Welker will never see. However, if they put that clause in there, Miami will obviously have to pay him every penny, while New England can re-structure.

See also:

Martin, Curtis
Hutchinson, Steve

 

[jefmblrd]

Okay, thanks, I understand it now. Pretty slick.

 

[Hok]

I don't quite understand how this works. What does it mean when it says "the full value of the deal will be guaranteed if Welker's team plays five games in Miami in any year of the deal."

If you include in the contract a provision that will kick in only if the player's original team matches, then it affects them and not you, and they'll be unlikely to match.

 

[signbabybrady]

the patriots could insert large fake years at the end of a contract that would neve rlikely be payed out. then they insert language that these years are guaranteed if the player plays 5 games in the home state which the patriots will never do in a given year.

so in essense the team that has tendered the player can't do so because it has to guarantee the contract where the team who wants him doesn't

I still cant believe they didnt rectify this situation. when Parcells found a loophole they made it illegal the following year.

 

[DaBruinz]

From PFT

"The bigger question, as we see it, is whether New England will include in the offer sheet a poison pill provision that makes it impossible for the Fins to match. If, for example, the offer sheet says that the full value of the deal will be guaranteed if Welker's team plays five games in Miami in any year of the deal, the Pats can as a practical matter get Welker for less total exposure -- especially if the deal also includes some phony high salaries on the back end."

I don't quite understand how this works. What does it mean when it says "the full value of the deal will be guaranteed if Welker's team plays five games in Miami in any year of the deal."

OK. As a restricted free agent, Miami has the right to match any contract that Welker signs. Well, that matching means ALL parts of the contract. If Maimi matches and Welker plays in 5 games in Miami, then the entire value of the contract would be owed to Welker regardless of whether Welker got cut or injured or retired.

So, lets say that Welker signed a 6 year/ $30 million contract that has a 5 mill signing bonus in it, but has that clause that if he plays 5 games in Miami in any given year, the ENTIRE contract is guaranteed. So, Welker plays the entire year and reaches that clause. That means that the remaining 24.2 million of the contract is guaranteed and would have to be paid to Welker.

 

[Ghost of Ben Dreith]

Basically, under the new CBA, you can put weird provisions in contracts, which are basically useful in RFA offer sheets. For example, last year, the Seahawks signed Nate Burleson to an offer sheet that had a couple of years at the end of it with high salaries that Burleson will likely never see (he will be extended or released before they come without a cap hit). However, the "poison pill" was that if Burleson played 5 games in the state of Minnesota in any year of the deal, the entire contract would be guaranteed. Therefore, if the Vikings chose to match, they'd essentially have to guarantee his entire contract, including the high, originally fake salaries at the back end.

The Vikings then turned around and did the same for Steve Hutchinson. The NFLPA and the league tried to come to an agreement to get rid of this, but the two sides came to an impasse and no settlement was ever reached, which means the poison pill is still a legitimate option for RFA offer sheets.

Actually it was Hutchinson first and then the Seahawks retaliated. Not trying to be nitpicky...but I guess this is.

On another note though, I also remember the NFL coming out and saying they were putting a stop to those rediculous kinds of poison pills....apparently not.

Even if the Pats do it and get Welker, I think its a Chicks#%t play.

 

[MrBigglesWorth]

I still cant believe they didnt rectify this situation. when Parcells found a loophole they made it illegal the following year.

The part I don't understand is the collusion part. Are they saying that if teams unoffically agree to not insert the poison pill they are in essense withholding potential earning from players and that's where the players union could come into play.

 

[Keegs]

the whole thing last year with Hutchinson and Burleson was hilarious.

Hutchinson is good so that was fine...
but "retaliating" by using the poisin pill on Burleson is like a team stealing Warren from us and then we get them back by finagling James Thrash.
It is not equal.

Nate Burleson sucks.

 

[primetime]

Actually it was Hutchinson first and then the Seahawks retaliated. Not trying to be nitpicky...but I guess this is.

Even if the Pats do it and get Welker, I think its a Chicks#%t play.

Oh yeah, you're right. That makes more sense, I suppose, since Hutchinson was by far the better player. And I agree with you about it being underhanded.

 

[MrBigglesWorth]

Actually it was Hutchinson first and then the Seahawks retaliated. Not trying to be nitpicky...but I guess this is.

On another note though, I also remember the NFL coming out and saying they were putting a stop to those rediculous kinds of poison pills....apparently not.

Even if the Pats do it and get Welker, I think its a Chicks#%t play.

I might be a cheap play, but the Pats have been shafted on cheap pass interference calls, so I think they are sick of it and taking matters into their own hands.

 

[Ghost of Ben Dreith]

I might be a cheap play, but the Pats have been shafted on cheap pass interference calls, so I think they are sick of it and taking matters into their own hands.

Well since you put it that way....maybe I was being a bit too hard on the Patriots,,,

 

[solman]

I still cant believe they didnt rectify this situation. when Parcells found a loophole they made it illegal the following year.

The players union would never agree to this, except in the context of a new CBA (in which case the NFL would have to pay for it).

 

[hwc]

A better example of a poison pill offer. You do a normal deal with Welker, then you tack on two extra years at $20 million a year. Then, you say that the entire contract is guaranteed if the player plays five games in Miami. The Dolphins CAN'T match that.

About collusion. The NFL owners tried to get rid of the poison pill. The union refused. Using the poison pill is such a no-brainer that if it is NOT used, the union is going to say that the only reason nobody used it is that the owners conspired not to stick it to each other....collusion that hurt the players by preventing free agent movement. Just like if the owners conspired to all agree not to make any free agent offers this year.

 

[Dom]

This whole "plays five games in Miami" thing is a bit boring. I wish teams would come up with some more interesting poison pills...

"The whole contract is guaranteed if the player plays more than five games with a marine animal on his helmet"

That would be much more fun!

 

[Gon_Trevil]

A better example of a poison pill offer. You do a normal deal with Welker, then you tack on two extra years at $20 million a year. Then, you say that the entire contract is guaranteed if the player plays five games in Miami. The Dolphins CAN'T match that.

About collusion. The NFL owners tried to get rid of the poison pill. The union refused. Using the poison pill is such a no-brainer that if it is NOT used, the union is going to say that the only reason nobody used it is that the owners conspired not to stick it to each other....collusion that hurt the players by preventing free agent movement. Just like if the owners conspired to all agree not to make any free agent offers this year.

Typical union. I know unions are *supposed* to be good things but sometimes... ugh :bricks:

 

[Commander Shears]

I'll simplify it. If a player is tendered, but then signs a contract with another team, his new team has two days to climb the beanstalk and steal two poison pills from the giant. If they slip them into the breakfast of the GM of the player's current team whilst saying the magic words, then that GM will sleep for a thousand Sundays, or until he is kissed by one of the Barber Brothers (or Shaun Alexander, since he looks just like them). Standard contract legalese.

 

[solman]

Typical union. I know unions are *supposed* to be good things but sometimes... ugh :bricks:

The NFL and the union are equally to blame. They negotiated this deal together. You'd better believe that had the NFL offered an additional 0.25% in cap, the union would gladly have agreed to rules eliminating the poison pill.


I can't believe that I wrote something defending a union.