By: Miguel Benzan
This is my attempt to explain what I think may and could happen with Aaron Hernandez’s cap numbers. I used reports from Ian Rapoport, Field Yates, and Joel Corry as well as my own research for my source material.
In late August of 2012 Aaron Hernandez signed an extension with the Patriots. His signing bonus was $12.5 million. It was scheduled to be paid out over three installments. Hernandez received $6 million in August of 2012 and $3.25 million in March of 2013. Aaron is scheduled to receive the third and final payment- $3.25 million on March 31, 2014. Hernandez’s workout bonus clauses required successful completion of at least 90% of the workouts in New England’s voluntary offseason workout program. His 2013 salary – $1.323 million – was originally guaranteed for injury only and became fully guaranteed in March of 2013 since Aaron Hernandez was on the Patriots at that time. $1.137 million of his 2014 salary which was originally guaranteed for injury only also became fully guaranteed in March of 2013. Aaron’s 2014 $500,000 offseason workout bonus also became fully guaranteed in March of 2013 since he was on the Patriots roster at that time. Most NFL contracts include a “failure to perform” or “failure to practice” clause that will make any guarantees such as a signing bonus or guaranteed salaries within the contract null and void. On June 24th Ian Rapoport reported that according to Paragraph 32(d) of Hernandez’ extension, the 2014 workout bonus became “null and void” if the player fails to report and that the sections of the contract dealing with the guaranteeing of the 2013 and 2014 salaries did not not contain a “failure to perform” or “failure to report” clauses. According to Joel Corry, a former sports agent Paragraph 35 of Hernandez’s contract contains a clause where he represents and warrants that there weren’t any existing circumstances when he signed his deal that would prevent his continuing availability throughout the contract. Joel reported on CBSSportsline.Com that “There’s another clause explicitly stating that the Patriots wouldn’t have entered into the contract except for Hernandez’s representations.
is a screenshot of Aaron Hernandez’s deal with the Patriots. You will have to double-click it to see it completely
When Aaron Hernandez was waived by the Patriots on June 26, the other hand, his 2013 cap hit went from $4,073,000 to $2,550,000 (the 2013 proration of his 2010 and 2012 signing bonuses). His 2014 cap hit increased from $4,200,000 to $7,500,000 (the unamortized portion of his 2012 $12.5 million signing bonus). There were questions over whether or not the guaranteed salaries would hit the Patriots salary cap in 2013. It turns out that they did not.
Sometime after his release Aaron Hernandez has filed grievances for his 2013 and 2014 offseason workout bonuses and salaries which is why the Patriots lost over $1.1 million in cap space in October 2013. Per the CBA 40% of the total grievance amount goes against the team’s cap until the grievance is settled or until the end of the League Year, in this case, 2013. The grievance amounts in question are 2013 offseason workout bonus money of $82,000, 2013 salary of $1,323,000, 2014 offseason workout bonus money of $500,000, and 2013 salary of $1,137,000. Those four amounts total $3,042,000. 40% of $3,042,000 is $1,216,800. Jonathan Kraft is quoted as saying “You have to hit 90 percent in our contract, and Aaron didn’t hit 90 percent, in our view,”. Jonathan Kraft contended that Aaron attended 25 of 33 workouts. As Joel Corry opined – “Hernandez was recovering from shoulder surgery during the offseason which limited his participation in organized team activities and mini-camp. It may have also limited him during the workout program. Since Hernandez’s workout clause doesn’t account for supervised rehabilitation, the Patriots may contend that he didn’t fulfill his workout obligations because his shoulder surgery prevented him from successfully completing workouts. It remains to be seen whether the arbitrator would find this type of argument persuasive.”
For most of December 2013 and January 2014 the NFLPA site http://www.nflplayers.com/cap showed the Patriots were under their 2013 adjusted cap number by $4,024,801. Because of that I had expected that to be the amount that the Patriots would be rolling over into 2014. So when the Boston Globe’s Ben Volin tweeted that the Patriots are rolling over exactly $4,106,801 in cap space for 2014, I tried to figure out why would that number changed. The first thing I noticed is the difference between the two numbers is exactly Aaron Hernandez’ 2013 offseason bonus money – $82,000. I thought then that the Patriots had won the grievance over the 2013 offseason workout bonus money of $82,000. It turns out that conclusion was premature. The Boston Globe’s Ben Volin tweeted that $32,800 was counting against the Patriots 2014 cap because of an Aaron Hernandez’ grievance. 40% of $82,000 is $32,800. So it appears that the Patriots and Hernandez are still arguing over Hernandez’s 2013 offseason workout bonus money.
While conducting research for this blog post, I looked at a couple of cases to see how long it took a team to get a cap credit for recouped money. The Patriots released Jonathan Fanene on August 21, 2012 with a “failure to disclose physical condition” designation. The Patriots filed a grievance seeking some, if not all, of the $3.85 million signing bonus Fanene received when he signed with the team March 20. The grievance hearing was held in July of 2013. On September 21, 2013 ESPNBoston.Com’s Mike Reiss reported that “The Patriots and defensive lineman Jonathan Fanene (represented by the NFL Players Association) settled their grievance within the past week, according to sources, and part of the settlement is that the Patriots won’t have to pay Fanene the final $1.35 million of his $3.85 million signing bonus… We can now officially close the book on the Patriots’ failed Fanene signing, with Fanene able to keep $2.5 million of the original signing bonus and the Patriots receiving a credit on their 2013 salary cap.” On March 13, 2014 update OvertheCap’s owner, Jason Fitzgerald, tweeted referring to the Patriots 2014 adjusted cap number that “the official number (also includes the 504k adjust and 360k of fanene is a direct credit and not in adjustment”. To sum up it took the Patriots two years to get a credit for a grievance filed in 2012. It took the Falcons five years to get a $3 million credit for Michael Vick. In August 2007 they won a grievance against Vick for around $20 million.
Let’s now take a look at four amounts involved.
The 2013 offseason workout bonus money of $82,000. I see both sides winning. The case for the Patriots is that their contract has a strict threshold and Aaron did not meet it. The case for Aaron is that he did not meet the threshold because he was recovering from a football injury. If the Patriots win this grievance, they will get a credit of $32,800 sometime. Do not know exactly when. If the Patriots lose this grievance, they lose $49,200 in cap space. Do not know when the cap hit would occur.
The 2014 offseason workout bonus money of $500,000. I think that this is a slam dunk for the Patriots as there is no way Aaron can report to attend the 2014 workouts. I do not know if the Patriots have already won this grievance. They could have and the $200,000 that was charged to the 2013 cap was credited back to the Patriots as part of the 2013 year-end adjustment. The credit could come in 2015 or later. Do not know.
The 2013 and 2014 guaranteed salaries – While Hernandez’s contract may be missing “failure to perform” or “failure to report” clauses when it comes to these salaries, I think that the Patriots will win the grievance over these guaranteed salaries. I do not know if the Patriots have already won this grievance. They could have and the $984,000 that was charged to the 2013 cap was credited back to the Patriots as part of the 2013 year-end adjustment. The credit could come in 2015 or later. Do not know. I doubt that they have lost the grievance. Heard that both grievances would be handled simultaneously so it is very likely that this grievance was tabled until the Patriots do not pay the $3.25 million installment.
The $7.5 million signing bonus proration that is hitting the Patriots 2014 cap – I have seen some posts/tweets opining that the NFL should just simply give the Patriots a $7.5 million cap credit. I doubt that will happen. Why? Sean Taylor. Sean Taylor was a 1st round pick of the Washington Redskins who was murdered. A year after his murder he counted against the Redskins cap. If the Redskins did not get cap relief for a murdered player, cannot see the NFL giving cap relief for an alleged murderer. Given that the CBA provided the Patriots an avenue for recouping the signing bonus money (wait until start of the 2013 training camp when Aaron could not attend and he would have invoked this clause in the CBA – “Forfeitable Breach. Any player who (i) willfully fails to report, practice or play with the result that the player’s ability to fully participate and contribute to the team is substantially undermined (for example, without limitation, holding out or leaving the squad absent a showing of extreme personal hardship); or (ii) is unavailable to the team due to conduct by him that results in his incarceration; or (iii) is unavailable to the team due to a nonfootball injury that resulted from a material breach of Paragraph 3 of his NFL Player Contract; or (iv) voluntarily retires (collectively, any “Forfeitable Breach”) may be required to forfeit signing bonus, roster bonus, option bonus and/or reporting bonus, and no other Salary, for each League Year in which a Forfeitable Breach occurs (collectively, “Forfeitable Salary Allocations”), as set forth below” I have my doubts on the strengths of the Patriots’ case to withhold the $3.25 million if Hernandez is not charged with a crime for actions committed before he signed his extension in July, 2012. I do expect the Patriots not to pay Aaron the final installment of his $12.5 million bonus that is due him on Monday, March 31st. Aaron Hernandez’s legal team has already filed a grievance also anticipating the Patriots move. As we have seen with Jonathan Fanene and Michael Vick, it can take years for a team to obtain a cap credit for money recouped. Please note that the cap credit is for the actual cash recouped so if Aaron has spent most of his signing bonus money it is likely that the only credits that the Patriots may ever get is the $3.25 million signing bonus that they will withhold and any grievances that they may win over his 2013/2014 offseason workout bonus and 2013/2014 salaries. Given Aaron Hernandez’s legal troubles, I do not expect a quick resolution
If Aaron Hernandez is charged for crimes that occurred before July, 2012, the Patriots would be able to go after the $12.5 million signing bonus because Aaron would have then violated the clause where he represented and warranted that there weren’t any existing circumstances when he signed his deal that would prevent his continuing availability throughout the contract. and the clause that explicitly states that the Patriots wouldn’t have entered into the contract except for Hernandez’s representations. Once again, I have to note that any cap credit is for the actual cash recouped so if Aaron has spent most of his signing bonus money it is likely that the only credits that the Patriots may ever get is the $3.25 million signing bonus that they will withhold and any grievances that they may win over his 2013/2014 offseason workout bonus and 2013/2014 salaries. Given Aaron Hernandez’s legal troubles, I do not expect a quick resolution.
May 16, 2014 Update – The most cap relief I expect that Patriots to get from Aaron Hernandez is $4,466,800 and I will not be surprised to see Tom Brady retire before the Pats receive it. $4,466,800 equals $3,250,000 (final installment of signing bonus which was due on March 31, 2014) plus $1,216,800 (the total grievance amount that I think hit the 2013 cap).