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The NFL's 30% Rule and a Vernon Davis contract extension

A week or so ago, Tre9er posted a FanShot linking to a National Football Post article that was discussing something called the 30% rule in the expired collective bargaining agreement. The rule (found in Article XXIV, section 8(b)) states that:

"No NFL Player Contract entered into in a Capped Year and extending into the Final League Year or beyond may provide for an annual increase in Salary, excluding any amount attributable to a signing bonus ... of more than 30% of the Salary provided for in the Final Capped Year, per year, either in the Final League Year or in any subsequent League Year covered by the Player Contract."

So basically, if the 2009 salary is $2M, the maximum available in 2010 is $2.6M, in 2011 it’s $3.2M, and so forth. In the earlier FanShot discussion, smileyman put together some mocked up salary numbers adding 30% of each subsequent salary. In the sources I've seen since, it reads as though it's only adding 30% of the year 2009 salary. I tweeted J.I. Halsell (writes for FO, used to be a cap analyst for the Redskins) and he said it's 30% of 2009, so we'll go with that info..

I'm bringing this up again for a few reasons. First, it's an important subject for 49ers fans because Vernon Davis is a free agent after 2010, and the 49ers have other guys coming up in 2011 and beyond (notably Patrick Willis) that they likely want to extend as soon as possible. Second, FanShots (even those moved to the front page), don't always get a lot of comments, so this is something I wanted to expand on a bit more. And third, I found another interesting article that provides a somewhat analogous situation and some additional insight on the subject.

More after the jump...

The primary option for circumventing the 30% rule is loading up the signing bonus in a contract. Looking at Vernon Davis, his 2009 salary was $1.44 million. That means, if he signed a 6-year extension (the length of Brent Celek's extension) it appears as though his annual salaries could increase no more than $432,000 per year (30% of his $1.44M). One question I have on that is whether it's only 30% of the 2009 salary, or if it's 30% of the subsequent salary. It wouldn't be a whole lot, but it would compound it a little bit.

If it's the former, then a 6-year deal would include total salaries of $17,712,000. Last December, Brent Celek signed an 8-year extension worth $34 million. Brent Celek is a very solid tight end, but as we discussed back then, I think Davis is better and will likely be looking for a better deal. Back in early 2008, Dallas Clark signed a six year extension worth $36 million. While we could use that as a baseline, let's round up and say Davis wants six years worth $42 million (just for argument's sake and inflation). If that's the case, the 49ers would be looking at bonuses of $24,288,000. Here are the year-by-year numbers for clarification:

2010: $1,872,000
2011: $2,304,000
2012: $2,736,000
2013: $3,168,000
2014: $3,600,000
2015: $4,032,000

As I mentioned before the jump, I based the increases on 30% of his 2009 salary and not 30% of each subsequent season.

Suffice to say, that's a crapload of money to be guaranteeing Davis. Of course, NFL teams do it all the time with their draft picks, and the 49ers will likely be looking at such guaranteed money in signing Anthony Davis and Mike Iupati. The 49ers are a profitable franchise, but they would be looking at a whole lot of up-front cash this year if they wanted to make sure Davis remained under their control for the foreseeable future.

Earlier I mentioned another article on the topic. Over at the Steelers site, Ian Whetstone (a solid cap commentator on the Internet) wrote about Pittsburgh's own issues in this area with Lamarr Woodley. The Steelers OLB is coming off his second straight 12 sack season and has been an all around impressive performer. The problem is that his rookie deal paid him $460,000 in 2009 (he was a mid-second round pick). Given such a low salary number, the necessary signing bonus money would be simply outrageous (in the neighborhood of $50 million).

Given the uncertain labor future of the NFL, the issues of restricted free agency and franchise tags remain up in the air. Ian makes the point that short term extensions might be the answer. Whether a player takes it or not would seem to depend in part on how badly or not he wants to stay in his current city. If Vernon Davis really wants to remain with the 49ers, but still wants the big money, maybe he takes 1-year deal to get into the new collective bargaining agreement and then get his big money?