So aside from seeing Laurence Fishburn in Las Vegas this past week (see: Subject of this post), there has been a little bit of discussion in the NFL about “Poison Pills.” Like myself, I imagine that the general public had no idea what a “Poison Pill” was in this context, and still may have absolutely no idea what it means.
As Greg Skidmore states in his article at the Sports Law Blog, “In corporate law, Poison Pills are defensive measures intended to prevent hostile takeovers through stock acquisition.”
Recently, this same tactic was used in the NFL by the Minnesota Vikings in their attempt to acquire offensive guard Steve Hutchinson of the Seattle Seahawks. For more about that issue, go read Greg’s post at the Sports Law Blog.
Instead of focusing on that specific case, I want to examine some intricacies of contract negotiation in the NFL. It is important to know the different kinds of ways that you can manipulate contracts to benefit your clients and also understand the methods by which organizations will try to manipulate contracts against your client.
Since we have already discussed the “Poison Pill” technique, lets finish off the discussion with a full understanding of how it is used. It is used when player’s former team (Seattle Seahawks in the example) has the ability to match the offer from a new team (Minnesota Vikings) in free-agency. By using the “Poison Pill”, the new team (Minnesota) may insert a clause into a signed contract. The clause says that for the offer to be matched by the former team (Seattle), the player must be the highest payed person at that position after the first year of the contract or else the rest of the contract is gauranteed. This makes it tough for the former team because it means that the player may have to take an enormous pay increase or will have a gauranteed contract (which is basically unheard of in the NFL).
Whether this is in violation of the NFL Collective Bargaining Agreement has not yet been decided by means of arbitration. If anyone knows more about this impending issue, please leave a comment.
I will dedicate many more posts to the NFL’s many forms of contract negotiation. Next up: Franchise Tags. Get excited!
[tags]nfl, contracts, poison pill, arbitration, steve hutchinson, vikings, seahawks, sports, law[/tags]