Restricted Free Agency

1. What is restricted free agency?

Players whose contracts with their teams have expired at the end of the most recent league year and who have three accrued seasons of playing experience are eligible to become a restricted free agent (RFA). If a player’s team tenders the player with a qualifying offer before the start of the restricted free agency period, the team obtains the right to match any offer sheet that the player signs with a prospective new team (or “offering team”). A player may sign the qualifying offer once it has been offered by his prior team. If the team rescinds the qualifying offer at any time, the player becomes an unrestricted free agent.

Under the 2011 Collective Bargaining Agreement (CBA), all drafted rookies sign four-year contracts and all undrafted rookies sign three-year contracts. Thus a typical drafted rookie who completes his contract will never have the status of a RFA. Scenarios which result in a player becoming an RFAs are:

  1. Undrafted free agent rookie whose three-year contract expired.
  2. Player that were drafted and then cut. The player’s subsequent contract might be for a shorter time period and expire after they have accrued three years of experience.
  3. Player that drafted and completed his four-year contract but did not accrue a season for a specific reason, such as being on the non-football injury [NFI] list or exempt commissioner permission list. For example, linebacker Kiko Alonso completed his four-year rookie contract with the conclusion of the 2016 season. However, he had only accrued three seasons (2013, 2015 and 2016) as he spent the 2014 season on the NFI list. Since he had only accrued three seasons, he was deemed a RFA.

2. What are the various RFA tenders available?

There are three classes of tenders available to teams. The amounts of each of these qualifying offers were established in the CBA for the 2011 league year. For each subsequent league year, the qualifying offer grows by the same percentage as the increase in the salary cap, subject to a minimum increase of 5% and maximum increase of 10% each year.

1) Right of First Refusal Only: This qualifying offer provides a player’s prior team with the ability to match any offer sheet that the player may receive from another team and maintain rights to the player. If the team does not match the offer sheet and therefore loses the player, it will not receive any compensation. The amounts of this qualifying offer during the term of the CBA of a given year are below:

a. 2011 – $1,200,000

b. 2012 – $1,260,000

c. 2013 – $1,323,000

d. 2014 – $1,431,000

e. 2015 – $1,542,000

f. 2016 – $1,671,000

2) Right of First Refusal, One Second-Round Selection: This qualifying offer provides a player’s prior team with the right to match any offer sheet received by the player. If the prior team doesn’t match the offer sheet from a new team and loses rights to the player, it receives the new team’s second-round draft pick in the upcoming draft. This qualifying offer is for the greater of (a) the set amount of money prescribed each year based on the CBA or (b) 110% of a player’s prior year Paragraph 5 Salary. The amounts of this qualifying offer during the term of the CBA of a given year are below:

a. 2011 – $1,835,000

b. 2012 – $1,927,000

c. 2013 – $2,023,000

d. 2014 – $2,187,000

e. 2015 – $2,356,000

f. 2016 – $2,553,000

3) Right of First Refusal, One First-Round Selection: This qualifying offer provides a player’s prior team with the right to match any offer sheet received by a player. Additionally, if the prior team doesn’t match the offer sheet from a new team and loses the player, it receives the new team’s first-round draft pick in the upcoming draft. This qualifying offer is for the greater of (a) the set amount of money prescribed each year based on the CBA or (b) 110% of a player’s prior year Paragraph 5 Salary. The amounts of this qualifying offer during the term of the CBA of a given year are below:

a. 2011 – $2,611,000

b. 2012 – $2,742,000

c. 2013 – $2,879,000

d. 2014 – $3,113,000

e. 2015 – $3,354,000

f. 2016 – $3,635,000

4) There is fourth option, which is an off-shoot of the third option described above, although it is infrequently utilized by teams:

Right of First Refusal, One First-Round Selection, Ability to Tag Player at the Expiration of the Contract: If a player’s prior team tenders the player with a qualifying offer that is at least $500,000 greater than the amount required in option 3 above, then, in addition to the benefits delineated in option 3, should the prior team match an offer sheet that stipulates that the new team may not designate the player as a “Franchise Player” or “Transition Player” with the expiration of the contract, this would not be considered a Principal Term in relation to the prior team and would not be required to be included in a contract formed between the player and prior team as a result of the prior team matching such an offer sheet. The term would be included in a contract formed with the new team if the prior team did not match the offer sheet.

3. When is the signing period for RFAs?

The signing period for restricted free agency is established by the previous September 1 by mutual agreement of the NFL and NFLPA. The signing period must last for a minimum of 35 days and end five days before the draft unless otherwise agreed upon by the NFL and NFLPA.

Draft-choice compensation, if it is necessary based on the RFA tender placed on a player, is due at the draft of a given league year unless the offer sheet is received by the player’s prior team less than two days before the draft, in which case draft-choice compensation is due at the following league year’s draft.

In 2016, the RFA signing period was March 9 – April 22 and the NFL draft was held April 28 – April 30.

4. What if a player does not sign an offer sheet during restricted free agency?

When an RFA signs an offer sheet during free agency, this will necessarily result in a new contract with either the player’s prior team or new team.

If the player does not sign any offer sheets during the RFA signing period, and the prior team does not rescind its qualifying offer, then at the conclusion of the signing period, the prior team obtains exclusive negotiating rights with the player. If the qualifying offer is greater than 110% of the player’s previous season Paragraph 5 Salary, then on June 15 the prior team may replace the qualifying offer with a new tender that is simply 110% of the player’s Paragraph 5 Salary (June 15 tender). For RFAs who received the lowest tender, teams must tag the player with the June 1 tender (greater of RFA qualifying offer or 110% of prior year’s Paragraph 5 Salary) to be eligible to place a June 15 tender on the player.

If an RFA has not signed a contract by the Tuesday following the 10th week of the regular season, then as of 4:00pm EST that day, the player is unable to play for the remainder of that season. Unlike an unrestricted free agent, an RFA would not benefit from sitting out a season, as the player would again be considered an RFA the next league year and therefore subject to his prior team’s qualifying offer and the rules of restricted free agency.

5. How does an RFA finalize a contract with a new team? What rights does the prior team have?

When an RFA and new team agree on terms for a contract, they submit an offer sheet signed by the player and the new team to the prior team. The offer sheet specifically identifies contractual provisions as either “principal terms” or “other terms.” The player’s prior team has five days from the date it receives the offer sheet to either exercise its right of first refusal and match the offer or not. If the prior team matches the offer sheet, the player and his prior team are considered to have entered into a binding agreement, which is to be formalized in a contract containing the principal terms of the offer sheet and other terms no less favorable than the “other terms” included in the original offer sheet from the new team.

If the prior team doesn’t match the offer sheet within five days, then the player and new team are deemed to have entered into a binding agreement, which is formalized in a contract containing the principal terms and other terms no less favorable than the other terms in the offer sheet. The prior team receives draft-choice compensation from the new team if applicable. The new team may only sign an offer sheet with the player if it already has in its possession the necessary draft choice (specified round or better) required to be conveyed to the prior team should the prior team not match the offer sheet.

6. What are considered the principal terms of an RFA offer sheet?

The following items are considered principal terms of an RFA offer sheet:

  • Salary to be paid to the player, including any reporting, roster, or signing bonuses.
  • Incentives for League-recognized honors or media awards.
  • Contract modifications such as guaranteeing salary, no-trade clauses, and clauses preventing a new team from putting a franchise or transition tag on a player at the expiration of the contract.
  • Incentives based on team performance. However, only incentives that are considered likely to be earned on the club making the offer would be included in a contract with a prior team should it match the offer sheet. If the incentive is considered not likely to be earned on the new team, the prior team would not be required to include that incentive in the contract borne of its match of the offer sheet from the new team. Additionally, incentives based on team performance may not exceed 15% of the total salary in the offer sheet.
  • Poison pills are explicitly forbidden.

7. What caused the CBA to expressly prohibit poison pills?

The final two bullet points in the listing of principal terms have their roots in a dramatic story that unfolded in the offseason that preceded the 2006 league year.

Steve Hutchinson was a guard with the Seattle Seahawks and became eligible for free agency after the conclusion of the 2005 season. Before the 2006 free agency period, he was slapped with a transition tag by the Seahawks. Being a transition tag player, he was able to negotiate with other teams and was signed to a seven-year, $49 million offer sheet by the Minnesota Vikings. However, the offer sheet had a unique twist. The Vikings included a clause stating that, if at any time Hutchinson was not the highest-paid offensive lineman on the roster, his entire $49 million contract would immediately become fully guaranteed. This was a problem for the Seahawks, who had just signed future Hall-of-Fame tackle Walter Jones to a huge contract extension that would have paid him $500,000 more in salary than the amount specified in the offer sheet for Hutchinson for the upcoming 2006 season. Had the Seahawks matched Minnesota’s offer to Hutchinson, he would have been the second-highest paid offensive lineman on the Seahawks roster and thus his entire $49 million contract would have become immediately full guaranteed. This “poison pill” essentially precluded the Seahawks from matching the offer sheet and caused them to lose Hutchinson to the Vikings.

Burned by the ingenious and legal maneuver employed by the Vikings, the Seahawks retaliated by signing Minnesota wide receiver Nate Burleson to an identical seven-year, $49 million offer sheet. This offer sheet contained several poison pills, including one that would guarantee the entire contract if Burleson played five or more games in the state of Minnesota in any season of the contract. The Vikings, of course, play home games in Minnesota; had they matched the offer, the entire contract would have become guaranteed five home games into the deal. They too declined to match this offer sheet, which was toxic because of its “poison pill” provisions.

In terms of the dueling contracts, the Vikings definitely got the better end of the deal. Hutchinson was an All-Pro player for the first four years of the contract and full-time starter in the subsequent two seasons before he was cut with one season left on the deal. Burleson, meanwhile, lasted four seasons with the Seahawks, catching 136 passes for 1,758 yards and 15 touchdowns. He was productive in the return game with an 11-yard average on punt returns, a 23-yard average on kick returns, and three return touchdowns.

To avoid a similar situation in the future, the subsequent CBA, which was negotiated before the 2011 season expressly forbade poison pills by stating that no offer sheet could contain a principal term that would create obligations for a prior team that would differ in any way from the obligations that the principal term would create for the team extending the offer sheet. Similarly, incentives by a prior team only need to be matched if they are likely to be earned on the team making the offer (offering team).

If these rules had been in place in 2006, the Vikings would not have been required to match the clause regarding the playing of five games in Minnesota, as that incentive would not have been likely been earned by a player on the Seahawks (during one season a Seahawks player can play three games at most in Minnesota– once in preseason [though its questionable if even that would count as a game for this purpose of this clause], once during the season, and once in the postseason).

Similarly, in the Hutchinson deal, the clause requiring the contract to be fully guaranteed if Hutchinson wasn’t the highest paid offensive lineman on his team would be unenforceable under the 2011 CBA. Matching the deal with that clause in-force would have caused the Seahawks to fully guarantee the contract, an obligation that would not have applied to the Vikings if the offer sheet was finalized into a contract with them. As a result, it is not an allowable clause under the current CBA.

8. What happens if there is a dispute between an RFA and one team or between two teams, the player’s prior team and offering team about the interpretation of one of the terms from the offer sheet?

If there is a dispute between a player and one of the teams or between the teams themselves about a particular term in regards to whether it is a principal term or not, whether it is a poison pill or not, or any other question of interpretation regarding the offer sheet, the matter is to be settled by the NFL’s independent arbitrator.

9. Are there any limitations on the offer sheets or contracts borne of offer sheets signed by RFAs?

A player may have only one signed offer sheet with a prospective new team at a time. When an RFA and new team sign an offer sheet that eventually becomes a contract, the player and team may not renegotiate the contract until after the completion of one playing season under the contract.

One team may not compensate another team for the decision to either sign or not sign an offer sheet with a player or to match or not match an offer sheet signed by a player and a prospective new team.

A player’s prior team may sign an RFA to a contract and trade that player to another team. However, any trades made during the signing period must be approved by the NFLPA. If the prior team matches the offer sheet, it may not trade the player to the team which submitted the offer sheet for one calendar year unless the player consents to the trade.