Free-agency splurge could throw Eagles for a loss

David Katz is a third-year student at Harvard Law School

When the NFL's free-agency period started, the Eagles quickly nabbed Asante Samuel, signing the Pro Bowl cornerback to a six-year, $57 million contract with a $20 million signing bonus. The decision to sign one of the most expensive free agents, rather than to pursue younger, cheaper cornerbacks, may harm the team in future seasons, because compiling a roster of high-priced free agents is a losing strategy in the long-term.

When the Eagles were successful in the early 2000s, they drafted most of the team's productive players and were able to sign them to reasonable contracts; stockpiling cheap and productive players allowed the team to have depth and talent at almost every position. By 2004, however, those drafted players started to become eligible for free agency, demanded large signing bonuses, and consumed a greater percentage of the Eagles' salary cap. The team lost depth and productivity at many positions because only a few contracts occupied a large portion of the Eagles' maximum team salary.

NFL contracts traditionally contain both a non-guaranteed salary and a guaranteed signing bonus; franchises often prefer to pay stars with low salaries and large bonuses. Since the signing bonuses are prorated over the life of the contract, they count toward the salary cap. It usually works great in the first year. For example, in 2004 the Eagles doled out $35.2 million in guaranteed signing bonuses for Sheldon Brown, Jevon Kearse, Donovan McNabb and Lito Sheppard. Since each player except McNabb earned the league's minimum salary, the Eagles attributed significantly less than $35.2 million to the 2004 salary cap. That year, those stars helped the Eagles go 13-3 on its way to a Super Bowl berth. By 2005, though, those hefty signing bonuses significantly restricted the Eagles' cap space, which prevented the team from signing important reserve players. That season, the team was 6-10.

Large signing bonuses can be debilitating to a franchise when players leave the team before the end of their contracts, whether through waiver, trade or retirement, because the total unpaid portion of the signing bonus "accelerates" and is counted in the next season's cap, creating "dead money." That's what happened to the San Francisco 49ers in 2004. The team had $27 million in dead money, including accelerated bonuses for Jeff Garcia and Terrell Owens. Since the salary cap was about $80 million that season, the 49ers had only $53 million to pay their players. Not surprisingly, the team went 2-14.

Teams can avoid excessive dead money by guaranteeing larger salaries rather than huge signing bonuses, but franchises have historically refused to do so. Guaranteed salaries have the benefit of spreading cap charges over the life of the contract - salaries are charged against the cap in the year paid - without the potential for acceleration. Furthermore, when teams have smaller cap charges for releasing players, they acquire greater flexibility to rid the payroll of excessively large contracts and sign more valuable players. Therefore, NFL teams should shift much of the signing bonuses into larger guaranteed salaries to retain cap flexibility in the future.

In the salary-cap era, teams need to selectively choose those high-priced players who fit with the teams' on-field schemes and off-field organizations, and then fill the remaining roster spots with players who fulfill needs and can support the stars.

Eagles' fans must hope that Samuel's contract is an aberration and that management will become patient to pursue only undervalued players in free agency and build up the team through the draft.

Although the rookies would undoubtedly be less prepared for the starting role than Samuel, they could be a better value in the long term, growing to be Pro Bowlers, with relatively cheap contracts signed as rookies, after playing a season or two behind Brown and Sheppard.

Throwing large bonuses at high-priced free agents restricts cap space for up to six years and hurts the team's future success.