Offset Language: Much Ado About Nothing?

Both this year and last, the Miami Dolphins have engaged in laborious contract negotiations with their first round draft picks.

The weird part about that is, concurrent with the new collective bargaining agreement ratified in 2011, rookie contracts are supposed to fit nicely in the 'Rookie Wage Scale', which is essentially a table that dictates a draftee's first four-year deal based on draft position.

The main point is that there shouldn't be much negotiation for these deals, but the Dolphins have found a way -- offset language.

To explain exactly what offset language is, here's an excerpt from an article by NFL.com's Ian Rapoport on the subject:

Thanks to the new CBA, first-round contracts are four-year deals with a fifth-year option for the team. That option must be picked up by the March following the player's third year. Once that is exercised, a player's fifth year of the contract (as much as $10 million) is guaranteed for injury. Essentially, teams will make decisions on their first-rounders after Year 3, determining whether or not they want to be on the hook for the remaining money.

But in the fourth year comes the debate over offset language. If there is offset language, it allows the team to save money when releasing a player. Let's say a first-rounder is due $2 million in his fourth year. If he's released, and then agrees to a $2 million deal with a new team, the original team is completely off the hook. He receives $2 million from his new club, and the team that drafted him washes its hands of the situation. If there is no offset language, the discarded player receives the guaranteed money from his original team and the full salary from his new team. The original team can't merely allow the new team to pay the remaining guaranteed money as part of the new deal.

That is quite a bit to take in. What it means is that without offset language, a first-round draft choice that is released before his four-year deal is complete can sign another contract with a different team and still collect the remainder of his fully-guaranteed deal from the team that drafted him.

In other words, he'd be able to double-dip on salaries.

If a team is able to include offset language on a contract, it will not be liable for the remainder of a deal if the player in question signs a contract elsewhere.

Now that we have a definition of what offset language is, what exactly does it mean for the team? How often does the exclusion of offset language end up costing the team money, and how much?

To examine that, first consider what has to happen for a player to have an opportunity to 'double dip' on his fully-guaranteed rookie contract. The player, who was a first-round draft pick, must be cut by his original team before the fourth year of his deal. Why would a team cut a somewhat inexpensive player before the conclusion of his full-guaranteed fourth season?

Answer: that player is awful. Like, all-time draft bust bad.

The player would have had to bomb so spectacularly that the team would rather open up a spot than keep him on the roster. The contract is guaranteed either way, so the team doesn't save any money or cap space by releasing him.

If that team does cut him, the player would be free to sign anywhere, and potentially earn an additional salary while still collecting from the team that drafted him. The likelihood is, however, that a draft bust so colossal would struggle to find another contract on the free agent market, and if he did, it'd likely be a small one.

To demonstrate this, let's pose a scenario. Envision that Jacksonville Jaguars' 2011 first round pick Blaine Gabbert has a terrible year, and the team drafts another quarterback in 2014. Jacksonville releases Gabbert after the season, with one year and $2,011,587 remaining on his rookie deal.

What are the chances that Gabbert, who became a massive first-round bust and never demonstrated the ability to be a capable NFL quarterback, finds another contract elsewhere? For argument's sake, let's imagine a team signs him in 2014 for the veteran minimum, which is $730,000 for a fourth-year player.

Gabbert would still collect $2,011,587 from Jacksonville along with $730,000 from his new team in 2014. Had his contract included offset language, Jacksonville's monetary liability would decrease by the value of the new deal to $1,281,587.

The savings don't seem too substantial, at least not to squabble over as the Dolphins and a number of other teams are doing this year. What makes it worse is how uncommon it is. Here are a couple tweets from Yahoo!'s Jason Cole, showing a little research on first round draft picks:

<blockquote class="twitter-tweet"><p>Quick fact points out uselessness of NFL teams seeking offset language on first-rd picks: There were 349 first rd picks from 2000-2010 ...</p>&mdash; Jason Cole (@JasonPhilCole) <a href="https://twitter.com/JasonPhilCole/statuses/357123831137185793">July 16, 2013</a></blockquote>
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<blockquote class="twitter-tweet"><p>Only eight were cut before their fourth season, when offset would apply. None of 8 got much more than minimum salary.</p>&mdash; Jason Cole (@JasonPhilCole) <a href="https://twitter.com/JasonPhilCole/statuses/357124508236267524">July 16, 2013</a></blockquote>
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<blockquote class="twitter-tweet"><p>So in biz where teams will spend nearly half-billion on salaries next 4 yrs, teams are risking holdouts of best prospect to save about $600K</p>&mdash; Jason Cole (@JasonPhilCole) <a href="https://twitter.com/JasonPhilCole/statuses/357125308392022016">July 16, 2013</a></blockquote>
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Everyone will have their opinion on whether or not offset language is a worthy cause for the Dolphins' front office to belabor, but it seems unwise to me to cause a top pick to potentially miss significant time in training camp over such a small, infrequently-used clause in a contract.

It does, however, appear that many other NFL teams are following Miami's lead on offset language inclusion. At some point, it may be a standard feature of first-round contracts.

All contract info is courtesy of OvertheCap.com.