BY:  EDWARD KEALY

The National Football League (“NFL”) is dealing with a particularly challenging issue regarding the recent bounty scandal and the New Orleans Saints.  The Saints have been cited by the league for instituting a bounty program in which their players were allegedly financially incentivized to try and knock opposing players out of games.  The National Football League claims that that an extensive investigation has led to the discovery of a bounty program being run within the Saints organization, more specifically, by its defense.[1]  The bounty system that the Saints instituted is a violation of NFL rules, but also implicates the Collective Bargaining Agreement (CBA), particularly in relation to the salary cap.

The League has begun disciplining the Saints organization and various members within it.  The punishments include, among others, a fine of $500,000 against the Saints’ organization and forfeiture of draft picks in the second round for both the 2012 and 2013 drafts.[2]  Additionally, Head coach Sean Payton is suspended for the entire 2012 season and former defensive coordinator Gregg Williams is suspended indefinitely.[3]  Given the severity of these penalties, one may wonder what the League’s authority over such matters are and how much discretion they have in their rulings.

The NFL possesses broad discretionary power regarding punishment for situations such as this.  Rule 17(2) of the NFL Rule Book lists “Extraordinary Unfair Acts.”[4]  Article 1 of this section outlines the Commissioner’s broad authority in investigating and taking disciplinary action under circumstances that he deems to be “so extraordinarily unfair or outside the accepted tactics encountered in professional football that such action has a major effect on the result of the game.”[5]  Article 3 then describes “Penalties For Unfair Acts.”  Specifically, the Commissioner’s powers include “the imposition of monetary fines and draft-choice forfeitures” and “suspension of persons involved in unfair acts.”[6]

Another issue with the bounty system is its salary cap implications.  In general, every contract and the consideration paid under each player contract, implicates the salary cap of a team.  In order to maintain a level playing field, teams must comply with the salary cap under the CBA.  As a result, the money paid related to programs like the Saints’ bounty system is additional consideration paid to players but is not reported in terms of their salary cap.  Article 13 of the CBA discusses Salary Cap Accounting Rules and section 6(c) discusses the role of incentives and performance-based payments and how they relate to the team’s Salary Cap.[7]  13(6)(c)(i) states: “Any and all incentive amounts, including but not limited to performance bonuses, shall be included in Team Salary if they are  ‘likely to be earned’…”[8]  Subsection (ii) states, “[a]t the end of a season, if performance bonuses actually earned resulted in a Club paying Salary in excess of the Salary Cap, then the amount by which the Club exceeded the Salary Cap  as  a result  of such actually paid  performance bonuses shall be subtracted from the Club’s Team Salary for the next League Year.[9]

Article 14 discusses the enforcement of the salary cap.[10]  Article 14(1) states:

“A Club (or a Club Affiliate) and a player (or a Player Affiliate or player agent) may not, at any time, enter into undisclosed agreements of any kind, express or implied, oral  or  written,  or  promises,  undertakings,  representations, commitments, inducements,  assurances  of intent, or  understandings  of any kind:  (a) involving  consideration of any  kind to  be paid,  furnished  or made available  or  guaranteed to the player, or Player Affiliate, by the Club or Club Affiliate either prior to, during, or after the term of the Player Contract…”[11]

The CBA goes into extensive detail about conduct aimed simply at circumventing the salary cap.  Article 14 not only proscribes this type of conduct, but also sets out both specific and harsh sanctions.  The type of conduct engaged in by the Saints’ organization is clearly proscribed by various rules governing the NFL.  Based on the nature of these violations and their implications of both the actual gameplay as well as the rules outlined in the CBA, it is no surprise that the League has been swift in its discipline and will continue to investigate this matter to the fullest extent possible.