After more than 20 years of working in and studying the tough world of sports business—including time spent as a sports agent and writing a book about the agent business—Wharton legal studies professor Kenneth Shropshire has learned a thing or two about the nastiness of contract negotiations.
But when asked to predict the outcome of the increasingly bitter contract dispute between the Philadelphia Eagles and star receiver Terrell Owens, even Shropshire says he can’t guess what will happen. He just knows it should be interesting to watch.
The feud over Owens’ demands for a new contract pits two formidable foes—the business-savvy Eagles and superagent Drew Rosenhaus—against one another in a negotiation that will play out in full public view. Things could get ugly. “Different agents operate in different ways, and this is certainly what Drew Rosenhaus is known for—this kind of maneuvering,” says Shropshire, David W. Hauck Professor of Legal Studies at the Wharton School and founder of the Wharton Sports Business Initiative.
Rosenhaus, a tenacious negotiator and one of the toughest agents in sports, was once named “the most hated man in pro football” by Sports Illustrated and seems to thrive on attention. Today, Rosenhaus represents about 100 NFL players. With every negotiation, even the nasty ones, Rosenhaus’ legend grows.
“I would guess most people don’t know Donovan McNabb’s agent’s name,” Shropshire said. “But certainly most anyone who knows football will know who Drew Rosenhaus is.”
In his latest push to become the NFL’s most feared agent, Rosenhaus this offseason managed to steal several top players from other agents and convinced some of them to do just what Owens is doing—hold out of training camp, demand more money and wait for team ownership to cave. The two sides remain deadlocked.
Owens’ contract, signed last March, is worth about $49 million and was supplemented by a signing bonus in excess of $9 million. It was a huge contract, but in his first season as an Eagle, Owens more than proved himself worthy of it: He caught 77 passes for 1,200 yards and scored 14 touchdowns. He was a big reason why the team reached its first Super Bowl in more than two decades.
It wasn’t long after the season ended, however, that things turned sour. Owens suddenly dumped longtime agent David Joseph in favor of Rosenhaus, who immediately met with the Eagles to inform the team T.O. wanted a new contract—a contract befitting the league’s best receiver. “It’s likely that there was some scenario where Rosenhaus, or some of his people, had the opportunity to convey to T.O. that, relative to some of the other receivers in the league, he is, arguably, underpaid,” Shropshire says.
Given the nature of NFL contracts, that’s not entirely unreasonable. In the NFL, long-term deals are almost never paid out in full, because the contracts are rarely guaranteed. If a team wants to dump a player in the third year of a five-year deal, there’s usually nothing stopping it from doing so. Given that situation, players tend to seek as high a signing bonus as possible, as well as substantial base salaries early in the life of the contract. Owens’ deal would appear to do just that.
He is set to earn $3.25 million in base salary in 2005, along with a $5 million signing bonus. His salary would drop to $770,000 in 2006 before jumping to $5.5 million in 2007, $6.5 million in 2008, $7.5 million in 2009 and $8.5 million in 2010. But again, much of that money was unlikely to be paid, even if Owens stuck around.
“In the end, the team and the agents know the contracts will never be paid out that way,” Shropshire says.
Rosenhaus seems committed to making Owens the game’s highest-paid receiver, an honor that currently belongs to Marvin Harrison of the Indianapolis Colts, who signed a 7-year, $67 million deal in December. But to pull that off, Rosenhaus will have to stare down the Eagles, who have built a reputation as one of the hardest-negotiating franchises in the league.
Coach Andy Reid has been blunt in his assessment of the Owens saga. “If he’s here, he’s here. If he’s not, he’s not,” Reid said when Eagles minicamp opened last week. “We have an understanding here that if you’re not here, we move on without you.”
“The Eagles are, historically, one of the teams that just won’t negotiate this way,” Shropshire says. “This will be a chance for the Eagles to again clearly define that—‘No, we still do not renegotiate contracts.’ … I think Andy Reid seems pretty adamant about this. He’s the kind of guy you learn to believe after a while.”
One advantage the Eagles do have, Shropshire says, is public opinion. No matter how the negotiation turns out, it’s unlikely the Eagles will take a public relations hit—but Owens is clearly susceptible to just that.
“Whether or not it’s a good idea is debatable,” Shropshire says. “The most difficult piece of this is the PR part—the affinity that might be lost with the city, and the fans and his teammates if it’s not handled correctly.”
Originally published on May 12, 2005