Westbrook-gate

Sorry for the lack of the posts the last couple of days. I was unusually busy this weekend getting my house ready to impending arrival of the fruit of my loins.

In any event, I've been wanting to comment on this story since Friday, but haven't had the time. Initially, I had the same reaction as Peter King did in his column today:

I think that Brian Westbrook $3 million overpayment by the Eagles is one of the strangest stories I've heard in a while. How can an organization run as well as the Eagles (Philly's the Microsoft front-office of the NFL) pay a guy $3 million more than he's due? And wouldn't the player, or his agent, say, "Uh, what's this extra $3 million in my check this week?''

Seriously, who wouldn't notice an extra $3M in their pay check? I don't know about you guys, but I notice when my check is $5 more. If there was an overpayment of $3M, I pretty sure I would have a heart attack from astonishment and my wife would spend the money inside of a decade.

Anyhow, the hard working people at Profootballtalk.com uncovered the real story:

Westbrook's 2005 contract extension contained a $3 million roster bonus payable in early 2006. The contract contained language allowing the team, at its option, to convert the roster bonus to a signing bonus. It's a relatively new cap-management device, aimed at permitting the team to reduce the cap hit arising from the payment in the year the money changes hands. As we understand it, Westbrook's contract was the first deal in which the Eagles used such a term.

Given the way that the contract was written, someone in the finance department accidentally concluded that Westbrook was entitled to both a $3 million roster bonus and a $3 million signing bonus -- not either/or. So Westbrook got two checks for totaling $6 million.

And while it's easy to chide Westbrook for cashing the extra check without asking any questions, we're told that the money doesn't directly go to him. Instead, it passes through his own financial management structure. So he didn't know about it until after the check cleared. (It's still unclear, however, whether he knew about the overpayment before the team raised it with him.)

The Eagles noticed the error as part of an internal year-end reconciliation, and the team promptly reported the situation to the league. At the advice of the league office, the Eagles pursued a grievance because clubs have only 45 days to file a claim or risk losing the ability to do so.

The Eagles had no reason to believe that Westbrook might try to stiff them by claiming that they waited too long to file the grievance. But three million bucks is three million bucks, and the safest course of action for the franchise was to preserve their rights by filing the grievance.

Meanwhile, we're told that a hearing has been set on the grievance for May 2007. But it's likely that no hearing will be held, since Westbrook does not dispute that he was overpaid. The delay in getting the money paid arises from the efforts of the team and the player to figure out whether Westbrook will cut a check for $3 million and pursue reimbursement of the taxes that were withheld (which could be a major pain in the butt for him), or whether he will pay the after-tax amount (roughly $1.7 million) and assign to the team the ability to pursue the tax reimbursement.

Technically, the grievance seeks recovery of $3 million plus interest, but it's our understanding that the Eagles won't squabble about the interest, and that there will be no cap consequence arising from the team's failure to recover reimbursement of the interest generated.

With that said, $3 million at an interest rate of five percent racks up $150,000 per year. Thus, we have a feeling that one or more of the other 31 NFL franchises (or, more specifically, one or more of the other three NFC East teams) might have something to say about this specific wrinkle.

Finally, the team is seeking reimbursement not of the $3 million roster bonus, but of the $3 million signing bonus. Thus, the only cap charge that ever would have applied in 2006 is $600,000 (i.e., one-fifth of the bonus payment), and it's our understanding that the Eagles were more than $600,000 below the cap at all times in 2006.

Pretty boring (and technical) huh? I'm guessing the guys at this website were getting their taxes done and got their accountant to help write this post.