How to End a Standard Player Contract
When a professional athlete joins a team, he or she signs a standard player contract (SPK), which sets forth the player's responsibilities and the conditions of his or her continued employment. The SPK is negotiated between the league and the players' association, and its terms apply to all athletes in that league. However, any high-profile players also negotiate an addendum to that contract, with protections that apply only to him or her. The document itself, as well as league rules and procedures, govern how players or clubs can end a standard player contract. These methods vary widely among leagues, and some methods may not be practiced in some sports.
Releasing a Player
Analyze the player's contract.While the standard player contract includes basic provisions for termination of the contract, an individual player's addendum may have additional clauses that address contract termination.
- For example, the SPK used in the NFL allows clubs to release players at any time. Since the NFL has salary caps and requires teams to pay fines for going over the salary cap, teams often release players so they can stay below the salary cap.
- A high-profile player may negotiate an addendum that specifies certain conditions must be met or that he is guaranteed a certain amount of money if he is released for such a reason.
- Keep in mind that teams normally are reluctant to make deals that guarantee money, because they have to pay that money even if they release the player – and that payout counts towards the team's total payroll for the purposes of the league's salary cap.
Provide the player with written notice.Typically if a club plans to release a player the contract requires the club to provide that player of written notice that he or she is being released.
- For example, the SPK used in the NFL provides that a contract is terminated when the player receives written notice that his contract has been terminated.
- The termination is effective on that day – there is no advance notice required under the SPK, although individual players are free to negotiate such conditions.
Pay the player any money due under the contract.When the player is released, the club must pay that player any money he or she has earned in the current pay period, as well as any additional amount specified in the SPK or the player's addendum.
- For example, if the player is paid every other week during the season, and he is released mid-season, he would receive a paycheck for the days he'd been on the roster during that pay period before the date he was released.
- In most cases, players aren't entitled to any money besides this once they are released.
- In contrast to the NFL, professional baseball players are entitled to termination pay plus reasonable traveling expenses back to their home town if their clubs terminate their contracts.
Assigning the Contract
Review league rules.Each league has its own rules that govern when players can be traded to other teams within the league, and what procedures must be used.
- In most professional sports leagues, players have substantially fewer reasons to terminate their contracts than clubs do. For example, in Major League Baseball, a player can only terminate his contract if the club doesn't pay him, and only then if the club still doesn't pay him within 10 days after receipt of written notice.
- An MLB club, in contrast, can terminate a player's contract if he fails to conform his personal conduct to the league's standards of good citizenship and sportsmanship, fails to keep himself in peak physical condition, or fails to exhibit skill or ability sufficient to qualify him for continued membership on the club's roster.
- Often these criteria, including the assessment that a player lacks sufficient skill or ability, are subjective assessments made by the club's management. As such, an MLB standard player contract can be terminated by a club based on management's opinion.
Request waivers from other clubs.One of the more common procedures used is to have the club that currently has the player request waivers from other clubs who want and have the ability to sign the player the club wants to transfer.
- This procedure is used by MLB clubs and is outlined in the MLB standard player contract.
- A club that wants to terminate a player's contract must request waivers from all other MLB clubs. Waivers are requested from each team in order from the lowest-ranked team in the standings to the highest.
- If another club wants the player, it may claim assignment of the player's contract. These claims are valid for two business days.
Notify the player.Typically a player must be notified either before or soon after the club issues a request for waivers that the club intends to transfer the player's contract.
- Under MLB procedure, if the club receives a claim from another club, it must notify the player that waivers were requested for the purpose of terminating his contract, and that his contract was claimed by another team.
- Once a baseball player receives notice that his contract has been claimed by another team, he has five days to decide whether he wants to transfer to the new team or be released.
- During the five-day period, the player can choose to terminate his contract by providing written notice to his club.
- If he fails to provide notice to his club that he wants to terminate his contract, his contract will be assigned to the new team.
Confirm the transfer.Once a team has been chosen and has accepted the player, the original contract is terminated and the player must sign a new contract with his or her new club.
- If the waiver period ends and no team has claimed the player, his contract is fully terminated.
- Baseball has two trade deadlines: July 31 and August 31. Players traded after July 31 must go through waivers. Those traded after August 31 cannot be included on any postseason roster.
Complete the transfer.Standard player contracts and collective bargaining agreements typically require a player to report to the new club immediately after the contract is assigned.
- All obligations between the club and the player under the contract cease on the date of termination, except that the club must pay the player any income he has earned to that date, as well as any moving allowances.
- The NFL's standard player contract does not require use of the waiver system. Rather, a player's contract can be assigned to any other team in the league at any time.
- The new team agrees to take over the contract on the same terms and pays the player's travel expenses to report to the team.
Submitting to Arbitration
Check the collective bargaining agreement.In some professional sports, termination of contracts due to a breach requires the parties to follow a particular grievance procedure outlined in the collective bargaining agreement between the league and the players' association.
- The arbitration method of ending a standard player contract is most commonly used in the NHL, and the collective bargaining agreement of the NHL/NHLPA establishes that the league and the players' association, through the grievance procedure laid out in the agreement, are the sole arbiters of grievances between players and clubs.
- However, either the player or the club, if dissatisfied with the results of the grievance procedure, can request an impartial arbitrator be appointed to resolve the dispute.
- For example, if an NHL team wants to terminate a player's contract because the player has breached his contract, the team must file a grievance and ultimately submit to arbitration.
Notify the other party of your grievance.League procedures typically require players or clubs to notify the other party of any grievance under the contract within a specific period of time after the incident that gave rise to the dispute.
- For example, the NHL/NHLPA collective bargaining agreement requires the grievance process to be initiated within 60 days of the date the incident occurred, or the date that the party became aware of the problem.
- The NHL/NHLPA collective bargaining agreement includes specific rules for effective service of written notices. They can be sent using email, or using fax if internet service is unavailable.
- Notice to players may be sent through the player's certified agent or through the NHLPA.
Receive an answer from the other party.Typically the other party has a deadline set forth in the collective bargaining agreement to respond to the notice in writing.
- In the NHL, the other party must respond to the notice within 10 days, and admit or deny each fact alleged in the notice.
- If the receiving party denies any facts alleged, it must provide the specific grounds for each denial.
Create an outline of your legal and factual position.In some leagues such as the NHL, each party is required to give the other an outline of its legal and factual position concerning the grievance in advance of the grievance hearing.
- These outlines must be provided to the other party at least seven days in advance of the grievance committee hearing during which the grievance will be heard.
Attend the grievance hearing.A separate grievance hearing in front of representatives from the league and the player's association may be held in advance or instead of a hearing before an impartial arbitrator.
- Under the NHL/NHLPA collective bargaining agreement, the grievance committee, formed by representatives from the league and the players' association, meets once every two months.
- Each meeting covers grievances filed at least 30 days prior to the meeting. Grievances filed later will be heard at the next meeting. In other words, if the grievance committee is meeting 10 days from the date the grievance is filed, that grievance will be heard in the meeting occurring in two months and 10 days.
Request arbitration.If the dispute isn't resolved through the grievance proceeding, the party that filed the grievance may request a hearing before an impartial arbitrator.
- Under the NHL/NHLPA agreement, the arbitrator must be a member of the National Academy of Arbitrators.
- For example, if an NHL team wanted to terminate a player's contract and the grievance committee found no grounds to terminate that player's contract, the team could request an impartial arbitrator to hear the matter.
- If arbitration is requested, each party must submit a disclosure statement to the other party that provides a statement of the issues, the factual background of the case, the theory of the case, and any witnesses or documents that will be produced as evidence.
- If documents are listed, they must be attached to the disclosure statement.
- The party that requested arbitration must submit its disclosure statement to the other party at least 30 days before the date of the hearing. The other party must submit its disclosure statement at least 20 days before the date of the hearing, so it has 10 days to complete and submit its disclosure statement after receiving the statement from the grieving party.
- The costs of arbitration are shared equally among both parties.
Attend the arbitration hearing.An arbitration hearing typically works much like a court hearing, with the arbitrator listening as both parties present their sides of the dispute and then deciding which party should prevail, much like a judge.
- Arbitration hearings under the NHL/NHLPA collective bargaining agreement take place either in New York or Toronto. The parties can agree to hold the hearing in another location.
- Witnesses are expected to testify at these hearings. If a witness is unavailable, the parties may agree to allow the witness to appear and give testimony over the telephone, or the hearing will be rescheduled for a date on which the witness can attend.
Accept the arbitrator's decision.Typically an arbitrator's decision is binding on both parties under the collective bargaining agreement, so there is no opportunity for appeal if you disagree.
- Under the NHL/NHLPA collective bargaining agreement, the arbitrator must issue a written decision within 30 days of the date of the hearing.
- The arbitrator's decision constitutes a full, final, and complete disposition of the grievance.
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