Lions Ask That Sanders Bonus Be Repaid

Lions Ask that Sanders Bonus Be Repaid

Question whether $11 million was for signing or for fulfilling contract at issue

Detroit, August 28, 1999 -- What is a bonus and how it is paid is an important consideration in sports contracts. Does the bonus constitute a one-time payment at signing? Or is it an amount that is paid in increments throughout the terms of the contract. For Barry Sanders and his former employer, the Detroit Lions, this question may end up in court.

USA Today reported that Sanders, who surprised the football world by announcing his retirement, was contacted by the Lions because the team apparently wants a prorated refund from the $11 million signing bonus he was paid when he signed a 6-year contract in 1997. The amount comes to a hefty $7.3 million.

It does not look like Sanders wishes to write a check for that amount. Rather, he claims that the bonus was literally a "signing bonus" and not a extra payment based on the number of years he performs his contract.

When dealing with a dispute such as this, the rules of contract interpretation maintain that the very first thing that is viewed is the "plain language" of the contract. Lions Chief Operating Officer Chuck Schmit maintains that the contract stipulated that Sanders must play, report and practice "for the length of the deal." If that be the case, the plain meaning of the contract is a "pay for play" rider.

But other forces can come to play in looking at a contract dispute. If the term has a specific definition unique to the industry or trade it involves, the courts can interpret the contract based on the meaning. If, for example, the union collective bargaining agreement defines a "signing bonus" as a one-time payment up front for signing, that is what will be determined.

Frequently, the language is not specific and the courts will have to "fill in the gaps" through other devices. In commercial law, the standards of industry (as noted above) are one factor. Another factor is the previous dealings between the parties. Say that Sanders and the Lions had a similar clause in prior contracts and that it was meant to apply to a one-time payment whether Sanders plays or not. A court would find that compelling in making its decision. Additionally, if the Lions employed similar bonuses for other players and interpreted them as a single payment, that could be used as evidence.

Of course, without the contract and the other evidence noted, it is hard to say how this dispute would turn out. But it serves as a hypothetical example of what courts would do it making a decision.