Contracts – A Brief Summary

“Player X has signed a 5 year deal worth $100 million, with $45 million guaranteed.”

Nice, simple, easy to digest – but it tells us almost nothing. A few years ago I took it upon myself to sit down and get to grips with NFL contracts, solidifying my place as the most boring member of my friendship group. Here follows a quick summary of what’s important to look at when viewing a contract, or when news breaks about the latest deals around the league.

Contracts are largely made of 4-5 major components. These are; The length of the deal, base salary, signing bonus, roster bonuses, and incentives. We won’t look into incentives here, as they can be for basically any amount of money depending on almost any achievement – but they’re often straightforward.

Contract Length

Nice and simple to start – the amount of years the contract is valid for.

Base Salary

Simply put, this is the amount of money the player will earn during the season. Each year on the contract can have differing figures, allowing teams to squeeze players in on low cap hits early and cut them once the salary/cap hit gets too high. Any portion of any years base salary can be guaranteed and is often used to balloon that figure up.

Signing Bonus

Signing bonuses are one of the figures that are always included in the ‘guaranteed’ figure. It is essentially a lump sum given to the player at the beginning of the contract, that is the added ‘pro-rata’ to the player’s deal. In the simplest of terms, divide the signing bonus by the number of years on the contract and then add that to the player’s base salary each year to get their cap hit.

Roster Bonus

These are fairly self explanatory as well, if a player is on the roster at the selected date – then they receive the bonus. The amount of the bonus is counted against the cap number for the season as soon as it comes into effect.

To put this into a real world example take a look at Ramon Foster‘s contract.

Foster deal

Foster signed a 3 year $9,600,000 deal, with a $2,750,000 signing bonus and no other bonuses, therefore his total guaranteed amount was $2,750,000 (all figures and images from Spotrac.com)

The end column, titled ‘dead cap’ is the effect that cutting Foster from the roster would have in the corresponding year. This is usually a case of subtracting whatever guaranteed money is left on the contract away from the cap hit of that year. So it can be seen that if the Steelers were to release Foster at any point before week 1 of the 2018 season, they would clear $2,675,000 in cap space.

Finally, it’s worth noting that as of week 1 of the regular season a player’s base salary will become fully guaranteed for that year, which is why the ‘dead cap’ figures for Foster in 2016 and ’17 no longer match the ‘base salary minus guaranteed money’ method.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s