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NFL Contract Guarantees, Explained

December 3rd, 2020 at 1:01pm CST by Zachary Links

Unlike in the NBA or MLB, players’ contracts in the NFL aren’t guaranteed by default. Typically, an NFL player will receive at least some guaranteed money when he signs a deal, but that money often comes in the form of contract bonuses, and in particular signing bonuses. While a player’s base salary, or P5 salary, will occasionally be guaranteed for a season or two, more often than not future seasons in that contract are fully non-guaranteed, allowing the team to escape the contract without much of a cap hit, particularly if the player’s bonus money was limited.

Take Vontaze Burfict for example. The linebacker inked a three-year, $33MM extension with the Bengals in 2017 with just $3.3MM in total guarantees. Rather than carrying Burfict at a $7.3MM cap figure in 2018, the Bengals released him in March, leaving just $1.8MM in dead money against $5.5MM in savings. At the time of signing, Burfict was ticketed to be the highest-paid 4-3 outside linebacker in the game on a per-year basis, but the Bengals were able to pull the plug and pay out only a portion of that commitment.

Signing bonuses, which are generally paid in one or two lump sums, are fairly straightforward forms of guaranteed money, but not all guaranteed money is created equal. We saw a prime example of that when Colin Kaepernick inked a long-term extension with the 49ers in 2014. When word of the agreement first broke, Kaepernick’s guaranteed money was reported to exceed $60MM+. However, upon learning the full details of the contract, we found that only about $13MM of that total was fully guaranteed, whereas another $48MM+ was guaranteed for injury only.

An injury-only guarantee is one of three types of guarantees that a team can write into a player’s contract that apply to his base salary in a given season. These guarantees are as follows:

Guaranteed for injury: If a player suffers a football injury and cannot pass a physical administered by the team doctor, he would still be entitled to his full salary if the team were to release him. For a player with several future seasons guaranteed for injury only, it would take a career-ending injury for the team to be on the hook for all those future injury-only guaranteed salaries.
Guaranteed for skill: The most subjective of the three, a player whose talents have significantly declined and is released for skill-related reasons (ie. another player beats him out for a roster spot) would still be entitled to his full salary if that salary is guaranteed for skill.
Guaranteed for cap purposes: This form of guarantee ensures that a player who is released due to his team’s need to create cap room will still be entitled to his full salary.

A team can use a combination of these forms of guarantees, making a player’s salary guaranteed for injury and skill, for example. In the event that a player’s salary is guaranteed for injury, skill, and cap purposes, we’d refer to that salary as fully guaranteed, since the player would be eligible for his full salary regardless of the reason for his release.

As is the case with prorated bonuses, all future guaranteed salary owed to a player by a team is considered “dead money” and would accelerate onto the club’s current cap in the event of his release (over one or two years, depending on whether the cut happens after June 1). For the most part though, beyond the first year or two of a deal, that prorated signing bonus money is the only guaranteed figure remaining on the contract, which is why teams often don’t have qualms about releasing a player in the later years of his deal.

NFL Contract Guarantees, Explained

September 17th, 2020 at 1:16pm CST by Zachary Links

Unlike in the NBA or MLB, players’ contracts in the NFL aren’t guaranteed by default. Typically, an NFL player will receive at least some guaranteed money when he signs a deal, but that money often comes in the form of contract bonuses, and in particular signing bonuses. While a player’s base salary, or P5 salary, will occasionally be guaranteed for a season or two, more often than not future seasons in that contract are fully non-guaranteed, allowing the team to escape the contract without much of a cap hit, particularly if the player’s bonus money was limited.

Take Vontaze Burfict for example. The linebacker inked a three-year, $33MM extension with the Bengals in 2017 with just $3.3MM in total guarantees. Rather than carrying Burfict at a $7.3MM cap figure in 2018, the Bengals released him in March, leaving just $1.8MM in dead money against $5.5MM in savings. At the time of signing, Burfict was ticketed to be the highest-paid 4-3 outside linebacker in the game on a per-year basis, but the Bengals were able to pull the plug and pay out only a portion of that commitment.

Signing bonuses, which are generally paid in one or two lump sums, are fairly straightforward forms of guaranteed money, but not all guaranteed money is created equal. We saw a prime example of that when Colin Kaepernick inked a long-term extension with the 49ers in 2014. When word of the agreement first broke, Kaepernick’s guaranteed money was reported to exceed $60MM+. However, upon learning the full details of the contract, we found that only about $13MM of that total was fully guaranteed, whereas another $48MM+ was guaranteed for injury only.

An injury-only guarantee is one of three types of guarantees that a team can write into a player’s contract that apply to his base salary in a given season. These guarantees are as follows:

Guaranteed for injury: If a player suffers a football injury and cannot pass a physical administered by the team doctor, he would still be entitled to his full salary if the team were to release him. For a player with several future seasons guaranteed for injury only, it would take a career-ending injury for the team to be on the hook for all those future injury-only guaranteed salaries.
Guaranteed for skill: The most subjective of the three, a player whose talents have significantly declined and is released for skill-related reasons (ie. another player beats him out for a roster spot) would still be entitled to his full salary if that salary is guaranteed for skill.
Guaranteed for cap purposes: This form of guarantee ensures that a player who is released due to his team’s need to create cap room will still be entitled to his full salary.

A team can use a combination of these forms of guarantees, making a player’s salary guaranteed for injury and skill, for example. In the event that a player’s salary is guaranteed for injury, skill, and cap purposes, we’d refer to that salary as fully guaranteed, since the player would be eligible for his full salary regardless of the reason for his release.

As is the case with prorated bonuses, all future guaranteed salary owed to a player by a team is considered “dead money” and would accelerate onto the club’s current cap in the event of his release (over one or two years, depending on whether the cut happens after June 1). For the most part though, beyond the first year or two of a deal, that prorated signing bonus money is the only guaranteed figure remaining on the contract, which is why teams often don’t have qualms about releasing a player in the later years of his deal.

Offset Language In The NFL, Explained

June 10th, 2020 at 6:47pm CST by Zachary Links

Ever since the 2011 Collective Bargaining Agreement, rookie contracts have been fairly regimented. Negotiations between teams and draft picks have become smoother than ever, with few – if any – players expected to be unsigned by the time training camp gets underway. Still, a number players have yet to ink their rookie deals, including several first-rounders.

These negotiations have been delayed, in large part, due to concerns over potential revenue loss in the coming year. Fortunately for teams, offset language is not expected to be a roadblock.

Over the last several years, only a handful of players in each year have managed to avoid having offsets language written into their deals. This year, Dolphins quarterback Tua Tagovailoa and Panthers defensive lineman Derrick Brown were the first Round 1 picks to sign and they agreed to offset language.

That hasn’t always been the case. In 2015, Marcus Mariota‘s camp haggled with the Titans until the two sides finally reached an accord with partial offset language, a compromise that was not consummated until late July. In 2016, Joey Bosa’s holdout dominated headlines until the linebacker inked his deal on August 29th. In most cases, a lack of offsets for a player simply depends on which team drafted him — clubs like the Rams and Jaguars traditionally haven’t pushed to include offsets in contracts for their top picks, even in an era where most other teams around the league do.

Offset language relates to what happens to a player’s salary if he’s cut during the first four years of his career, while he’s still playing on his rookie contract. For the top 15 to 20 picks in the draft, those four-year salaries will be fully guaranteed, even if a player is waived at some point during those four seasons. For example, if a player has $4MM in guaranteed money remaining on his contract and is cut, he’ll still be owed that $4MM.

However, if a team has written offset language into the contract, that club can save some money if and when the player signs with a new team. For example, if that player who had $4MM in guaranteed money left on his contract signs with a new club on a $1MM deal, his old team would only be on the hook for $3MM, with the new team making up the difference. If there’s no offset language on that first deal, the old team would continue to be on the hook for the full $4MM, and the player would simply earn an additional $1MM from his new club.

Although the negotiation of offset language might potentially delay a rookie’s signing, the offsets rarely come into play, since few top picks flame out badly enough that they’re released during their first four seasons. And even in those rare instances, if a player has performed poorly enough to be cut in his first few years, he likely won’t sign a lucrative deal elsewhere, so offset language wouldn’t help his old club recover more than perhaps the league minimum.

The NFL’s Post-June 1 Cuts, Explained

June 1st, 2020 at 10:34am CST by Zachary Links

NFL teams will often use contract bonuses as a way to spread out a cap hit that might otherwise be exorbitant. For example, if a player’s four-year deal includes a $8MM signing bonus, that money can be paid immediately but spread out over four years for cap purposes. This way, the cap charge for the bonus amounts to $2MM per year for cap purposes, rather than $8MM in year one.

There’s an obvious benefit to kicking the can down the road, but it can also hurt teams if they want to terminate that deal. If the club in the above scenario wanted to release the player in the second year of his contract, it would still have to account for that remaining prorated bonus money. Rather than counting on the cap as $2MM per year for two seasons, that dead money “accelerates,” and applies to the cap for the league year in which the player is released. In other words, the remaining $4MM in prorated bonus money immediately counts against the cap.

Although these rules apply to many cuts, a different set of rules is in place for players released after June 1. In that case, a team can spread the cap hit across two seasons rather than one — for the current season, the prorated bonus figure stays at its original amount, with the remaining bonus balance accelerating onto the following season. Referring again to the above scenario, that means the player would count against the cap for $2MM in the league year in which he was cut, with the remaining $4MM applying to the following league year.

The guidelines for pre-June 1 and post-June 1 cuts are fairly straightforward, but things become a little more complicated when we take into account that teams are allowed to designate up to two players as post-June 1 cuts even if those players are released before June. This offseason, we’ve seen a handful of players designated as post-June 1 cuts: Trey Burton (Bears), Desmond Trufant (Falcons), Trumaine Johnson (Jets), and Todd Gurley (Rams).

In the case of Johnson, the Jets were initially slated to pay him $11MM in base salary this year. Under typical circumstances, the release would have left Gang Green with a $12MM dead money obligation for 2020. However, through the post-June 1 designation, they will unlock $11MM in cap space starting on Tuesday with just $4MM in dead money this year. In 2021, they’ll be faced with the remaining $8MM charge.

Because the cap charge for the current league year isn’t reduced until June, designating a player as a post-June 1 cut hasn’t been hugely advantageous for teams historically. Typically, by June, just about every notable free agent is off the board. However, this year is a bit of a different story – Jadeveon Clowney, Logan Ryan, Larry Warford, and other notable vets are still on the board.

Free agent opportunities aside, releasing a player in the spring and designating him a post-June 1 cut can be mutually beneficial for a player and his team. It allows the player to hit the market when potential suitors still have cap room and are still looking to add free agents, and it allows the club to spread out the player’s cap charge without having to actually wait until June 1 to release him — waiting until that point could mean paying roster or workout bonuses in the interim. Additionally, even if the team doesn’t need that June cap space for free agency, it can come in handy for signing draft picks.

A couple loose ends related to post-June 1 cuts:

The same rules applying to players who are released apply to players who are traded — if a team trades a player after June 1, his remaining bonus money can be spread out over two seasons. However, a club can’t designate anyone traded prior to June as a post-June 1 player.
Teams cannot designate post-June 1 cuts during the final league year of the Collective Bargaining Agreement.
This year, NFL teams were bracing for the possibility of not having the post-June 1 cut at their disposal, due to the expiring collective bargaining agreement. However, the NFL and the NFLPA ensured the 2020 post-June 1 cut and many years of labor peace with a brand new CBA.

PFR’s NFL Glossary: Returning From Injured Reserve

May 29th, 2020 at 1:32pm CST by Zachary Links

Once upon a time, the injured reserve designation would automatically rule a player out for the entire season. But, thanks to an update in 2012 and many tweaks over the last eight years, that’s no longer the case.

In 2012, the NFL and the players’ union agreed that each team could bring back one player from IR, though that player had to be designated before Week 1 of the ’12 season. Gradually, that rule was revamped to allow every team to return two players from IR each year, with the flexibility to make that determination midway through the season as teams monitored each player’s recovery.

Still, the basic parameters applied – the players had to spend a minimum of six weeks on injured reserve without practicing. After that, they’re permitted to practice, but they’re required to wait at least another two weeks before seeing live action. That’s the minimum amount of time. If the player isn’t activated after ~21 days, they’re no longer eligible to play that season. It’s known as the “three week window” in the NFL, and teams cannot reuse that return spot if the player isn’t good to go. So, while the revamped rule gives teams some much-needed flexibility, there’s still a lot that goes into the decision.

In May, the NFL gave the rule yet another facelift. Going forward, teams will be allowed to bring three players back from IR each season to provide a little extra padding for clubs strained by injuries and the limitations of the 53-man roster.

PFR’s NFL Glossary: Waivers

May 13th, 2020 at 7:12pm CST by Zachary Links

Here at Pro Football Rumors, you’ll see a number of stories posted on players being cut, waived, or released by their NFL teams. While these terms are often used interchangeably, they’re not quite synonymous. A player who is “cut” has been removed from his team’s roster, but whether he is “waived” or “released” generally depends on his NFL experience.

Between the day after the Super Bowl and the following season’s trade deadline, players with less than four years of service time – or “accrued seasons” – have to pass through waivers after they’re cut by an NFL team. The other 31 clubs around the league have a day to place a waiver claim on that player, adding him to their roster and taking on his contract. That’s why we refer to these players as having been waived, rather than released.

If a player with more than four years of service time is cut between the Super Bowl and the trade deadline, he is not subjected to the waiver process, meaning he becomes a free agent immediately, able to sign with a new team right away if he so chooses.

This isn’t the case all year round, however. Once the trade deadline passes, any player who is cut by his team must pass through waivers, regardless of how many accrued seasons are on his resume. So if a team drops a 12-year veteran in Week 10 of the season, that player must pass through waivers unclaimed before he’d be free to sign with a team of his choice.

Here are a few more details on the waiver process:

If two teams place a waiver claim on the same player, he is awarded to the team with the higher priority. Waiver priority is determined by the previous season’s standings — this year, for example, the Bengals have first dibs, while the Super Bowl champion Chiefs have 32nd priority.
However, the waiver priority order will change starting in Week 4. At that point, waiver priority is determined by records of the current season.
The window to claim a player closes at the end of the NFL’s business day, which is at 3pm central. So if a player is waived by one team on Monday, the other 31 clubs have until Tuesday afternoon to submit a claim. Players cut on Friday clear waivers (or are awarded to a new team) on the following Monday.
Prior to the first cutdown date in training camp, injured players with fewer than four years of service time cannot be placed on injured reserve until they pass through waivers. Teams will cut this sort of player with a waived-injured designation, allowing other teams to place a claim if they so choose. If the player goes unclaimed, his team can place him on IR or agree to an injury settlement, then fully release him from the roster.

Note: This is a PFR Glossary entry. Our glossary posts explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement.

PFR Glossary: Rooney Rule

January 27th, 2020 at 1:30pm CST by Zachary Links

This offseason, five NFL teams hired new head coaches. New Redskins head coach Ron Rivera was the only non-white coach to fill one of those vacancies, which drew criticism from some, including Steelers owner Art Rooney II.

“I think where we are right now, is not where we want to be, not where we need to be,” Rooney said recently. “We need to take a step back and look at what’s happening with our hiring processes.”

“As it appears right now, there just weren’t very many minorities in the process at all this year. And I’m not sure why that is,” Rooney continued. “It doesn’t need to be that way. We have about one-third of the coaches in the National Football League are from the minority communities. That’s really not a bad pipeline. And so, the question is, why aren’t more of those people getting interviews? Why aren’t more of those people advancing through the process?”

Established in 2003, the Rooney Rule stipulates that teams must interview at least one minority candidate for head coaching positions. Named after former Steelers owner Dan Rooney, the rule is in place to make sure that candidates of color have a fair shake at climbing the ranks.

When the Rooney Rule was introduced, there were historically very few non-white head coaches in the NFL. Fritz Pollard became the first black head coach in NFL history in the 1920s and the league did not see another minority head coach until 1979 when the Raiders hired Tom Flores.

Since the advent of the Rooney Rule, dozens of qualified minority candidates have been given opportunities to showcase themselves for head coaching positions. However, it’s difficult to say whether that has directly led to a greater number of minority hires. Teams have been accused of interviewing minority candidates simply to check the box.

This was a common complaint against the Raiders a couple of years ago when they reportedly agreed to hire Jon Gruden on Christmas Eve, before they interviewed Oakland tight ends coach Bobby Johnson and USC offensive coordinator Tee Martin for the role in January. Ditto for some of this year’s searches, including the Cowboys. Some say the Cowboys weren’t giving serious consideration to former Bengals coach Marvin Lewis before they hired ex-Packers coach Mike McCarthy. The Fritz Pollard Alliance, which works with the NFL to monitor minority hiring practices, has vowed to push for changes to the rule.

In recent years, the rule has been extended to general manager vacancies. In December 2016, the NFL agreed to informally apply the rule to offensive and defensive coordinator positions, though there are no penalties for noncompliance. If a team is found to have broken the Rooney Rule in a head coaching search, the club may be faced with a substantial fine and/or a forfeiture of draft picks. In the coming months, the Rooney Rule could be expanded even further.

PFR’s NFL Glossary: Waivers

September 27th, 2019 at 11:00am CST by Zachary Links

Here at Pro Football Rumors, you’ll see a number of stories posted on players being cut, waived, or released by their NFL teams. While these terms are often used interchangeably, they’re not quite synonymous. A player who is “cut” has been removed from his team’s roster, but whether he is “waived” or “released” generally depends on his NFL experience.

Between the day after the Super Bowl and the following season’s trade deadline, players with less than four years of service time – or “accrued seasons” – have to pass through waivers after they’re cut by an NFL team. The other 31 clubs around the league have a day to place a waiver claim on that player, adding him to their roster and taking on his contract. That’s why we refer to these players as having been waived, rather than released.

If a player with more than four years of service time is cut between the Super Bowl and the trade deadline, he is not subjected to the waiver process, meaning he becomes a free agent immediately, able to sign with a new team right away if he so chooses.

This isn’t the case all year round, however. Once the trade deadline passes, any player who is cut by his team must pass through waivers, regardless of how many accrued seasons are on his résumé. So if a team cuts loose a 12-year veteran in Week 10 of the season, that player must pass through waivers unclaimed before he’d be free to sign with a team of his choice.

Here are a few more details on the waiver process:

If two teams place a waiver claim on the same player, he is awarded to the team with the higher priority. Waiver priority is determined by the previous season’s standings — this year, for example, the Cardinals have first dibs, while the Super Bowl champion Patriots have 32nd priority.
However, the waiver priority order will change starting in Week 4. At that point, waiver priority is determined by records of the current season.
The window to claim a player closes at the end of the NFL’s business day, which is at 3:00pm central. So if a player is waived by one team on Monday, the other 31 clubs have until Tuesday afternoon to submit a claim. Players cut on Friday clear waivers (or are awarded to a new team) on the following Monday.
Prior to the first cutdown date in training camp, injured players with fewer than four years of service time cannot be placed on injured reserve until they pass through waivers. Teams will cut this sort of player with a waived-injured designation, allowing other teams to place a claim if they so choose. If the player goes unclaimed, his team can place him on IR or agree to an injury settlement, then fully release him from the roster.

This is a PFR Glossary entry. Our glossary posts explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement.

PFR Glossary: NFI List

July 4th, 2019 at 3:00pm CST by Zachary Links

The NFL’s “physically unable to perform” (PUP list) allows teams to park seriously injured players for a minimum of six regular season games without taking up a spot on the roster. Meanwhile, a similar designation exists for players who are unable to practice as a result of conditions unrelated to the team’s official football activities.

We’re talking about the NFL’s Non-Football Injury list, more commonly known as the NFI list. The name indicates that the designation is only for injuries that occur off of the gridiron (snowboarding accidents, banana peel slips, etc.), but it also covers injuries that are sustained while partaking in football activities outside of the auspices of the shield. For example, a player who suffered an injury during college football activities could be placed on the NFI list.

There are two types of NFI designations: the Active/NFI designation leaves the door open to returning to practice once the player is medically cleared. Meanwhile, the Reserve/NFI designation is for players who will not return to the active roster during the regular season. With the “Active” tag, players count against the roster max, whether it’s the 90-man or 53-man version. With the “Reserve” tag, they do not.

So, what’s the real difference between NFI and PUP? The biggest distinction is that teams can withhold part of the player’s salary while on NFI. This isn’t frequently done, but it’s an option for teams who feel that a player’s personal irresponsibility caused their condition.

PFR Glossary: Physically Unable To Perform List

June 26th, 2019 at 7:43pm CST by Dallas Robinson

When training camp rolls around next month, you might start hearing about players being placed on the PUP list. While the PUP list (sadly) isn’t a collection of which players are bringing their favorite canines to practice, it does have an important meaning for the NFL season.

PUP stands for physically unable to perform, and the PUP list is similar in fashion to injured reserve. It denotes which players aren’t healthy enough to practice during training camp. But there is one important distinction regarding PUP that can often get confusing.

Players who can’t start training camp due to an injury are initially placed on Active/PUP. This is a minor designation, and one that we at PFR typically won’t even cover. A player on Active/PUP isn’t able to practice until he’s medically cleared. Once he gains that clearance, he’s free to hit the practice field and is removed from the PUP list.

If a player begins training camp on Active/PUP and never gets healthy enough to practice throughout camp and into the preseason, he’s likely to be placed on Reserve/PUP. This is the more common PUP designation, and one that we will cover. Being placed on Reserve/PUP forces a player to miss the first six weeks of the regular season, so it’s a fairly serious option. After those six weeks are up, the team has a three-week window in which in must either activate the player, place him on injured reserve, or release him.

A few things to remember:

A player can’t practice and then be placed on a PUP list. If Patrick Mahomes takes part in only a single day of training camp before suffering an injury that will knock him out for the first six weeks of the regular season, the Chiefs wouldn’t be allowed to move him to PUP.
Similarly, if a player is on Active/PUP, gets healthy enough to practice, and then gets hurt again during camp, his team is out of luck. He won’t be able to go back on the Active/PUP list or be placed on the Reserve/PUP list.
Any player on either PUP list does not count toward his team’s 53-man roster.

In short, you typically don’t need to fret if your favorite player is placed on Active/PUP. The majority of players on Active/PUP are there for precautionary reasons and will soon be allowed to participate in practice sessions. But if that player sticks on Active/PUP throughout the preseason and is then shifted to Reserve/PUP, buckle in for a minimum absence of six weeks.

Note: This is a PFR Glossary entry. Our glossary posts explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement.

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