Different Types Of Contract Structures

Yesterday afternoon, Joel Corry of CBS Sports explained the differences between deal structures, in terms of how the money is paid out and guaranteed to players.

In his article, he describes four types of structures that occur commonly in NFL contracts:

  1. Signing Bonus
  2. Signing Bonus and Salary Guarantees
  3. Signing Bonus and Option Guarantees
  4. Pay as you go

The differences between these four basic concepts are small, but they each have their advantages in terms of how cap space is utilized.

Corry explains that in the first type, which relies on the signing bonus, the player’s base salary is kept low early in the deal but the cost of cutting the player is high due to the guaranteed bonus. However in the pay as you go method, the guaranteed money is all at the beginning, so if the player is released a limited amount of dead money will remain on the books.

The other structures fall somewhere in between, and while this is his attempt to simplify it, contracts are complex and can sometimes overlap.

This could come into play while NFL teams begin negotiating their next batch of contract extensions.

Corry also lists team by team which salary structure they prefer for their largest contracts. He explains the details of the contracts, and how he expects the team to act going forward. To see Corry’s explanation of your favorite team’s strategy, check out his article.

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