PFR Glossary

Vested Veteran Salary Guarantees

Tons of veteran players were cut before the start of the season, and while different clubs had different reasons for shuffling their rosters, the looming vested veteran guarantee may have played a part in many of those moves. Vested veterans – players with at least four years of NFL experience – had their 2018 base salary guaranteed for the year by being on an NFL team’s roster for the first game of the season.

That means that if a team decided after Week 1 to part ways with a veteran player with a 2018 base salary of $1MM, the team would still be on the hook for that full $1MM, which would count against the cap. A veteran who has received this form of termination pay in the past wouldn’t be eligible to receive it again, but otherwise the player can put in a claim for his full salary and receive it. Veterans not a Week 1 roster don’t benefit from that provision, however.

If a player is signed during the season, following a team’s first game, and is later released, he’s only entitled to 25% of his full-season salary. For instance, let’s say a team signed a player in Week 2 for a full-year salary of $1.02MM. First, that salary would be prorated for 16 weeks, meaning it’d be worth $960K. If a player is cut shortly after signing, he’d receive 25% of that amount, or $240K. If the player is released within four weeks of signing, he’d only count for $240K against his team’s cap, rather than the amount of his full salary.

Ultimately, the Labor Day weekend numbers crunch is about much more than talent-based decisions. Teams are mindful of expenses and potential dead money hits, particularly when they’re tight against the cap. The smaller vested veteran guarantees may seem like a drop in the bucket when compared to a $177.2MM cap, but every dollar counts for clubs with less than $2MM in breathing room such as the Vikings, Patriots, and Rams.

PFR Glossary: Injured Reserve

Already this season, we’ve seen several key players moved to teams’ injured reserve lists. 49ers quarterback Jimmy Garoppolo, Packers defensive tackle Muhammad Wilkerson, and Patriots running back Rex Burkhead are among the players who landed on the IR recently, opening up a spot on their clubs’ active rosters for their teams to replace them. 

The injured reserve designation is generally used for players who will be out for the season. That’s not the case for every player who lands on injured reserve though. Particularly during the preseason, we see players who weren’t part of their teams’ long-term plans hit the IR list, only to be cut several days later. Generally, these cases involve players who aren’t suffering from season-ending injuries, and receive injury settlements from their respective clubs in order to release those clubs from any liability.

For instance, let’s say a player is injured during the final week of the preseason with a high ankle sprain, and the player and team both agree that the injury will sideline him for three weeks. The club could place that player on injured reserve, then cut him with a two-week regular-season injury settlement (since the final preseason week is also taken into account). That would allow the player to receive 2/17ths of his season salary, and allow him to look for work with a new club when he gets healthy. If the club were to keep the player on injured reserve rather than removing him with a settlement, it would be required to cut him when he gets healthy.

Teams who release a player from IR with a settlement are eligible to re-sign that player later in the season, if they so choose. But they must wait three weeks, on top of the time of the initial settlement. In that previous example then, a club would have to wait until after Week 8 to re-sign the player with the high ankle sprain.

Players who remain on their clubs’ injured reserve lists all season continue to receive their full salary, which also counts against their teams’ salary caps. The 49ers, for example, have tons of traditional dead money on the books thanks to the contracts of NaVorro Bowman, Vance McDonald, and Jonathan Cooper. But, they’re also effectively carrying dead money for Garoppolo, who carries a $37MM cap number in the first year of his lucrative extension.

In some instances, players agree to “split contracts” when they sign with a club, which means that the player will receive a smaller salary if he lands on injured reserve. Split contracts, which are worth less than the active roster minimum salaries, are fairly rare, and are primarily signed by undrafted rookies or veterans with injury histories.

One additional quirk related to the injured reserve list is the option each team has to bring two players back from the IR list. The rule has changed quite a bit over the last few years. Previously, the rule stipulated that a team had to designate one specific player for return later on in the season. The IR-DTR spot was later nixed to allow teams to bring one player back from IR without any previous designation, but starting in 2017, teams were permitted to return two players from IR. The only hitch is that a player must be on IR for a minimum of six weeks before practicing and can return to game action after a total of eight weeks.

Note: This is a PFR Glossary entry, modified from an earlier post by PFR editor emeritus Luke Adams. Our glossary posts explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement. Photo courtesy of USA Today Sports Images.

PFR Glossary: Waivers

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 Browns have first dibs, while the Super Bowl champion Eagles 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.

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

PFR Glossary: NFL Supplemental Draft

The supplemental draft allows NFL teams to select players who, for one reason or another, were barred from entering the regular draft in the spring. When a team selects a player in the supplemental draft, they forfeit the corresponding pick in the regular draft next year. For example, if a team selects a player in the sixth round of the supplemental draft this year, they will have to give up their 2019 sixth round selection.

There have been no players taken in the supplemental draft in the past two years, but that is likely to change this year thanks to Sam Beal. Draft prognosticators had the former Western Michigan cornerback pegged as an early pick in the 2019 NFL Draft and it is believed that he’ll be taken somewhere in the first three rounds this year. Mississippi State defensive back Brandon Bryant and Virginia Tech cornerback Adonis Alexander are also drawing serious interest and it wouldn’t be a surprise to see them selected in the later rounds. Earlier this week, Oregon State linebacker Bright Ugwoegbu became the latest player to throw his hat in the ring.

In the past, teams have found gems in the supplemental draft. In 2011, the Raiders selected Ohio State quarterback and future standout NFL receiver Terrelle Pryor. In 2012, the Browns used a second round pick to take the talented and troubled Josh Gordon. Other supplemental draft alums include quarterback Bernie Kosar (Browns, 1985), wide receiver Cris Carter (Eagles, 1987), running back Bobby Humphrey (Broncos, 1989), wide receiver Rob Moore (Jets, 1990), nose tackle Jamal Williams (Chargers, 1998), and linebacker Ahmad Brooks (Bengals, 2006).

This year’s supplemental draft has been set for July 11 and, unlike the last couple of years, it figures to hold some intrigue.

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. 

Contract Guarantees

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 Tyrann Mathieu for example. The safety inked a five-year, $62.5MM extension with the Cardinals back in 2016, but only $21.25MM of that sum was fully guaranteed. Rather than paying Mathieu a $5MM roster bonus in March, the Cardinals released him, leaving $9.3MM in dead money on the cap. Mathieu’s $60MM+ contract seemed like a whopper at the time of signing, but he only collected on a fraction of it.

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 like Kaepernick who has several future seasons guaranteed for injury only, it would take a career-ending injury for the Niners 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.

Note: This is a PFR Glossary entry. Our glossary posts will explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement. Information from Over the Cap was used in the creation of this post. This post was modified from an early entry by editor emeritus Luke Adams. 

Photo courtesy of USA Today Sports Images.

Restructuring Contracts

When an NFL team finds itself short on cap flexibility and in need of some space, one of the most effective short-term fixes is to restructure a player’s long-term contract. While cutting or trading players can often be solutions as well, a contract restructure allows the team to keep its roster intact while also providing immediate cap relief.

The base salaries of NFL contracts typically aren’t guaranteed, but players can receive guaranteed money in the form of signing bonuses. While those bonuses are considered to be up-front payments, for cap purposes they can be spread out over up to five years of the contract. For instance, if a player were to sign a four-year deal with a $12MM signing bonus, that figure would prorate equally over the four years of the contract, amounting to a $3MM cap hit per year. If a team were to release that player one season into the deal, the club could avoid paying most of the player’s annual base salaries, but would still be on the hook for the remaining bonus money, along with the cap total for that money.

As such, the most common form of contract restructuring involves converting a portion of a player’s base salary for a given year into a new signing bonus. That bonus can then be spread out over several years, moving it away from the current season.

This is exactly the sort of agreement the Ravens and Tony Jefferson reached this offseason. In 2017, the Ravens signed Tony Jefferson to a four-year deal worth up to $37MM. This year, the Ravens moved some of that cash around to give themselves breathing room under the cap. Baltimore converted $5MM of Jefferson’s $6MM base salary into a signing bonus, creating $3.3MM in space for 2018. Meanwhile, Jefferson’s 2019 and 2020 cap numbers increased by $1.67MM.

Restructuring a contract by converting base salary to a signing bonus creates immediate relief, but also creates problems in future years. A year from now, the Ravens may have to make another move with Jefferson, which will likely mean restructuring his deal once again, to reduce a $12.657MM cap number for 2019.

There are ways a player can remain under contract with a team while also helping to create or maintain both short-term and long-term cap flexibility. A player agreeing to take a pay cut, for instance, could allow a team to reduce his current cap number without necessarily moving that money further down the line in the contract. However, that generally happens in situations in which the team’s leverage outweighs the player’s leverage.

In most cases then, a restructured contract that sees base salary converted into bonus money is the simplest short-term fix for a club. The bill will come due eventually, but restructuring a deal allows a team to put off a more significant decision for at least one more year.

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. Information from Joel Corry and Over the Cap was used in the creation of this post.

PFR Glossary: Contract Incentives

This year’s biggest free agents have already come off of the board, but there are still plenty of notable veterans available, including Antonio GatesDeMarco Murray, Dez Bryant, Tre Boston, and Johnathan Hankins. When these players eventually sign, they’re likely to have contract incentives built into their deals. With that in mind, we wanted to give a refresher on contract incentives and their various forms.

Signing bonuses can sweeten the pot for free agents and are largely self-explanatory, but incentives are a bit trickier. At the most basic level, contract incentives are designed to reward a player for his performance — in some cases, these financial rewards are linked to individual or team production, while other incentives can be earned simply by the player earning a spot on his team’s active roster from week to week. These incentives are divided into two categories: Likely to be earned (LTBE) and not likely to be earned (NLTBE).

Under the NFL’s definition, a likely to be earned incentive is generally one that was achieved the year before. So if a running back racked up 1,300 yards on the ground in 2017 and has an incentive in his contract that would reward him for surpassing 1,200 yards in 2018, that incentive is viewed as likely to be earned and counts against his cap hit from the start of the year. On the other hand, a back who has never surpassed 700 rushing yards in a season could have an incentive on his deal for 2014 that would reward him for rushing for 800 yards — such a bonus would be considered not likely to be earned, and wouldn’t count against the player’s cap number.

Because the player’s or team’s performance in a given season dictates whether or not the incentive is actually earned, the player’s cap number is sometimes altered after the fact. For instance, there’d be no change if a player met the criteria for a $50K LTBE incentive, but if he failed to earn that incentive, his team would be credited with $50K in cap room for the following season. Similarly, if a $50K NLTBE incentive isn’t reached, nothing changes, but if a player does earn that incentive, his club’s cap space for the following season is reduced by $50K.

A simple incentive linked to yardage or touchdown totals in a season isn’t too hard to track, but there are more convoluted forms of bonuses. Let’s say a player coming off an injury that limited him to six games played signs a contract that would pay him $500K in per-game roster bonuses. That player would be considered likely to appear in six games, but unlikely to appear in more beyond that. So, of his $500K in roster bonuses, $187,500 would initially count against the cap, as the LTBE portion.

Here are a few more notes on contract incentives and how they work:

  • Any incentive that is considered to be in the player’s sole control, such as weight bonuses, or his presence at workouts, is considered likely to be earned.
  • Any incentive in the first year of a rookie contract is considered likely to be earned.
  • Individual performance incentives can be linked to most basic statistical categories, such as yardage, yards per attempt, and touchdowns. However, more obscure stat categories typically aren’t allowed for individual incentives. For instance, a receiver couldn’t have an incentive tied to receptions of 20+ yards. Meanwhile, a defender could have an incentive linked to sacks or interceptions, but not to tackles for a loss.
  • In some cases, individual performances can also dictate the value of traded draft picks. For example, the Jaguars making the playoffs in 2017 altered their trade for Marcell Dareus. The Bills received a conditional 2018 sixth-round pick for Dareus in the parties’ October trade, but that pick became a fifth-rounder when the Jags reached the postseason.

Note: This is a PFR Glossary entry, modified from an earlier entry by editor emeritus Luke Adams. Our glossary posts explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement. Information from Russell Street ReportOver The Cap, and Salary Cap 101 was used in the creation of this post.

The Fifth-Year Option

This summer, we’ve seen a handful of notable players from the 2014 NFL Draft hold out from their respective clubs. The standard rookie deal runs for four years, but first-round picks such as linebacker Khalil Mack, Rams defensive tackle Aaron Donald, and Titans tackle Taylor Lewan are under contract through the 2018 season thanks to the fifth-year option. With one year left on their deals at a pre-determined rate, they are looking to gain leverage in their extension talks.

So what exactly is the fifth-year option? Essentially, it’s a way to extend a player’s rookie contract by an extra year, at the club’s discretion. Players don’t have any say in whether or not these options are picked up, though players and teams are still free to negotiate longer-term contracts that would render the fifth-year option unnecessary. Otherwise though, the decision is in the hands of the team, and must be made by May 3 in the player’s fourth season.

Last year, 25 players (out of a possible 32) had their fifth-year options picked up for the 2018 season. As a top-10 pick, Mack’s fifth-year salary was equivalent to the transition tender at his position during his fourth season, which came out to $13.846MM.

For first-rounders picked outside the top 10, like Lewan and Donald, the calculation was a bit more complicated. Their fifth-year option was determined by the average of the third through 25th top salaries at that position. That’s why Lewan is in line for $9.34MM this season and Donald is set to earn just $6.9MM.

Fifth-year options are guaranteed for injury only between May 3 and the start of the following league year. As such, they’re not entirely risk-free, but as long as the player remains healthy, a team could exercise his fifth-year option, then cut him before his option year gets underway without being on the hook for his salary. When the league year begins, the player’s fifth-year salary becomes guaranteed for skill and cap purposes, as well as injury.

With a new CBA on the horizon, it’s conceivable that the fifth-year option will be amended to allow first-round picks to test free agency sooner. Then again, the NFLPA might not want to make the concessions needed in order to do away with the fifth-year option, even though it would help to accelerate the market at every position.

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. This post was modified from an early entry by editor emeritus Luke Adams. 

Offset Language

Since the NFL’s latest Collective Bargaining Agreement has made rookie contracts 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.

Although we don’t know the inner workings of each negotiation, one factor that continues to play a role in contracts for first-round picks relates to offset language. Over the last several years, only a handful of players in each year have managed to avoid having offsets language written into their deals. 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 relies 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.

Note: This is a PFR Glossary entry, modified from an earlier post by PFR editor emeritus Luke Adams. Our glossary posts explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement. Information from OverTheCap.com was used in the creation of this post. 

Explaining Post-June 1 Cuts

NFL teams will often use bonuses in contracts as a way to spread out a cap hit that might otherwise be exorbitant. For instance, if a player’s five-year deal includes a $10MM signing bonus, that money can be paid immediately but spread out over five years for cap purposes. This way, the cap charge for the bonus amounts to $2MM per year for cap purposes, rather than $10MM in year one.

However, this practice can come back to haunt teams if they want to get out of a contract early. Suppose the team in the above scenario wanted to release the player in the third year of his contract. Even if none of the player’s base salary is guaranteed at that point, the team will still have to account for that remaining prorated bonus money. Rather than counting on the cap as $2MM per year for three 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 $6MM in prorated bonus money immediately counts against the club’s 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 number of players designated as post-June 1 cuts, including Ndamukong Suh (Dolphins), Orlando Scandrick (Cowboys), Mychal Kendricks (Eagles), and Coby Fleener (Saints).

In the case of Kendricks, the Eagles were initially slated to pay him a $5.85MM in base salary this year with a $7.6MM cap figure. Under typical circumstances, the release would have left the Eagles with a $3.2MM dead money obligation for 2018. However, through the post-June 1 designation, they will unlock $6MM in cap space starting on Friday with just $1.6MM in dead money this year. In 2019, they’ll be faced with the remaining $1.6MM charge.

Because the cap charge for the current league year isn’t reduced until June, designating a player as a post-June 1 cut isn’t hugely advantageous for teams. By June, just about every notable free agent is off the board, so the new savings likely won’t be put toward a major move.

Still, releasing a player in March 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.

In the case of the defending champs, who faced a serious numbers crunch heading into the offseason, the June 1 designation allowed for some much-needed wiggle room. Before the move, the Eagles had an NFL-low $103K available under the cap.

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.

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. Information from Over the Cap was used in the creation of this post. The original version of this post was published on April 2, 2014.