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Salary Cap 101 - Part 3 - Guaranteed Money

4/8/2019

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We’ve made it to part three of my three-part series on the NFL salary cap. We conclude with guaranteed money and how it fits into everything. Now guaranteed money has nothing to do with betting that Blake Bortles will never lead a team to a Super Bowl win. Guaranteed money is money in a player’s contract that he will make regardless as to whether he stays with his team for the entirety of his contract. For example if a player signs a five-year, $55 million contract with $22 million guaranteed, it means that even if he gets cut after the first year, he’ll get the entire $11 million from year two of the deal ($11 million for the year he played plus the $11 million for year two gets you the $22 million guaranteed).  Guaranteed money gives you an idea of what risk a team takes on with a player’s contract. The Minnesota Vikings signed Kirk Cousins to a three-year, $87 million contract with every dollar guaranteed. No matter what happens, the Vikings are on the hook to pay Cousins ever dime. I’d love the chance to suck at my job and still get all of my money.
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Kirk Cousins seen here trying to decide between buying his own island, a jet or a flying island.
Guaranteed money can be an issue with salary cap if a player is cut before he actually earns all of his guaranteed money. Let’s take the Cousins’ deal as an example. The current deal, to keep things simple, would count $29 million per season against the salary cap. Now if the Vikings decided in the off season to cut him, the cap hit for the upcoming 2019 season would be $58 million, not $29 million because they’d have to pay him for the remainder of the contract. This is why you see teams hesitant to guarantee money in player contracts but we’re in an age where players have become more aware of health issues related to playing the game so they want their money guaranteed for their own security.

As a kind of compromise, you will often see players get large signing bonuses as part of their contracts. Teams are allowed to prorate these signing bonuses up to five years against the salary cap while the player is getting all of the money up front. Let’s look at an example. A player signs a five-year, $20 million contract with no guaranteed money. Teams won’t normally spread that evenly over five years. They’ll probably back load it in case they want to cut the player early in the deal. Backloading will mean less against the cap up front. Let’s say for this contract It’s $2 million for year one, $3 million for year two, $4 million for year three, $5 million for year four, and $6 million for year five. As an incentive to get him to sign, the team pays him a $20 million signing bonus. The team doesn’t need to take all of that against the cap in year one. They are allowed to take $4 million per year over the five years of the contract so it’s actually $6 million against the cap in year one, $7 million in year two, $8 million in year three, $9 million in year four, and $10 million in year five. On the downside if the player doesn’t make it through the entire contract, any remaining balance cannot be prorated and must be taken against the cap in the year the player is no longer with the team.


So there’s your tutorial on the NFL salary cap and how certain aspects of a contract affect it. Hopefully you got something out of this. Maybe you’ll amaze your friends at the bar with your contract knowledge. Maybe they’ll tell you they’re going to take a leak and they won’t come back because you’ve bored the hell out of them. In any case, knowledge is power and you just added some. Score!

Until next time, don’t take any wooden nickels, tell ‘em you want straight cash, Homie, and don’t take a penny for your thoughts if you put in your two cents because someone’s making a penny there and it’s not you.

Yours in football,

MZE

Author

Mike Zimmers Ears is a Minnesota Vikings fan and regular contributor on Blitzed. He also hosts his own Vikings podcast Sound the Gjallahorn. 

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