Quote:
Originally Posted by Chaka
I think you guys might be confusing the rules relating to signing bonuses and contract guarantees. Although a signing bonus is paid at the time of a contract being signed, for salary cap purposes the bonus amount is divided equally over the entire term of the contract. However, if the player is traded or released before the end of the contract, the portions of the signing bonus allocated to future years are immediately telescoped into the present cap year.
Guarantees work a little differently. Contract guarantees are allocated to the year in which they are scheduled to be paid. If a player is traded, those unpaid guarantees travel with the player to the new team. If that player is cut or released instead, the team still must honor the future guarantees and those contract guarantee amounts are telescoped into the current cap year.
Last, but not least, there are non-guaranteed parts of the contract. As I’m sure everyone knows, those are extinguished without consequence if a player is cut, but until that time remain on the team’s books and are counted against their projected salary cap. If the player is traded, the new team steps into the shoes of the prior team and has the same right to honor these terms, or to cut/release the player with no obligation.
The different treatment of bonuses, contract guarantees, and non-guaranteed contract amounts (and all various permutations of each) are the building blocks for all of the financial engineering the players and teams do.
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Once again, per the
NFL CBA:
(iii) Amounts Treated as Signing Bonuses.
For purposes of determining Team Salary under the foregoing, the term “signing bonus” shall include:
(1) Any amount specifically described in a Player Contract as a signing bonus;
(2) Any guaranteed reporting bonus;
(3) Any consideration, when paid, or guaranteed, for option years, contract extensions, contract modifications, or individually negotiated rights of first refusal;
(4) Any option exercise fee or bonus, subject to the rule set forth in Section 7(c) below, and any option buyout amount, when paid or guaranteed;
(5) The difference between the Salary in the second contract year and the first contract year when Salary in the second contract year is less than half the Salary called for in the first year of such Contract;
(6) Any reporting bonus in the season of signing when a contract is signed after the start of training camp;
(7) Any roster bonus in the season of signing when a contract is signed after the last preseason game;
(8) Any salary advance paid on a guaranteed basis;
(9) Any guaranteed bonus tied to workouts;
(10) Any salary advance which a player is not obligated to repay;
(11) Any amount of a Salary advance, offseason workout bonus, offseason roster bonus, or offseason reporting bonus that is guaranteed for skill, injury and Salary Cap terminations, on a non-contingent basis for all of the guarantees. (Notwithstanding Subsections (8)–(9) above, a Salary advance, offseason workout bonus, offseason roster bonus, or offseason reporting bonus that is guaranteed for skill, injury and Salary Cap terminations, but on a contingent basis for any of the potential guarantees, shall be included in Team Salary only in the League Year in which the bonus is earned by the player; e.g., in the case of an offseason roster bonus, in the League Year in which the player is required to be on the roster to earn the bonus. The rules set forth in this Subsection (11) shall not affect Salary Cap accounting for any other purpose.);
(12) In a Player Contract, or any renegotiation or extension of a Player Contract, that is executed in the Final League Year, each of the following, if it is to be earned or paid to the player in the season following the Final League Year: (a) any Salary advance which the player is not and cannot be obligated to repay; (b) any offseason workout bonus that is contingent upon the player’s participation in less than half of the Club’s offseason workout program; (c) any offseason roster bonus; and (d) any offseason reporting bonus;
(13) Any bonus to be paid to a player solely for fulfilling his obligations to play under his Player Contract without seeking to renegotiate and/or “holding out” (i.e., a “completion bonus”), and which bonus is otherwise guaranteed for skill and injury, except that the amount of any such completion bonus shall be calculated at its present value, computed using the Discount Rate. Further, if any event occurs which extinguishes the player’s right to receive such completion bonus, any amount of the bonus that has previously been included in Team Salary shall be immediately added to the Club’s Team Salary for the current League Year, if such event occurs prior to June 1, or for the next League Year, if such event occurs after such date, with the remainder of the bonus that has been allocated to Team Salary for future League Years immediately extinguished.
Wentz has $24 million of option bonuses and $20 million of roster bonuses in 2021-2024. The $24 million of option bonuses and $10 million roster bonus goes on to the Eagles' cap immediately upon a trade (that's the $34 million cap hit you spoke of earlier), making it a 4 year/$66 million deal for the Colts with 2 roster bonuses of $5 million being the only guarantees on the deal. If the Colts only had to trade a 3 for him and Reich could coax 85% of 2017 Wentz out of him, they'd be stupid not to do it.