Guranteed Contracts in the NFL - Good or Bad

[cheesner]

I have heard this same thought at least a dozen times on the radio in the last few weeks.

NFL contracts are not guaranteed and it is unfair to the players.

Over the weekend was the most ridiculous opinion piece I have heard on the matter. The analyst was ridiculing the Albert Haynesworth deal saying it was too much money and that $41 million was guaranteed. The speaker then went on to say how it was still unfair to the player because the NFL team can cut him after only 2 years and will owe him nothing after that. I was thinking, Hayensworth will then have made over $20.5 million per year - I bet he wouldn't be complaining.

The simple fact of the matter is that a portion of almost every NFL contract is guaranteed in the form of signing bonuses or just plain guaranteed money over the life of the contract. Not 100% of the contact, but a portion of it is guaranteed. In the case of Haynesworth - 40% of the money is guaranteed. Is this a bad deal for the players? I feel it is for the benefit to the players not to have guaranteed contracts.

Fairness to ALL players: As we all know, there is a salary cap in the NFL. There is a finite amount of money to go around. Why not provide an incentive system to reward the best players? Suppose, for example, that Haynesworth tanks. He takes his $100M and starts living the good life. His play drops off dramatically and the Redskins are forced to cut him. They now take a $15M hit each year for the next few years - the original contract duration. That is $15M that could have gone to other players on the team, but instead is wasted on a player no longer with the team. I know Haynesworth sees no problem with that scenario, but is it fair to the rest of the team and other possible FAs that this money is off the table? Instead, the players are required to continue to earn their contracts.

Continuing with the Haynesworth example, would he even have gotten the contract from Redskins if all contracts were guaranteed? Consider all the free agents they have signed over the last few 10 years and had to cut. Arrington, Trotter, Stubblefield, Wilkerson, Bruce Smith, Deion Sanders, etc could have all been on the payroll years after being cut and it is doubtful the Redskins would be able to afford some of those contracts. Would the Raiders have been able to sign Asamougha if they still had to pay the FAs they signed last year and have recently cut:

Gibril Wilson S 6yr $39M 6.5M/yr
Dante Hall CB 7yr $70M 10M/yr
Kalimba Edwards DE 2yr $5M 2.5M/yr
Javon Walker WR 6yr $55M 9.1M/yr

This is an average of $28M that was saved by letting these underperforming players go. Although Javon has not been officially released at this time, it is doubtful he makes it next year. Therefore the NFL players need to ask themselves, should money be tied up in underperforming players? Or should that same money be made available to rising stars who deserve it?

Contract Size: What I think that most of the commentators do not realize is that teams are more willing to write bigger contracts because they are not guaranteed. If Hayensworth's contract was to be 100% guaranteed it would be for less money. It is the classic economic model of risk vrs reward. A guaranteed contract represents additional risk for the team for the reasons outlined above.

[Lurker64]

Honestly, I think the NFL system is entirely fair and probably the best system for football, since it's a violent sport and serious injuries are much more common than other sports.

It basically works out like: If you sign here, you're guaranteed to get this much (the guaranteed money), and if you don't get hurt/continue to play well enough to be on the roster you get more (the yearly salary), and if you meet other incentives you get even more (miscellaneous other bonuses).

That seems an entirely reasonable way to pay a football player.

[sheepshead]

Not perfect, but much much better than baseball.

[Patler]

It really doesn't matter. If the contracts are guaranteed they will be written much differently, with no delayed bonuses like roster bonuses, smaller salaries and more performance based compensation that would not be guaranteed. The contracts also will likely be much shorter, but not necessarily if they are heavy on performance compensation. The differences will be subtle.

In the end, there is only so much money to spend, and the owners will want to spend it on the players who are contributing.

[KYPack]

Not to nitpick on ya, Cheese but these contracts are screwy. They've evolved out the CBA.

"Dante Hall CB 7yr $70M 10M/yr "

It's DeAngelo Hall $80 mil for 8 yrs.

They cut him after a half season when the contract excellerators would have kicked in. He got 8 million on an "80 Million dollar contract".

Newspapers should have to bill those deals as "an 80 million dollar opportunity". All the players are guaranteed is the signing bonus and the first years salary. After that, you can be cut at any time. That's why all the guys want that long term deal with the SB. So they can bank that bonus and first year salary.

I was always hoping a Patler/Waldo typoe would figure out how many long term NFL contracts ever go to the last year and are fully funded.

I bet it's less than 2% of all the deals.

[Patler]

Not to nitpick on ya, Cheese but these contracts are screwy. They've evolved out the CBA.

"Dante Hall CB 7yr $70M 10M/yr "

It's DeAngelo Hall $80 mil for 8 yrs.

They cut him after a half season when the contract excellerators would have kicked in. He got 8 million on an "80 Million dollar contract".

Newspapers should have to bill those deals as "an 80 million dollar opportunity". All the players are guaranteed is the signing bonus and the first years salary. After that, you can be cut at any time. That's why all the guys want that long term deal with the SB. So they can bank that bonus and first year salary.

I was always hoping a Patler/Waldo typoe would figure out how many long term NFL contracts ever go to the last year and are fully funded.

I bet it's less than 2% of all the deals.

At least now they routinely report how much really is guaranteed on the deals.

[pbmax]

Not to nitpick on ya, Cheese but these contracts are screwy. They've evolved out the CBA.

"Dante Hall CB 7yr $70M 10M/yr "

It's DeAngelo Hall $80 mil for 8 yrs.

They cut him after a half season when the contract excellerators would have kicked in. He got 8 million on an "80 Million dollar contract".

Newspapers should have to bill those deals as "an 80 million dollar opportunity". All the players are guaranteed is the signing bonus and the first years salary. After that, you can be cut at any time. That's why all the guys want that long term deal with the SB. So they can bank that bonus and first year salary.

I was always hoping a Patler/Waldo typoe would figure out how many long term NFL contracts ever go to the last year and are fully funded.

I bet it's less than 2% of all the deals.

At least now they routinely report how much really is guaranteed on the deals.
Though that information is usually one day behind the inflated agent resume padding numbers. Just enough time for cheesner's talking head to take umbrage at fiction and then misrepresent guaranteed.

[pbmax]

...Why not provide an incentive system to reward the best players? Suppose, for example, that Haynesworth tanks. He takes his $100M and starts living the good life...
There is a pay for incentive program in this CBA, but the dollars are dwarfed by the average contract.

And the reason that you won't see a majority of money packaged in incentives tied to play is competition. If this iteration of the NFL went that route, some bright promoters and businessman would start up a rival league and offer big money up front to the big names. Players that move the needle in ticket sales, merchandising and TV numbers are not the same as the player who grade out well in an incentive calculation. If you started a franchise and you needed to sell tickets and ad space, would you sign Matt Cassel, Joe Flacco or Brett Favre?

That and the fact that brighter minds than all of us put together have struggled to quantify with numbers and data exactly what make a great player or team in football. The best data available looks at probabilities based on situations. It would be hard to design a pay package for individual players based on that. Teams themselves disagree on this approach.

In one way, I would love to compete against this system. As it is likely to be like the BCS in some way and struggle to make sense to everyone, there would be way to take advantage of its own inefficiencies and build a team cheaper than dirt that would blow away higher cost teams.

[cheesner]

Not to nitpick on ya, Cheese but these contracts are screwy. They've evolved out the CBA.

"Dante Hall CB 7yr $70M 10M/yr "

It's DeAngelo Hall $80 mil for 8 yrs.

They cut him after a half season when the contract excellerators would have kicked in. He got 8 million on an "80 Million dollar contract".

Newspapers should have to bill those deals as "an 80 million dollar opportunity". All the players are guaranteed is the signing bonus and the first years salary. After that, you can be cut at any time. That's why all the guys want that long term deal with the SB. So they can bank that bonus and first year salary.

I was always hoping a Patler/Waldo typoe would figure out how many long term NFL contracts ever go to the last year and are fully funded.

I bet it's less than 2% of all the deals.

My first draft had 'Monty' Hall. Glad I at least got it to a football player.

I understand that the contract terms will never be met. That just illustrates two of my points. If they were guaranteed, poor Al would not be able to sign as many people this season. The second point is these contracts are artificially inflated because they will likely not be met (that is a player will be cut before the term ends). If it was guaranteed - it would be for less. If some player comes in and becomes HOF material - he just maybe paid the money.

[SnakeLH2006]

It really doesn't matter. If the contracts are guaranteed they will be written much differently, with no delayed bonuses like roster bonuses, smaller salaries and more performance based compensation that would not be guaranteed. The contracts also will likely be much shorter, but not necessarily if they are heavy on performance compensation. The differences will be subtle.

In the end, there is only so much money to spend, and the owners will want to spend it on the players who are contributing.

Agreed....players make their money in the NFL...Signing bonuses etc. are not looked at the same as that is guaranteed money when they get cut. It's a violent sport and the NFL makes major money,but players do well. Now if they don't save it and spend it on yachts and casinos...That's their problem.