NFL Team Models & Structures
Exploring the variations in contract approach across the league
Hello and welcome back to Cap & Trade newsletter. It’s almost Friday! Yay!
We are still on a hiatus from the podcast, but that will resume in the very near future. Especially if Houston makes a final decision on their next head coach. The Reece’s Senior Bowl is happening this week. Unfortunately I was unable to attend this year, but as Mike Kaye (of NJ.com) told me: “You are here in spirit.”
This week I wanted to take a look at the different models, structures, and management of player contracts across the league. With the deployment of the NFL salary cap and the Collective Bargaining Agreement (CBA) there are multiple ways to manage a team salary cap, and how the contracts dollars are applied to the team salary cap.
I’ve often said the salary cap and salary cap dollars are essentially an accounting function. An allocation of salary under similar accounting formulas. But there is a hard cap, and yes the cap is real, and teams are not allowed to operate beyond that hard cap number. How teams deploy those cap dollars is where we see the divergence across the league.
Structures & Models
The three commonly used models are: cash model, heavy signing bonus model, and (what I’ve termed as) the hybrid model. There are variations of each model, but at at 30,000 foot view these are the three base models deployed. Use of each model depends on precedents, cash flow, fiscal year strategy, and other financial parameters. Different models offer strategic advantages, while each also have their own weaknesses.
The cash model does not use signing bonuses, or any pro-rated money for that matter. Top of the market contracts are difficult to navigate with this model. Teams will use salary guarantees, lump sum roster bonuses to cover the cash flows. The lack of bonus pro-ration does lead to high individual player salary cap charges early in the contract; in exchange for a flatter cap structure and cap flexibility in subsequent years of the contract. The final piece to this is the lack of dead money in the latter years of the contract. Las Vegas and Tampa Bay are two organizations that rely heavily on this model.
The signing bonus model is more of an old school approach. This was common across the league after the 2011 CBA was signed by the NFL and NFLPA. This structure uses a large signing bonus with a small (sometimes minimum) year 1 salary. The large signing bonus offers a strong cash flow to the player. The structure also allows for lower player cap charges early in the contract. The drawback is if the relationship goes sideways between player and team, there could be a substantial amount of dead money on the contract. The early cash flows can be deployed in exchange for lower APY on the contract. This can also allow the team to avoid vesting salary guarantees in year 2/3 of the contract. This specific tactic is utilized by Baltimore. Green Bay, Pittsburgh, Seattle, Dallas, Cincinnati are just a few teams that utilize the signing bonus model.
The hybrid model uses pieces from other models as a whole. Generally this can be a small signing bonus, year 1/2 salary guarantees, and/or lump sum roster bonuses to cover cash flows. This model is my preferred method as it offers the most flexibility to match cash flows, and retain some cap flexibility for the near and long term future. The model can be shifted (from SB to cash or vice versa) to meet player and agent demands, while still operating within the cash flow parameters set fourth. Houston, New England, Jacksonville, Philadelphia are a few teams that utilize this model.
Team Specific Methods
Each team has their own quirks on how they manage contracts and contract structure. Qualified player agents should be familiar with how each team operates to set appropriate expectations with their clients. Knowing these team specific structures is a benefit to those involved. Here are a few interesting team specific bits:
Houston: Uses a flexible hybrid model with heavy player incentives and per game roster bonuses. Agent should expect to have those included.
Green Bay: Heavy signing bonus model with no guarantees (at signing) beyond year 1 of the contract. Year 2 roster bonuses are used on top tier contracts to supplement cash flow.
Las Vegas: Cash model with early salary vesting dates. Vesting dates occur days after the Super Bowl or waiver period in February. Vesting dates are referencing salary guarantees.
Seattle: Signing bonus model with strong early cash flows to entice players to sign with the team. No salary guarantees at signing beyond year 1, but will supplement the lack of guarantees with early vesting dates on salary guarantees in February.
Los Angeles Rams: GM Sneed will deploy a multitude of contract styles including options bonuses. The interesting piece is Sneed will utilize odd salary numbers to match the players history or personality. Ex. Base salaries may end with 18 to match player’s jersey number.
Philadelphia: Howie Roseman uses some of the wildest contract clauses and structures. Salary advances, Other Amounts Treated as Signing Bonus (OATSB), team options, void years just to name a few. I’m just glad I don’t follow the Eagles as close as I do with the Texans.
New England: Hybrid model with per game roster bonuses and incentives. New England does not include automatic salary to bonus conversion clauses in their contract. I am unaware of any other team who does not include this common clause.
Tampa Bay: Strict cash model with roster bonuses. The organization had to go outside of their model in 2021 to retain their Super Bowl roster during free agency. That included the conversion of roster bonuses to signing bonus to pro-rate money (Mike Evans) and signing bonus & void years (Tom Brady).
San Francisco: Uses a modified hybrid model. The key thing to know with San Francisco is that salary vesting dates and roster bonus dates will be later than usual when compared to other teams. Vesting dates are specifically April 1st, which coincides with the fiscal year for the organization.
Dallas: Heavy signing bonus model with rolling salary guarantees. Say what you will about the team’s annual salary cap issues. Their model works for them including the multiple salary to bonus conversions. Dallas generally does not spend in free agency either.
Kansas City: Recent contracts have used a hybrid model but with lower base salaries coupled with annual lump sum roster bonuses in subsequent years. This gives the organization flexibility to complete bonus conversions as needed to shift cap dollars to the future in exchange for short term cap relief. This is accounted for with a predicted rise in the league salary cap year over year.
Cincinnati & Pittsburgh: Similar structure to Green Bay with no guarantees beyond year 1, followed by roster bonuses on top of the initial signing bonus. Cincinnati will have to deviate from this structure when the time comes to sign Joe Burrow to an extension. Pittsburgh deviated from this with the TJ Watt contract extension by including future salaries guaranteed at signing.
Baltimore: Big signing bonuses and early cash flows in exchange for lower contract APY metrics. The Ronnie Stanley contract is a perfect example of this.
Jacksonville: Hybrid model with year 2 team options. But the key with this organization is the timing of the option. The option deadlines are early, usually 15 days prior to the start of the league year.
Those are just a few of the individual team variances in salary cap management and contract structures. With free agency coming up in a little over a month, it is important to know and understand these concepts to gain more insight to each team’s signings.