Analysis
3/15/22
3 min read
NFL Contracts: Guaranteed Money Structure
In an NFL player contract, the term “guarantee” can have three different designations: (1): “Guaranteed for skill,” (2): “Guaranteed for cap;” and (3): “Guaranteed for injury.”
First, looking at “Guaranteed for skill,” if this clause is put into a contract, the money attached to the clause will be guaranteed regardless of if the player’s skill decreases. For example, if a player is cut due to poor performance, under a guaranteed for skill clause, the player would still receive the money.
Second, a “Guaranteed for cap” clause in a contract means that a team cannot try and not pay the player for the reason of salary cap concerns.
Finally, a “Guaranteed for injury” clause in a contract means the player is guaranteed that money even if they get hurt (from a football related injury) and cannot play. Additionally, players receive a signing bonus upon signing their contract and it is fully guaranteed.
If money is fully guaranteed in a contract, this means that the money is guaranteed for skill, cap, AND injury. Most NFL player contracts are fully guaranteed, but if not fully guaranteed, then guaranteed for injury only, meaning if a player is cut for skill or cap reasons they will not receive this money; they would only receive the money if they suffered a football related injury and could not play and/or were cut.
It is also important to note that there can be money that becomes guaranteed (vests to a full guarantee) at a later date, but the team can cut the player before the trigger date occurs and the player would not get that guaranteed money. Structures such as vested guarantees emphasize the importance of knowing every term in a contract, as it can make a large difference in player payout.
The more guaranteed money a contract contains, the more the player likes the contract, and the more risk the team is assuming. For example, if a player has a four-year contract for $20 million with $10 million fully guaranteed, the team could potentially release the player and only have to pay him $10 million. However, if a player has a four-year fully guaranteed contract for $20 million, then the team will pay the player the entirety of the $20 million contract regardless of any injury, cap, or skill concerns that could arise throughout the life of the contract.
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