In November 2010, Donovan McNabb signed a blockbuster contract extension. A six-time Pro Bowler with the Eagles, McNabb had been traded to Washington that spring. His new deal was completed just days before his 34th birthday, and the widely reported terms—five years, $78 million, with incentives that could push that compensation as high as $88 million—were at the time among the most lucrative for quarterbacks, the NFL’s most expensive position. Fletcher Smith, McNabb’s agent, seemed delighted by the prospects of the new deal. “Now,” Smith said, “he doesn’t have to focus or concentrate on what next year will bring.” But there would be no next year. After the 2010 season ended, McNabb never collected another cent from that contract.
The true details tucked inside McNabb’s deal would be revealed days later. It turned out that nothing beyond the current season was guaranteed, and Washington had a team option on the five remaining years of the pact. That never came into play; McNabb was traded to the Vikings on the eve of training camp the following summer, and was out of the league for good once Minnesota waived him that December. What was left of his Washington megadeal simply voided, as if it had never existed.
The particulars of McNabb’s contract might have been unique, but the broader narrative—the gaudy, headline-grabbing numbers that turn out to be completely ephemeral—remains a common phenomenon in the modern NFL, where contracts are not fully guaranteed.
How can this be? MLB guarantees salaries completely. So does the NHL, minus the rare buyout. The overwhelming majority of NBA contracts are guaranteed. Of the four major U.S. sports, the NFL is an outlier. This is the case even though the NFL is expected to rake in an estimated $14 billion in revenue this year, a 75-percent increase just since 2010, and $4 billion more than any other U.S.-based sports league. Yet only in the NFL are contracts not contractual, and even many of the so-called guarantees not guaranteed.
NFL players are far more likely to sustain injuries than those in MLB, the NBA, and the NHL. A recent paper from the Football Players Health Study at Harvard University, which is part of a long-term project funded by the NFLPA through money set aside in the current CBA, estimated that (emphasis mine) “the mean number of injuries suffered per game in the NFL is approximately 4.9 times higher than the sum of those other leagues.” That same study, which its authors stress was done without any influence from the NFLPA, also found that an NFL player is 3.8 times more likely than an NHL player to sustain a concussion in a regular-season game—a figure that doesn’t include data from practices, training camps, or the preseason and postseason. And the average length of an NFL career, according to the Wall Street Journal, is now less than three years. Given football’s inherent violence, the immense physical toll it inflicts, and the ever-shrinking career spans of its participants, NFLers would seem to be the pro athletes most in need of guaranteed contracts.
The explanation is a complicated one. There are two major rules that work against players getting more guaranteed money, though they are slowly getting more guarantees these days in the forms of both bonuses and salary. But the one thing many fans and even some players may not realize: There’s also absolutely nothing to prevent an agent from negotiating a fully guaranteed salary for an NFL player. It just never happens.
The NFL doesn’t have guaranteed contracts for the simple reason that this is the way things have always been done.
“Back in the old days, owners could give guarantees; it’s just that they never did,” Gary R. Roberts, the author of a 1992 Marquette Law Review article titled “Interpreting the NFL Player Contract” and the current president of Bradley University, told me. “They didn’t have to. Nobody else was doing it, so there was no leverage the players had to insist on guarantees.”
The NFL’s labor disputes have landed in the courts more frequently than any of the other big four sports’. And while guaranteed money has been on the NFLPA’s radar since at least the 1970s, the players have long used their bargaining powers on issues they’ve considered to be more pressing: salaries, benefits, pensions, free agency, health and safety, workplace rules.
While players in MLB, the NBA, and the NHL all achieved some form of free agency in the mid-1970s, that right wasn’t granted to NFL players until much later, in 1993. (And even then the players only achieved free agency by decertifying the union and taking their fight to court.) The trade-off was accepting a salary cap, a construct that functions to keep wages down rather than to preserve parity, as it’s so often sold.
No rule drives ownership’s reluctance to give players more guaranteed money than the cap, which is governed by a complex series of accounting rules that don’t always reflect actual payments to players. Portions of a team’s cap, for example, can be consumed by what’s known as dead money—cash previously paid to a player in the form of a guarantee (usually a signing bonus), but prorated to stay on the books for the life of the contract (up to five years), even after that player has been cut or traded.
How does this all work? Chris Deubert, one of the Harvard study’s authors, told me that “the contract on its face is guaranteed.” But what the CBA has long done is articulate rationales for why that contract can be terminated.
“And then it’s up to the player and his agent to strike out those enumerated reasons why a player can be cut,” Deubert said.
As Deubert and Glenn M. Wong wrote in their excellent 2009 history of the evolution of bonuses and guaranteed money in the NFL for the UCLA Entertainment Law Review:
Signing bonuses, paid within a certain date of signing, represent the most traditional form of guaranteed money as the player receives the money relatively quickly. However, [basic] salaries, option bonuses and roster bonuses to be paid in future seasons might also be guaranteed. Typically, these categories of compensation can be guaranteed against “skill,” “injury” and/or “cap.” When a club terminates a player’s contract it must indicate what its reason are for doing so. The acceptable reasons can be nullified by these guarantees: a “skill” guarantee provides that a player’s contract cannot be terminated if in the club’s opinion he does not have the requisite skill; an “injury” guarantee protects a player’s contract from being terminated if he is injured; and a “cap” guarantee prohibits a club from terminating a player’s contract when his salary cap charge may have become too large. So while reports may often cite the “guaranteed” money of a newly signed player, the particular guarantees are much more involved.
One other factor that keeps owners from doling out guarantees is an arcane CBA rule mandating that any fully guaranteed money be placed into escrow at the time of signing. This means that even if the guarantees are paid to the player over the course of one, two, or even three years, ownership still must place all of that guaranteed money into a separate bank account. Owners don’t like to do this because they’d rather not part with money until they absolutely have to. Meanwhile, agents hate the escrow stipulation, colloquially known as “the fully funded rule,” because owners reference it whenever they turn their pockets inside out and shrug. The rule once served a purpose, back before the league’s revenues skyrocketed and some owners genuinely had serious enough cash-flow problems to threaten their ability to make payroll. But not now.
“It is a rule that really has no place in today’s NFL and should be removed,” said Jason Fitzgerald, the founder of overthecap.com.
I’ve banged this drum in recent months, but teams now use the CBA as a cudgel to limit players’ earning power through a variety mechanisms like injury splits, per-game roster bonuses in lieu of salary, one-year deals, and contract years that automatically void. But the root of all this remains the salary cap, a fact that gets taken for granted whenever guaranteed money is discussed.
“I think it’s not as conscious a decision as you might be thinking; it’s much more a matter of inertia,” Deubert told me. “Ever since 1993, that salary cap structure has become just more and more complicated and ingrained. I think the idea of doing guaranteed compensation, or even figuring out guaranteed compensation within that structure, is very complicated and challenging.”
If the players’ union were to successfully bargain for guaranteed compensation, Deubert added, “You’d have to rewrite about half of the CBA.”
The NFLPA says 62 percent of what was paid to players in 2016 was guaranteed—a figure that includes signing bonuses. But that figure doesn’t reflect the fact that owners generally don’t pay out salaries they’re not contractually obligated to pay. The Harvard study’s own more recent findings revealed that just 44 percent of what was actually contracted was in the form of a guarantee. This still represents a substantial improvement from the start of free agency in 1993 until the dawn of the previous CBA in 2006, during which time Deubert estimates that less than 25 percent of all contracted NFL compensation was guaranteed. A handful of factors in the current CBA account for this.
For the first time, the owners have a cash-spending floor that requires them to spend a minimum of 89 percent of the cap, which prevents them from just hoarding any unused cap space for all eternity. (The previous CBA, by contrast, had a cap-spending floor, a rule some owners used to game the system by cramming all sorts of not-likely-to-be-achieved bonuses into deals, since even those phony bonuses had to count against the cap.) DeMaurice Smith, the NFLPA’s executive director, recently told ESPN’s Outside the Lines that the cash-spending rule “has pushed us to a world where larger and larger amounts of the salary are guaranteed, and I think that’s a good thing.” But the spending floor is actually required in aggregate across four-year intervals (2013 through 2016 and 2017 through 2020), with an allowance to roll over any unused cap space from one year to the next. Andrew Brandt, who’s worked in the past on both sides of the bargaining table as a former agent and as an executive responsible for contracts with the Packers, told me this rollover allowance has given teams the green light to manipulate what they’re actually spending on players. “This is a loophole that is allowing teams to collectively leave $200-300 million of cap room on the table every year,” Brandt said.
There have been noticeable improvements to the sort of guarantees players are getting. While the current CBA mandates a wage scale that includes four-year contracts for all drafted rookies, most first-round picks—this year this was true for the first 21 selections—get all four years fully guaranteed. And for second-round picks, it’s pretty standard for the first year or two of their salaries to be fully guaranteed.
“That represents a dramatic change from the past,” longtime agent Leigh Steinberg told me.
Steinberg represents quarterback Paxton Lynch, taken No. 26 overall last year by the Broncos. He successfully bargained to get $600,000 of Lynch’s $1.74 million fourth-year salary guaranteed.
First-round picks also are required to carry a team option for a fifth year. That option must be exercised no later than May 2 heading into the player’s fourth season, at which point the fifth-year compensation is guaranteed for injury. It then becomes fully guaranteed by the start of the following league year in March. And even though the option is an additional restriction on players’ ability to bargain for what they’re worth, the option-year salary is a substantial improvement above what players had earned under the rookie-wage scale.
Then there’s the franchise tag and the lesser-used transition tag, which also tie players to their current teams—thus eliminating their bargaining position—after their contracts have expired. The advantage for the player is that the tags pay an average of the top-tier salaries at that player’s position, and they are fully guaranteed.
But it’s telling that for many of the NFL’s best young players, actual salary security often takes the the form of rules that give their teams greater control over them.
Of all the rationales used to justify why NFL teams refuse to fork over fully guaranteed contracts, none comes up as often as football’s injury risk. If players are so prone to injury, so the thinking goes, teams don’t want to be saddled with paying out a big contract to someone who is at-risk of being unable to play—a burden exacerbated by the salary cap.
The late Gene Upshaw, the former executive director of the NFLPA, made this point in a 2002 op-ed published in the Washington Post. Upshaw’s tenure was widely regarded for being too chummy with management, and his words here don’t exactly refute that:
“[G]uaranteed contracts are not negotiated by the unions into their collective agreements, but rather by players and agents into their individual agreements. Unfortunately for the NFL player, his ability to negotiate a guaranteed contract is severely undermined by the risk of a career-ending injury. He could be the greatest player who ever played, but he is still potentially one play away from the end of his career each time the ball is snapped. And even if an injury is not career-ending, it can diminish his skills. This fact obviously makes the clubs very reluctant to guarantee salaries in future seasons.”
More and more excuses for not guaranteeing contracts have cropped up:
- Players with declining skill consuming roster spots that could go to others.
- Players might put in less effort if they know they’re getting paid no matter what.
- Players might be less likely to play through pain if they’re not constantly playing for their next contract.
All of these reasons manage to ignore the reality that a system of guaranteed compensation hasn’t hindered the growth and popularity of other sports.
But the players’ union is forced to prioritize. Under the current CBA, players are entitled to a minimum of 47.5 percent of the NFL’s revenue. But part of what they receive (roughly $40 million per team) goes toward their benefits package, which doesn’t count against the cap, and which the NFLPA likes to claim is “the very best in professional sports.” The Harvard study, which compared that benefits package to the other leagues, concluded that this is “substantially true,” even as reports suggest the outreach for former players—especially older ones—has been less than ideal. Here’s the Harvard group’s explanation, which includes a caveat that these packages do not present an apples-to-apples comparison because of the NFL’s high injury rates:
First, the NFL offers every benefit that is provided by any of the other leagues. Second, the NFL offers several benefits that are not provided by any of the other leagues, including severance pay, long term care insurance, the Former Player Life Improvement Plan, and neurocognitive disability benefits for former players. Third, there are several benefits that only the NFL and a limited number of the other leagues provide: (a) only the NFL, MLB, NBA, and NHL provide health insurance (beyond COBRA) for former players; (b) only the NFL, MLB, and NBA provide players with mental health and substance abuse treatment; (c) only the NFL and NBA offer a health reimbursement account; (d) only the NFL and MLB offer disability benefits to former players; (e) only the NFL and NBA offer education-related benefits for all players; and, (f) only the NFL, NBA, NHL, and MLS guarantee workers’ compensation benefits to all of their players.
“The union ideally is making an informed decision of how they want to spread their [share] of the revenue,” Deubert told me. “More guaranteed money would mean less in benefits.”
Fitzgerald, the founder of overthecap.com, estimates that just 15 to 20 percent of all multi-year NFL contracts make it through to conclusion. If agents can bargain for more guaranteed money, why don’t they?
To secure more guaranteed money—or at least as a higher percentage of the total contract—would in most cases result in shorter and cheaper deals. With the cap continuing to rise—it has increased 36 percent since 2013, thanks to a massive spike in national broadcast revenues—shorter deals would also give players more opportunities to test the market as a greater pool of money becomes available. Teams keep players during non-guaranteed seasons all the time, which is why a lot of agents would prefer to take a chance on the four-year, $30 million deal with $12 million guaranteed versus a two-year, $15 million deal with $12 million guaranteed.
“They’re betting on their player,” longtime agent Tony Agnone told me.
As far back as the 1980s, Agnone secured contracts with significant guarantees for players like Karl Mecklenburg and Steve Watson. But that avenue was only available to players with star power, a small cross-section of the league. That remains true today. Another longtime agent, Brian Mackler, said he often seeks to get 60 to 75 percent of a contract’s max value in guarantees. He successfully did this on two occasions for Patriots linebacker David Harris. In 2011, Mackler got Harris a four-year deal with the Jets for $36 million, with $29.5 million guaranteed. Harris played through that contract, and in 2015 he signed a three-year, $21.5 million deal that included $15 million guaranteed. The 33-year-old Harris was cut by the Jets in June, and none of the $6.5 million he was due in 2017 was guaranteed.
“A lot of agents are more concerned about the total value so they can run to the newspapers and say ‘Look what I got this guy,’” Mackler said. “I think a lot of agents are more concerned about how they’re perceived in the newspapers.” This is true. There’s a whole ecosystem built around initially announcing the max details of contracts only, without the guarantees. Scoop reporters do it as favors to the agents who feed them the scoops, and owners like it because it makes them appear to be spending a lot more money than they actually are.
Interestingly, this year’s free-agent crop did produce one notable short deal that was almost fully guaranteed: Linebacker Lawrence Timmons left the Steelers for the Dolphins for two years, $12 million total, with $11 million guaranteed. It’s rare to see a long-term deal that includes full guarantees into Year 3. Timmons’s deal just cuts through the bullshit by identifying itself as what most deals actually are. Will that become the norm in the future?
The sheer size of NFL rosters also works in favor of the owners. During the offseason, teams can have up to 90 players, though only the top 51 salaries count against the salary cap. In-season, there are 53 players on a roster, plus 10 practice-squad players, who are paid a minimum of $7,200 per week (all of which counts against the cap). Compare that to rosters of 25 in MLB, 23 in the NHL, and just 15 in the NBA, which recently concluded another round of eye-popping megadeals. As NFLPA spokesman George Atallah told Pro Football Talk last summer, during the annual spasm in which the NFL’s relatively smaller contracts were tsked-tsked compared to the NBA’s massive spending spree:
“One business has fifty-three employees; it’s the NFL. One business has fifteen employees per team, and that’s the NBA. So by definition the smaller business is going to be able to pay their employees more money per employee than the bigger business is ... I wish more of the certain members of the sports media would just do some basic math before they popped off.”
This offseason has brought attention to the NFL’s shrinking middle class, and to the growing divide between veterans and younger players, which is creating “a have and have-not league,” as former Buccaneers GM and current ESPN analyst Mark Dominik described it to The Ringer’s Kevin Clark. Overthecap.com’s Fitzgerald recently wrote that 17 percent of the estimated $5 billion the league is expected to spend this year on salaries will go to just 50 players (out of roughly 2,000), with half of all salaries going to 250 players. The growth of the salary cap has worked in concert with arbitrary restraints like the rookie wage scale to create this disparity. For fringe players—i.e., most of the league—a work stoppage would interrupt their prime earning years, which are already limited. Combine these factors—a league filled with a handful of well-compensated players along with a sizable majority making far less, with little-to-nothing guaranteed—and it becomes easy to see why it’s so difficult to organize NFL players to take collective action. And then there is the nature of NFL players themselves, given the sport they play. As Agnone put it, they’ve spent their lives being obedient and having their heads filled with military-style talk of unit cohesion by coaches who constantly shout at them like drill instructors.
“You’ll never confuse football players with the Bolshevik revolutionaries who stormed the Winter Palace,” Agnone said.
Let’s go back to McNabb’s Washington contract. Those initial reports suggested it carried “$40 million in guarantees.” That was misleading to the point of a lie. As Adam Schefter later discovered, it included a $25 million guarantee that paid out only if McNabb were to suffer a career-ending injury. An additional $12.5 million was a vested guarantee in the form of an option bonus that was never exercised. The deal was essentially a mirage. McNabb and his agent agreed to the extension because its lone actual guarantee—$3.75 million, which the Skins happily spent in order to control his rights that offseason—allowed him to collect a total of $17.5 million in 2010, making him the highest-paid QB in the league just as his career was winding down. In a league without guarantees, this is the kind of shell game agents and players are often forced into playing to secure as much money as possible for as long as they can, while they can.