We’ve learned a lot over the past week about NFL owners, the dry trade and free agency market they’ve created for Lamar Jackson, and how guaranteed money can work under the cap.
NFL Owners and Weak QB Market
Are they colluding to keep Lamar from getting a large amount of guaranteed money? Absolutely (allegedly).
This isn’t about helping out the Ravens, which obviously other owners don’t care to do. It’s about rolling back the DeShaun Watson contract precedent so the same thing isn’t demanded by Joe Burrow, Josh Herbert, and the bevy of young QBs coming in the upcoming draft. I’m sure Patrick Mahomes and Josh Allen would also be looking to renegotiate if guaranteed money becomes the norm.
Normally owners are fairly flippant with the money they throw around (there’s a reason the league needed a cap). But there’s a stipulation from an old, irrelevant rule that requires owners to put up an escrow check for guaranteed money. That’s why the Bengals sold naming rights to their stadium last year; they needed cash flow for the check they’ll have to cut for Burrow.
Because of that, there are literally teams who simply can’t afford to cut that escrow check for $200 million guaranteed. Parity will suffer if that rule stays in place.
Point is, there were already limited teams needing a QB, and that becomes more limited by who can afford that upfront money.
Making Guaranteed Money Work Under the Cap
A number of contracts have written the blueprint to do this, not the least of which is DeShaun Watson just a few days ago.
The Browns freed up $36 million in cap space the coming season. How did they do that? By pushing it forward. Kicking the can down the road.
This can be done by converting base salary into signing bonus, which pays it out right away but spreads it across the remaining contract. Or by adding void years. This spreads the cap hit into future years in which the player will possibly or likely be gone.
Watson did both of these things, converting $44 million base pay into signing bonus, which dropped his 2023 base salary to just over a million, and adding a void year. This reduces his cap number for 2023 to $19 million, but increases it to $63 million each of the next 3 seasons. The void year means the Browns will take a $9 million hit in 2027, a year after the contract is complete.
Guess what the Browns will do next year. They’ll convert more salary into signing bonus and add another void year. Or two. And in the end, he’ll hit their cap until 2030 at least, regardless how many years he plays. He’ll already have that money in hand, so it means nothing to him when it hits the cap.
I get the argument that this antiquated rule about holding guaranteed money in escrow creates an issue for owners, but they control it. They can get together and change that any time. They won’t, because in cases like this, it benefits them.
But don’t tell me it can’t be managed under the cap. It’s just not true.