What Happens To An NFL Contract When A Player Is Released?

When an NFL player is released from their team, their contract is also terminated. However, the player may still be entitled to some money from their former team if they had signing bonus money or other guaranteed money in their contract.

Introduction

When an NFL player is released, their contract is immediately terminated. However, their rights to any signing bonus or guaranteed money they have already received are protected. For the most part, teams are only on the hook for any money that was supposed to be paid out in the future.

What Happens To The Money?

When an NFL player is released, the team is responsible for the remainder of the player’s contract. However, the team can spread out the dead money over a period of two years. dead money is the amount of money that a team would have to pay a player if they were to release him.

Signing Bonus

The NFL’s collective bargaining agreement controls how signing bonuses are treated when a player is released. For veterans with more than four years of service, any prorated portion of their signing bonus that remains on the team’s salary cap is immediately charged to the team’s cap when the player is released. For example, if a player had a $5 million signing bonus and was released with two years remaining on his contract, $2.5 million of that bonus would be charged to the team’s salary cap.

Salary Cap

When an NFL player is released, the team must absorb the remaining guaranteed money on his contract. This can create a large dead money charge against the salary cap.

If a player is released before June 1, his salary is still counted against the team’s salary cap in the current year. After June 1, the player’s salary is no longer counted against the cap In addition, any signing bonus proration is applied to future years’ salary caps.

For example, if a player has a four-year, $10 million contract with $5 million in guarantees and he is released after two years, his team would have $5 million in dead money on their salary cap for the next two years. If that same player was released before June 1, his team would have $2.5 million in dead money on their salary cap for the current year and $2.5 million in dead money on their salary cap for the next year.

Other Considerations

In addition to the division of the signing bonus, there are other important factors to consider when it comes to an NFL players contract. One of the most important is the “offset language.” This is language in the contract that states that if the player is released, and signs with another team, the new team will only owe the difference between what the player was scheduled to make with his old team, and the minimum salary for a player with his experience.

Prorated Salary

Prorated means that the player’s salary is spread out over the length of the contract. So, if a player signed a four-year, $40 million contract, and was released two years into the deal, he would get $20 million in prorated salary. That’s because he played two years (out of four) under contract. Prorated money is guaranteed money.

Dead Money

One of the lesser known aspects of an NFL player’s contract is what is known as “dead money.” This is money that is still owed to a player by his former team even after he has been released or traded. For example, if a player signed a five-year, $10 million contract and was released after two years, his former team would still owe him $6 million in dead money.

The salary cap plays a large role in why dead money exists. When a player is released or traded, his salary is no longer counted towards the team’s cap space. However, the signing bonus he received when he originally signed his contract is still counted against the cap. Therefore, teams are often hesitant to release or trade players who have large signing bonuses in their contracts because it would create too much dead money against the team’s salary cap.

In some cases, a team may try to negotiate with a player to restructure his contract in order to lessen the amount of dead money that would be created if he were to be released or traded. For example, if a player had two years left on his five-year, $10 million contract and was scheduled to make $5 million in each of those years, the team may try to renegotiate his contract so that he would receive a lower salary in exchange for an increased signing bonus. This would create less dead money if the player were to be released or traded because only the prorated portion of the signing bonus would count against the salary cap.

Dead money can also exist when a player retires before his contract expires. In this case, the team does not owe the player any more money, but the signing bonus he received when he originally signed his contract still counts against the team’s salary cap.

Some players are aware of these contractual tricks and will try to negotiate their contracts so that they are more advantageous to them if they are ever released or traded. Others simply accept whatever contract they are offered and hope for the best. In either case, it’s important for players and fans alike to be aware of how dead money can impact a team’s salary cap situation.

Conclusion

In conclusion, when a player is released from an NFL contract, they are still responsible for any guaranteed money that is owed to them. The team is no longer on the hook for future payments, but the player may have to pay back signing bonuses or other guaranteed money. It is important to know the terms of your contract before you sign it, so that you are aware of what will happen if you are released from the team.