Breaking Down NFL Contracts: A Guide to Signing Bonus, Guaranteed Money, and More
As the 2022-23 NFL playoffs continue to unfold, many teams are already planning ahead for next season by considering player contracts, new and existing.
The goal for these teams is to either retain their current star players or add new talent to their roster in an effort to compete for the championship.
These teams carefully analyze which players they want to keep on their roster and which players they hope to bring in to help improve their chances of winning.
The signing bonus, guaranteed at signing, and total guaranteed money are important terms to understand in contract negotiations. That said, here is a list of all the contract terms and their meaning in the NFL.
Cap Hit
This refers to the amount of a player's salary that counts against the team's salary cap for the season. Each team has a salary cap for each season, and the cap hit is the amount that a player's salary will be taken out of the team's salary cap.
Total Cash
This refers to all the monetary compensation a player is set to earn during the course of their contract. This includes a base salary, a signing bonus, and any other guaranteed money.
Base Salary
This refers to the salary each player earns in a season as agreed on in the contract. The base salary is paid weekly during the regular season, as it is broken down into 17 installments.
Workout Bonus
This is a bonus paid to players for participating in the team's workout program during the offseason. Teams use the workout bonus as a means to lure players to stay fit during the offseason.
Contract Length
This is the duration of a player's contract. Usually, players sign contracts between 4-5 years long, but some players have signed contracts with lengths spanning 10 years (Patrick Mahomes).
UPDATE: Patrick Mahomes' 10-year contract extension will be worth up to $503M, per @RapSheet, @TomPelissero
It's the first half a billion contract in sports history 🤯 https://t.co/V5kCcVpIPZ
Contracts Value
This refers to the total amount of money that a player will earn over the course of their contract. It is calculated by adding together the base salary, signing bonus, and any other guaranteed money.
Contract Average Annual Value (AAV)
Contract AAV is the average annual value of a contract. This is calculated by taking the contract value and dividing it by the contract length. The player with the highest contract AAV is Green Bay Packers QB Aaron Rodgers with a value of ($50.2 million).
Average Annual Value Percentage of Cap (AAV % of Cap)
This represents the proportion of a team's salary cap limit that players' contracts occupy. It is computed by dividing the average annual value of the player's contract by the team's salary cap limit for that specific season.
Total Guarantee
This refers to the total sum of money that is committed to being paid to a player. This money is paid to the player regardless of their performance or injury status. Deshaun Watson signed a contract in the offseason that's fully guaranteed at $230 million.
According to @betonline_ag, the Patriots are the current favorites to land Lamar Jackson this off-season👀
LJ was unable to reach an agreement on a contract extension with the Ravens earlier this year, and is looking for a fully-guaranteed, Deshaun Watson-type deal. https://t.co/IshLAzEaLM
Guarantee at Signing (GTD at Signing)
This is the amount of money that a team commits to pay to a player when they first sign the contract before the player has even taken the field. This amount is guaranteed to be paid to players regardless of their performance or injury status during the course of their contracts.
Signing Bonus
This is a huge sum of money that players receive when they sign contracts. Signing bonuses are typically paid out upfront and are not subject to being earned through performance. They are considered guaranteed money and are often used as a way for teams to spread out the cap hit of a contract over multiple seasons.