With the deadline to opt out of the 2020 NFL season just around the corner, a flurry of announcements came yesterday from both “high-risk” and “low-risk” players.
Whether a player is considered high or low risk creates a crucial distinction in how their contract will be handled going forward (more on that later), though both will have salary cap ramifications. Here, we'll break down what these opt-outs mean for the teams, the players and the contracts.
Editor's Note: Follow PFF's opt-out tracker for an updated list of NFL players who have already chosen to forego the 2020 season.
Who can be considered high-risk? And what does a high-risk opt-out look like?
The NFL Players Association outlined COVID-19 amendments to the collective bargaining agreement in a memo to players and agents. The memo contains a list of fifteen risk factors taken from the CDC.
- 1. Cancer
- 2. Chronic kidney disease
- 3. COPD (chronic obstructive pulmonary disease)
- 4. Immunocompromised state (weakened immune system) from solid organ transplant
- 5. Serious heart conditions, such as heart failure, coronary artery disease, or cardiomyopathies
- 6. Sickle cell disease
- 7. Type 2 diabetes mellitus
- 8. Asthma
- 9. Cerebrovascular disease (affects blood vessels and blood supply to the brain)
- 10. Cystic fibrosis
- 11. Hypertension or high blood pressure
- 12. Immunocompromised state (weakened immune system) from blood or bone marrow transplant, immune deficiencies, HIV, use of corticosteroids, or use of other immune weakening medicines
- 13. Neurologic conditions, such as dementia
- 14. Liver disease
- 15. Pulmonary fibrosis (having damaged or scarred lung tissues)
A player is considered to be “high-risk” if he is diagnosed with at least one of the above risk factors. Players in this category who choose to opt out of the 2020 season will be eligible to receive a $350,000 stipend for 2020.
The terms of their contract for 2020 will then “toll” to 2021. The tolling of the contract applies to both high-risk and low-risk opt-outs. It essentially means this: the player's 2020 base salary, any unpaid roster bonus and any LTBE (“likely to be earned”) incentives will not count against the 2020 salary cap, and the team will receive a cap credit in this amount. However, any signing bonus proration amounts will remain on the 2020 cap.
Note: While the COVID amendments have not been finalized between the NFL & NFLPA, one important detail with respect to the salary cap treatment of opt-out players has emerged — the standard tolling of a contract normally does not shift prorated signing/option bonus money to the following year, but the tolling for the COVID opt-outs will, according to Jason Fitzgerald of OverTheCap.
Let's take a look at Vikings nose tackle Michael Pierce as an example of what that would look like:
Pierce was set to earn a $3 million 2020 base salary and received a $6 million signing bonus that created three $2 million cap charges from 2020-22. Pierce is a high-risk opt-out and will thus receive a $350,000 stipend for 2020. Therefore, his 2020 cap charge will be $350,000 + $2,000,000 (prorated bonus) = $2,350,000.
The Minnesota Vikings will therefore receive a 2020 cap credit of $2,650,000 (original 2020 cap number of $5,000,000-$2,350,000 or original 2020 base salary of $3,000,000-$350,000).
It is still unclear if the $350,000 stipend will count against the cap. It could just be a cash payment, in which case the Vikings' credit would be $3,000,000.
The terms of the contract for 2020 — which is just the $3 million base salary in Pierce's case — will then toll to 2021. Pierce's $350,000 stipend will not be subtracted from the $3 million base salary in 2021.
Instead of the $7,900,000 base salary listed above, Pierce will have a $3 million base salary in 2021; the 2021 base salary will apply to 2022, and the 2022 base salary will apply to 2023. Here is the full breakdown.
Pierce earns an additional $350,000 on the front end but will now be under contract through 2023 as opposed to 2022, and he will consequently have to wait another year to hit free agency.
Voluntary/low-risk Opt-Outs
For voluntary or low-risk opt-outs, the impact on player contracts is a bit different.
First and foremost, only players drafted in 2020 or players who earned a credited season in 2019 are eligible for the $150,000 salary advance. And while any player of any service level may opt out, not all will be in line to receive the $150,000 advance. For example, Seattle Seahawks guard Chance Warmack has already opted out but will not be eligible for the salary advance because he sat out the 2019 season.
Players who did earn a credited season in 2019 — those who were on full pay status for a total of three or more regular-season games — will receive the $150,000 salary advance. The terms of their contract for 2020 will then “toll” to 2021.
Let's take a look at new Eagles wide receiver Marquise Goodwin:
Goodwin was set to earn a $3,950,000 2020 base salary and has $500,000 in per-game roster bonuses. But here is where the LTBEs come in:
$500,000 divided by 16 is $31,250. Marquise Goodwin played in nine games last season, so 9 x $31,250 = $281,500.
As you can see above, Goodwin’s 2020 cap number is $4,281,250. This is $3,950,000 + $281,250 + $50,000.
Because Goodwin played in 9 games last year, 9/16ths of that $500,000 is LTBE (likely to be earned).
So, Goodwin's $3,950,000 base salary and $281,250 in LTBE per-game roster bonuses will toll to 2021. His 2020 cap charge will become just the $150,000 salary advance.
The key distinction between high-risk and low-risk is how this 2020 $150,000 salary advance is treated. This $150,000 is subtracted from Goodwin’s $3,950,000 base salary. It's not a stipend like above — it's a repayable cash advance.
It is still unclear if the $150,000 salary advance will actually count $150,000 on the 2020 salary cap, but one would assume that it is more likely to than the high-risk opt-out. Goodwin's new 2021 base salary after the contract tolls will be just $3,800,000.
The Eagles will therefore most likely receive a 2020 cap credit of $4,131,250 (original 2020 cap number of $4,281,250-$150,000). Here is the full breakdown:
Goodwin earns no additional compensation and would have to wait another year to hit free agency.
Impact on clubs
Of course, the number of players who choose to opt out — and the size of their respective contracts — will vary team to team, but these 2020 salary cap credits can provide a lot of short-term relief. For example, The New England Patriots gained roughly $17 million in 2020 cap space yesterday (and no, I don't think Belichick is the evil mastermind behind any elaborate scheme).
However, teams will need to be careful with spending up this newly created cap space, as the tolling of the contracts means they are technically still on the hook for that money in 2021. That being said, if a player's base salary does not contain guarantees, they could still be cut like any other player and the team would not be on the hook.
With the potential for a decreased 2021 salary cap, taking the cap credit and rolling that cap space over into 2021 seems like the prudent move for most teams.
© 2024 PFF - all rights reserved.