When it comes to new veteran contracts, a pattern has emerged. Someone reports the deal as having a high number of guaranteed dollars, subtly trading a willingness to oversell the deal for the privilege of being the one to break it. Then, a day or two later, the real numbers comes out, and we break it all down.
In most cases, a certain amount of money is fully guaranteed when the contract is signed. Other money initially is guaranteed only in the event of a career-ending injury. Then, at specific points in the future, pieces of the injury-only guarantees convert to fully guaranteed payments, for injury, skill, and salary cap purposes.
In some cases, the future conversion of the money from partially guaranteed to fully guaranteed gives the team a vehicle for dumping a player before the full guarantee kicks in. In other cases, it’s simply a recognition of an outdated rule that requires fully guaranteed future payments to be fully funded at the time the contract is signed.
If, for example, a player’s contract has $10 million fully guaranteed in 2012 and $10 million fully guaranteed in 2013, the team has to set aside the full $20 million right now to ensure the player won’t get stiffed. As a result, teams shy away from fully guaranteeing significant future payments.
So why in the heck does the “funding” rule persist? With billions of TV money flowing into the league’s coffers every year, the teams are good for the future money. Thus, the players should have had this item at the top of its 2011 CBA wish list, and the league should have agreed without debate.
They can still do it now. The CBA may be modified at any time to eliminate the funding requirement, and to give players full and complete future financial security if/when a team wants to do so. Individual teams could still decline to include significant fully-guaranteed future payments; but those that are willing to do it wouldn’t be prevented by a rule that arises from an irrational fear that one or more teams are teetering on the brink of bankruptcy.
With free agency only nine days away, the league and the NFLPA would be wise to put their heads together and kill the “funding” rule now.