When 49ers linebacker Chris Borland retired in March, he agreed to repay $463,077 in unearned signing bonus money. With 49ers defensive lineman Justin Smith retiring in May, he has more than $2.1 million in unearned signing bonus money.
Specifically, the final year of Smith’s contract carries a signing bonus allocation of $2.186 million, arising from the $6.56 million signing bonus paid to Smith in 2013, when he signed his current deal.
Under the Collective Bargaining Agreement, the 49ers can choose not to pursue repayment. The circumstances of Smith’s most recent deal indicates that perhaps they shouldn’t. In 2013, Smith previously was due to earn a base salary of $7.5 million. To reduce his cap charge from $8 million to $3.72 million, Smith agreed to reduce his base salary to $940,000 and to take the rest as a signing bonus.
It’s possible the 49ers would have simply cut Smith if he’d balked. Nevertheless, Smith agreed to a deal in which the team got the benefit of extending his contract by two years and creating significant cap savings in 2013. Smith, in turn, received $6.56 million up front.
And that’s the one potential drawback for players who agree to restructure contracts by converting base salary in the current year to signing bonus payments. If the player thereafter retires, he’s potentially on the hook to pay back millions. Still, requiring a player to pay back a chunk of the money he would have earned under his prior contract could make it harder for teams to persuade future players to agree to similar deals.