clock menu more-arrow no yes mobile

Filed under:

How Dolphins structure contracts from former sports agent

A former sports agent breaks down how NFL teams structure their contracts, taking a look at the different methods and specifying which team uses which method.

Robert Mayer-USA TODAY Sports

Former sports agent Joel Corry, currently working as an NFL salary cap analyst for Over the Cap, recently broke down the different ways teams structure contracts, making sure they have room underneath the salary cap each year.  Writing for CBS Sports, Corry explains there are four major ways teams build contracts: signing bonus, signing bonus and salary guarantees,  signing bonus and option bonus, or pay as you go.

He further explains each of those models (it's really a good read).  Randomly selecting one, the "signing bonus and salary guarantees" is explained by Corry as (emphasis added):

Guaranteed money with this structure consists of a signing bonus and salary guarantees. The base salary in the first contract year is usually fully guaranteed (injury, salary cap and skill guarantees) at signing. Roster bonuses in the first contract year due a few days after signing are fairly common. Even though these roster bonuses technically aren't guaranteed, they are considered as a part of the guaranteed money. Salary guarantees in subsequent contract years are mainly base salary. Some teams will fully guarantee the second-year base salary at signing.

The trend is for base salaries after the first contract year to be conditionally guaranteed. They are guaranteed for injury only initially but fully guaranteed if a player is on the team's roster on a specified date in each specific contract year. This date will vary from team to team but is normally within the first few days of the current league year (i.e.; 2015 base salary becomes guaranteed on third day of the 2015 league year). Early roster bonuses (first day of the league year) in subsequent contract years containing guarantees aren't as common as the base salary guarantees but operate in a similar manner.

A majority of salary guarantees have offset language. An offset clause reduces the guaranteed money a team owes a player when he is released by the amount of his new deal with another team. Without an offset, the player receives his salary from the team that released him as well as the full salary from his new contract with another club.

Sounds pretty familiar.  Turning to Corry's explanation of how the Dolphins, he writes:

The Dolphins were able to make a splash during free agency in 2013 using modest signing bonuses and salary guarantees because of low first-year cap numbers in their deals. The base salaries in the first two years of their deals are fully guaranteed at signing. The second-year cap number typically is more than twice as much as in the first year. Mike Wallace, who signed a five-year, $60 million deal, has the most extreme jump. His cap number went from $3.25 million in 2013 to $17.25 million in 2014. Any third-year base salary guarantees are conditional but can be player friendly. For example, $3 million of Dannell Ellerbe's 2015 base salary became fully guaranteed on the fifth day of the 2014 league year (March 15).

Maybe that's why the signing bonus and salary guarantees sounded familiar (and may not have been so randomly selected).  The Dolphins typically sign a player to a low first-year, then see their base salary jump in the second year, enticing the players to sign with the team, yet giving Miami the ability to release the player with little to no dead money after that.  It also means the highest salary cap number moves around the roster, keeping the team from having too much money tied up in any one single player for more than a year or two.

The question will be what happens when quarterback Ryan Tannehill is due for a new contract.  With the out-of-proportion salaries earned by quarterbacks, how the Dolphins structure Tannehill's contract could be a huge factor in how the team builds contracts after that.