Use of the Roster Bonus in Free Agency

The use of the roster bonus is something to keep an eye on as we enter the free agency period. It’s a good tool for teams who have available cap space to use.

It’s been noted that the Jets GM John Idzik has used this method in recent signings of guys like Jeff Cumberland, Darrin Walls and Ellis Lankster. Although the guaranteed money in these signings only isn’t very significant (the total is only about $1.5 million), keep an eye on Idzik (or other GMs with cap space—Oakland’s Reggie McKenzie, Cleveland’s Ray Farmer and Jacksonville’s David Caldwill) using this method when signing more prominent players.

The reason that teams use the roster bonus as opposed to a signing bonus is that a signing bonus is prorated over the life of a contract. While a proration decreases a players cap hit in the present, it carries a future cap obligation.

Technically, roster bonuses cannot be fully guaranteed (meaning they can’t be guaranteed for skill, injury and salary cap). However, this point becomes moot when used in the way of the Jets’ recent signings; these bonuses are paid to these player’s just days after they sign their respective contracts (meaning they’re really fully guaranteed for cap purposes). But with more team-friendly roster bonuses, this lack of full guarantee can come into play.

If you’re wondering why teams don’t just simply increase the guaranteed portion of the P5 (or base) salary of a player as opposed to giving them an option bonus, the main reason is timing.  Base salaries are paid over the course of 17 weeks, while the options used in the case of the Jets are being paid in March.  Also, it benefits the player in that their P5 salaries become docked if they’re suspended; with the roster bonus, only failing a drug test will force you to pay a roster bonus back.

Be on the look out for some of the teams mentioned above to use this option bonus method in the coming days. And definitely give this video a watch for more information on the structure of contracts.

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  • Beamen321

    Jason, I’m not sure I fully understand why this would be advantageous for the team. Due to the fact that leftover salary cap space rolls from one year to the next, the team is just taking the cap hit now instead of later. Say someone signs for 2 years for 2m/year with 6m coming from a bonus. The total cap hit is 10m over two years (8m if cut after year 1) no matter how you split up the money. If you use a signing bonus the saved cap space in year 1 rolls to year two which would then be used to cover the remaining cap hit. So while dead money looks bad, it’s really no different either way. The only difference I can think of is to get a team over the 89% cap mark over a 4 year period. By that money accounting earlier in that calculation it could save a team that doesn’t typically spend money (Raiders, Browns). Let me know if I’m missing something. I really appreciate your great work!!