Explaining the Joe Staley Salary Cap Charge Increase

Last week 49ers tackle Joe Staley had a minor tweak to his contract- his $6 million option bonus was converted to a $6 million signing bonus. Sounds simple enough right?  Except Staley’s cap charge increased by $1.2 million, as first reported by Joel Corry,  as if he received both a signing and option bonus. How does that make sense?

This is one of those little NFL cap valuations that causes some confusion. The NFL considers all options exercised, from a salary cap perspective, once the new League Year begins regardless of the date that the option decision is actually due. Whether the option bonus is due the 1st day of the League Year or the last day (such as Rob Gronkowski’s $10 million option due in March of 2016) once the League Year begins the cap charge remains. For Staley that bonus would have been due on April 1.

By converting the bonus to a different structure the NFL will treat it as an entirely new bonus. So San Francisco gets a $1.2 million charge for the signing bonus AND a $1.2 million charge for the option bonus. To remedy the situation the 49ers will receive a salary cap credit in 2016 of $1.2 million. This is the point at which the NFL revalues contracts to see what money was actually paid versus what was counted on the salary cap. So 49ers fans can already know that they will receive at least a $1.2 million cap adjustment in 2016. Teams last year that took similar charges and received credits for options unpaid were the Panthers (Steve Smith) and Patriots (Brandon Lloyd).

Why did the 49ers want to convert the option to a signing bonus?  Thats likely in part due to the recent retirements of Patrick Willis and Chris Borland. If the 49ers simply exercised an option on Staley for $6 million and he decided to retire in 2016, Staley would keep the entire $6 million payment. If, however, a signing bonus is utilized then Staley would be required to pay back $4.8 million if he retired. This is a common practice in the NFL though the timing of the 49ers decision is later than most. Staley still has a $4 million option bonus in his contract due in 2016.

  • eYeDEF

    Damn. So they were they really concerned Staley would join Willis and Borland in retirement or is this just pretty standard stuff to cover their bases?

  • MattR

    If, however, a signing bonus is utilized then Staley would be required to pay back $4.8 million if he retired.

    This is only true if the contract contains language requiring signing bonus forfeiture and I am not sure why Staley would agree to such language as part of the contract restructuring,

    • In the new CBA forfeiture for retirement is now standard rather than individually negotiated

      • MattR

        That is not correct.

        Article 4, Section 9. Forfeiture of Salary: Players and Clubs may not agree upon contract provisions that authorize the Club to obtain a forfeiture of any Salary from a player except to the extent and in the circumstances provided in this Section 9. For the avoidance of doubt, Paragraph 5 Salary already earned may never be forfeited, and other Salary already earned may never be forfeited except as expressly provided herein.The maximum permitted forfeitures described below do not in any way obligate any player or Club to agree to any forfeiture.

        and clause (l) of that section: “Contract Provision. It shall be permissible for a player and Club to agree in a Player Contract as follows: “Player shall be subject to forfeiture of Salary to the maximum extent permitted under Article 4, Section 9 of the Agreement dated July 25, 2011 [or “of the Collective Bargaining Agreement dated August 4, 2011].” A player is not in any way obligated to agree to any such forfeiture clause, or any lesser forfeiture permitted by this Section.

        • You are 100% correct and I was wrong on it. I was told that it is standard fare in all player contracts but at the discretion of a team to collect, unlike drug suspensions, but yes they can negotiate them out.

  • eddiea

    So, as MattR stated he wouldn’t have to pay this back, could this be another way of guaranteeing extra money in ’16? Since it seems there was no good reason to do this. Or, are they a little “shell shocked” from the unexpected retirements?