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?
Joe Staley’s 2015 cap number recently increased from $6.4M to $7.6M. 49ers converted $6M option bonus that was coming due to signing bonus.
— Joel Corry (@corryjoel) April 6, 2015
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.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.