There are several important factors to consider when analyzing NFL contracts. Most observers are well aware of the Average Per Year (APY), as well as how essential fully guaranteed money is for the well being of players and for the roster management of teams.

But cash flows–the timing of when, and how much, money goes from a team to a player–is the other important metric that doesn’t get as much attention, yet should. And we at OTC hope to raise more awareness of cash flows to the NFL discourse.

Securing the bag

To explain the importance, let’s say that you are good enough at your job that someone is willing to pay a very large sum of money to you over a course of multiple years. In what manner would you want that money to be distributed to you? Generally, you want as much as you can get as soon as possible. That’s because it would give you greater ability to utilize the benefit of money to its fullest extent, whether that is spending it on goods and services that would immediately improve your life, or taking advantage of compound interest via investing on your part, instead of your employer’s.

In the NFL, the importance of getting as much cash as you can as soon as you can is considerably heightened when, as is well known, the length of contracts can be deceiving. A recent OTC database query indicates that most contracts of three years or more fail to last beyond two seasons, with the odds of the contract being terminated after just one season being greater than the contract being fully completed.

As such, a contract with a very high APY or even high guarantees may end up being a poor deal for the player if the cash is backloaded into seasons the player never sees with the team.

Our new cash flow features

To help you better understand how cash flows in the NFL work, we’ve launched two resources to get you started just before free agency, with plans to expand in the future.

The first is our central cash flows page that can be found under the Contracts dropdown of OTC’s dashboard. Here, you’ll find all active contracts listed by how much they are paying over the course of each year of the contract. As with other pages, the columns are sortable and can be filtered by team and position.

There are two tabs to view:

• Annual cash payments are a useful place to go to see just how much cash is due to a player in any given year, which can be important in times like this when teams are judging whether they feel players are worth those payments, even regardless of their accounting on the current salary cap.
• However, the view is defaulted to running cash flows, which are a summation of how much the player is set to earn over the course of the contract. This is more important in judging the cash value of a contract as a whole, instead of over just a given year.

To further illustrate the importance of running cash flows, let’s go right to the top four contracts in APY in the league, all quarterbacks:

Patrick Mahomes has been renowned for shattering the APY ceiling in the NFL. But take a look at how much money is coming to him in the first four years of his extension, officially starting in 2022. Mahomes is behind all three of his peers in earning new money through the first two years, does not pass Aaron Rodgers until Year 3, and is still behind Deshaun Watson by Year 4.

Mahomes shouldn’t be begrudged for choosing to play the long game–he is in a very safe position in the NFL, after all. But there’s a reason why ten year contracts like he signed are extremely rare–almost all other players in the NFL won’t get the benefit from a team of presumptive employment that long. Instead, the aim for players is to frontload as much cash as you can early on in the contract.

The second view is that each active player now has a cash flow section on his dedicated page, right below the main contract details and notes. This section will document the annual and running cash due to each player, as well as visualizing the progress he has made in his contract.

Let’s use Garett Bolles, a left tackle recently extended by the Broncos, as an example:

Within his $68 million extension was a shade under $2 million classified as old money, cash that he had already earned or was scheduled to earn under his previous contract. Bolles was paid a $20 million signing bonus to kick off his new contract, of which has obviously been marked as earned. As you can see, Bolles has already surpassed more than a quarter of earning his entire contract.

But in 2021, the first official year of his extension, you can see how minimal his pay is, just $1 million. This is somewhat a misleading extreme, as this feature was designed more to keep Bolles’s 2021 cap number low. But when this view is paired with comparison at his peers at his position, it can be demonstrated that it will take him longer to earn his money. Of course, like with Mahomes, Bolles shouldn’t be begrudged for his decision to get the comfort of knowing where he’s going to play for the long term.

Preparing for free agency

As we see start to see news of new contracts trickle out 10 days from now, keep an eye on how these contracts measure up in cash flows. Typically, when you see an NFL insider explicitly report that a player will be paid $X in the first year, $Y over two years, $Z over three years, and so on, the source is coming from the agents’ side that is positive about how the cash will flow to the player. Similarly, whenever you hear a report that contains only the APY and/or guarantees, even if impressive, once we have the contract up on OTC double check to see how the cash flows stack up with other positional comparables. It might end up demonstrating that the player ceded ground on this metric in return.