The question I seem to be getting over and over these days is regarding Kam Chancellor of the Seahawks and his status going forward. Rather than just emailing or tweeting back I thought it made more sense to do a post on the subject that I can refer everyone too from now on. So lets do a quick Q&A on Chancellor’s contract. As always these answers are based on my interpretations of the CBA and the way I have seen other similar situations play out.
What is the Contract Breakdown?
Seattle signed Chancellor to a $12 million per year extension just this past August. $25 million of the $26 million contract contains some type of guarantee, though that number is a bit inflated since Chancellor already had $6.8 million virtually guaranteed on his prior contract. He received a $10 million signing bonus as part of the new contract. The extension did increase his salary in 2017 by about $6 million.
Personally I found the extension to be a bad one and a bit odd, but the Seahawks have never been risk averse and generally buy into their guys. It was a very high price for a strong safety and more than that Chancellor was 29 years old and hadn’t played 16 games since 2013. He seemed like the perfect player to let walk when his contract expired rather than going further in so I was surprised when he got such a lucrative deal this August.
What is the Guaranteed Structure?
Here is where the contract gets interesting. Chancellor received $13 million in full guarantees, all earned this season. The remaining $12 million in guarantees are what I call vesting guarantees. A vesting guarantee is a guarantee that is currently guaranteed for injury only but becomes fully guaranteed at a later date, in this case a few days after the Super Bowl.
While injury guarantees often mean very little this is the best type of injury protection a player can get. The way most injury guarantees work is relatively simple- if the player can pass a preseason physical when released the team has no obligation to pay out the injury guarantee. However if the player is unable to pass that physical the team owes him the money. This would be $12 million.
Because the vesting date exists, and in this case is so early, the player only has to be injured up to the vesting date. Once that vesting date passes the salary is guaranteed. So lets say that Chancellor could not pass a physical on March 1st but could on July 30th it wouldn’t protect the Seahawks in this case since his salary would be fully protected by that point.
Teams do release players with injury protection and try to avoid the payment but players will file a grievance to collect their money when that happens. I would imagine if Chancellor has an injury that could force retirement he would have a pretty good chance to win the grievance.
What are the Salary Cap Ramifications of Cutting vs Keeping?
Chancellor will count about $9.58 million on the cap next year if he remains on the team in some capacity. If he was released and no disputing the injury the cap charge would be $19.5 million. The reason it is so high is because $7.5 million of his signing bonus would accelerate plus the full $12 million guarantee would kick in.
If Seattle refuses to pay on the injury and he files a grievance the cap charge would then be $12.3 million. The reason this is lower is because only 40% of the grievance counts on the cap when filed. The remaining amount would hit the books when and if the grievance was settled or awarded. Similarly the Seahawks would receive a salary cap credit for the 40% if they were found to be in the clear for cutting him.
The other option is a June 1 cut. By using the June 1 designation they can change the way the bonus is accounted for. In this case the cap charge would then be $14.5 million in 2018 and $5 million in 2019. They would not be able to even attempt to avoid the guarantee if they did this since you can not do a June 1 cut until the new league year starts at which point Chancellors guarantee would become fully guaranteed.
In my opinion the best option is to carry him on the roster, put him on the PUP list, and see what happens. At the very least they can then wait for 2019 to roll around and make whatever adjustments they see fit.
How Do Things Change if Chancellor Retires?
The first thing to understand here is that there is no reason for Chancellor to retire. In general a player who voluntarily walks away from the NFL is breaching his contract. That means the player would be walking away from his guaranteed salary.
In addition a player who breaches their contract that received a signing bonus may be forced to repay all the remaining bonus money that has yet to be accounted for on the contract. While the Seahawks did not enforce this with Marshawn Lynch they did force Chancellor to forfeit some money on his prior contract when he held out. Regardless it’s a risk the player should not take until it is done in writing that the team will not recover the $7.5 million in bonus money.
If he retired officially and let the team off the hook for $12 million his cap charge next year would be $7.5 million. I can’t see any reason why he would do that so I would be stunned if he said he was walking away.
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.