I just read that the New York Jets released veteran Wide Receiver Braylon Edwards which reminded me about the factor that termination pay can be in deciding the fate of some players. Now I’m not sure if Edwards received any termination pay from his stint in San Francisco (I wouldn’t think he did since he was cut so late in the year, but I don’t know that for a fact though for the sake of argument we will assume it is fact), but I think his release is an example of the role that veteran status can sometimes have on roster management.
So what exactly is termination pay? Termination pay is an in season salary guarantee that is automatically given to veteran players as a provision of the CBA. There are actually two types of termination pay. The primary one guarantees a players entire Paragraph 5 salary for the season. To be eligible you have to make the roster for the first game of the season and have not collected termination pay in the past. If released the team owes you the remainder of your salary for the year if the player puts in a claim for the amount. So if a player earns $1,700,000 in P5 salary, makes the team, and is cut after the first week the team still must pay him the $1.7 million. This termination pay does count in full towards the salary cap.
The second form of termination pay is for players signed during the season. In this case the player is only entitled to 25% of his proportionate salary for the season. For example if a player is signed in week 2 at a rate of $1,700,000 (meaning he would earn $1.6 million if he is on the team the next 16 weeks) he is only eligible to collect a total of $400,000 under the termination pay clause. Considering he earns $100,000 per week he could be released after four weeks with no additional damage done to your salary cap.
The one thing that teams want the most of during the season is roster flexibility. Sure there are plenty of players locked in, but those last 10 to 15 guys are by no means assured of anything. If you choose to bring a veteran onto the initial 53 man roster that is termination pay eligible and you think he is in those last 10 to 15 players on the roster following training camp, well you have now damaged your roster flexibility because you can’t remove his cap charge from the team. So in a sense you can box yourself in by keeping a veteran who may be the best option on September 1 but likely will not be on October 1.
So for players like Edwards they may get released only to be called back up at a later date when the second form of termination pay kicks in. At this point a teams flexibility is not compromised due to the termination pay. A GM like the Jets’ John Idzik, who comes from a system in Seattle that during their rebuild were constantly moving pieces from the roster, is probably less inclined than many to keep players like Edwards. Edwards also has an injury history that popped up again this summer which can make the team think he is going to be a week to week player essentially on a guaranteed contract.
Just another small but important aspect to consider when you hear about your team cutting a veteran. Some of them may be back sooner rather than later, but the rules make it difficult for end of career veterans who will likely be backups to start the year on the active roster of many teams whose outlook is brighter in the future than in the current year.
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.