***Note: Shortly after writing this Adam Schefter reported that the Colts will not exercise their right to recover any bonus money***
Andrew Luck’s retirement was pretty shocking and I have gotten a number of questions about how this works on the Colts salary cap, so let’s take a quick look at the contract and the impact of his retirement.
Once Luck’s is officially placed on the retired list he will count for $18.4 million against the salary cap in 2019 and $6.4 million against the cap in 2020. $12.8 million of that figure comes from a $32 million signing bonus that Luck received in 2016 and the other $12 million comes from a roster bonus that was earned this past March.
The Colts have the right but not obligation to require Luck to return the full $24.8 million to the Colts for his retirement. This has been hit or miss in the past with teams as to whether or not they go after the bonus money. If the stories that the Colts were aware of this possible retirement since March you would think they have already discussed this with Luck and he is aware of what he will be paying back.
I think historically teams have gone after the money when they feel the player is walking away from the team for reasons not related to injury or age. For example the Lions went after Calvin Johnson’s remaining bonus money when he walked away from the team. The Cowboys, on the other hand, did not go after Tony Romo’s.
Luck falls in a bit of a gray area. It seems as if he has been chronically injured but at the same time it seemed that he was capable of playing football. His decision to retire rather than try to play this year in a sense saves the Colts his $9.125 million salary that he would have earned even if he landed on IR.
My gut feeling is that the Colts will certainly look to gain back the $12 million in roster bonuses from this year especially if he could have made this decision in March. $6 million of that has not even been paid to Luck yet as his contract called for payment to be made in September so that is easy for the team to withhold. As for the $12.8 million in signing bonus money I think there is a better chance that they do not look to recover that especially if they are holding out hope that he returns in the future.
As far as cap credits they will come as the money is repaid. Generally that would begin on the 2020 cap but if the NFL considers his $6 million roster bonus to have never been paid they will likely reduce his cap charge this year from $18.4 to $12.4 million rather than having the team wait until 2020.
Luck’s contractual rights will remain with Indy as long as they do not terminate the contract. If he returns to play football his contract will kick in again and continue as if he never left. What that means is if he came back next year his contract would then run through 2022 rather than 2021. So basically you can just assume the contract is now frozen.
I do think what will be interesting is how/if the NFL handles this in the next CBA. Salaries are high enough and players educated enough about injury potential that we are beginning to see stars leave the game in the prime of their careers. Its one thing when linebackers are walking away, but another when the players who are considered the face of a franchise walk away. Teams have more investments made in QBs than any other position and to see someone of Luck’s stature just walk away should be concerning. They are the biggest ticket sellers and the most important player on the field. While the Colts have a capable backup QB their odds of being a top playoff team fell dramatically with the loss of Luck and you have a fanbase that is feeling crushed by this outcome.
Current forfeiture language is primarily tied to signing bonus prorations which are becoming smaller and smaller relative to the contract these days. But the only way to prevent players from retiring is to find a way to financially make it harder to step away. The way things currently are done they could only instruct their contract guys to use bigger prorated bonuses though that has negatives with it as well. So I could see other options on the table for the owners down the line to protect themselves better.
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.