A little tidbit came out this week that the Lions made Calvin Johnson repay the team $320,000 due to his retirement. That news was met with a number of reactions with some thinking that it was petty of the Lions to do this and others taking the stance that Johnson quit on the team. So I wanted to share my own thoughts on the topic since salary forfeiture is something I discuss from time to time when talking about contracts.
Johnson signed a massive contract worth $16.2 million a year back in 2012. It was a contract so large that it stood as the top contract at the position until 2017 at which point Antonio Brown’s APY finally surpassed it. No other receiver in the NFL has signed a contract worth more than $15 million so this was a major investment in a superstar.
Johnson received a $16 million signing bonus when he signed his contract. Technically a signing bonus is more or less a pre-payment made by the team to the player to honor the contract. When a team breaks the contract the money already paid to the player remains with the player. However if the player breaks the contract by refusing to work the team has the right to reclaim whatever bonus money is still prorated against the contract. Think about it like putting a deposit down on the home and then just backing out of the contract because you decide you don’t want the home. Generally you lose your deposit.
At the time of his retirement there was still a $4 million charge associated with his signing bonus. Johnson also had received a smaller signing bonus as part of a 2013 restructure but I don’t know if that was or was not subject to forfeiture. Either way he opened himself up a large financial burden when he retired.
I think when we look at retirement issues we generally make subjective determinations as to what is right and what is wrong. For example when Tony Romo indicated that he wanted to retire after he lost his job to Dak Prescott and was seemingly getting lukewarm interest in a trade most would have said Dallas would have been in the wrong if they asked him to pay back millions in bonus money. Jerry Jones agreed and to do right by Romo he released him which gave him no right to reclaim any money. However when Chris Borland retired after just one year with the 49ers I think most would have sided with San Francisco being entitled to the remaining 75% of his bonus money.
Johnson I think falls a little into a gray zone. Johnson had been in the NFL for 9 seasons but was still in the prime of his career. He was still a focal point of the Lions offense and that was not expected to change anytime soon.
From the Lions perspective I can understand the logic in going after bonus money for a few reasons. Through no fault of the current front office the Lions had one of the most mismanaged salary caps, if not the most mismanaged, in the NFL. Part of that was due to Johnson’s contract and to have him just walk away and leave them with a $12.9 million dead charge on the cap is a tough pill to swallow, especially after having one of their cornerstone players leave in free agency the year before in part because the Lions had no real way to fit him in. He hung the Lions out to dry and with little warning.
Johnson was also careful to say that his walking away was not because he upset with losing but because he didn’t want to subject his body to the grind of an NFL season. This came at a time when there seemed to be more and more talk about people walking away from the NFL because of concerns with long term health effects. Teams have to set a precedent for protecting themselves in the event that this becomes a more common occurrence.
However this is where I have an issue with the Lions. If you are going to set some kind of precedent with your team philosophy then you have to go all in, not negotiate a settlement for 8% of the total. That doesn’t help the Lions salary cap. It doesn’t set any kind of positive precedence. It just comes off as petty and it’s worthless in the grand scheme of things. The fact that it strained a relationship with one of the better players in franchise history just makes it even worse. It’s hard to see what they gained by doing this.
One other aspect of this topic though lies in the criticism of the concept itself. The topic of guaranteed contracts and the one way nature of contracts is always at the front of NFL discussion. This is another one of those areas that would be criticized if used more often. But these are rules that were agreed to by the union. Players employ agents whose job is to get them the best possible deals. Whether those contracts are guaranteed or not is the fault of the agent.
When it comes to forfeiture provisions due to retirement this is a topic that an agent can negotiate. Teams can and do put language in contracts that do not allow the team to recapture money in the event of retirement. Agents can opt to negotiate less signing bonus money and more yearly salaries. There are ways to protect from this and that’s not on the team but on an agent to be proactive when attacking this issue.
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.