Injury pay cuts and limited leverage: five brutal truths about NFL contracts (2024)

The cardiac arrest suffered by the Buffalo Bills safety Damar Hamlin during a game earlier this month and his future financial prospects shone a spotlight on contract conditions in the NFL – America’s most lucrative major league but also its least generous. Here are a few of the more striking facts about players’ working conditions.

Most of the money isn’t guaranteed

Gaudy headline figures reported in the media when players sign contracts are rarely an accurate reflection of the true sums that will end up in their bank accounts. Take the 10-year, $503m deal agreed by the Kansas City Chiefs’ Patrick Mahomes in 2020.

Only (a word that often deserves quote marks when discussing sports salaries) $141m is guaranteed money. There are so many conditions, outs and “guarantee mechanisms” in Mahomes’ contract, reported, that it stretches to over 100 pages. In Spotrac’s breakdown of NFL contracts, the guaranteed sum is below the theoretical value of the agreement about 90% of the time. And that’s especially true for lesser players, since they have limited negotiating power.

Signing bonuses are ringfenced in the NFL. Often, however, if a player is cut from a team as a result of injury, underperformance or simply to save money, their contract evaporates. Contrast that with Major League Baseball, where contracts are fully guaranteed: the Los Angeles Angels’ Mike Trout signed a $426.5m, 12-year deal in 2019, every dollar destined for his bank account. Almost all NBA contracts are fully guaranteed. But in the NFL, through no fault of his own a player could find himself unemployed after a year having earned, for example, $1m from what was theoretically a three-year deal worth $3m.

There’s an archaic league funding rule stating that guaranteed money must be placed in escrow. That gives owners a ready excuse to wriggle out of offering guaranteed money, and may discourage cash-strapped teams from big commitments. But really, it’s all a question of negotiating power. “There’s nothing in collective bargaining that says you have to guarantee basketball or baseball contracts, there’s nothing that says you don’t have to guarantee football contracts,” says Andrew Brandt, a former Green Bay Packers vice-president in charge of player contracts.

“NFL owners have continued to use the argument: ‘We can’t guarantee it, it’s an extremely high injury sport, it’s going to hurt our product [to be] paying people who get injured all the time’,” adds Brandt, professor of practice and executive director of the Moorad Center for the Study of Sports Law at Villanova University.

“It’s just been the way it is, even with the most leverage players like star quarterbacks, they’re basically on long-term deals that are really two-year deals – two years guaranteed and the rest is kind of a team option.”

Getting injured often leads to a hefty pay cut

The NFL Network journalist Ian Rapoport reported that Hamlin’s four-year, $3.64m contract was due to earn him $825,000 this season but contained a clause to pay him at a lower rate of $455,000 while on the injured reserve list. In other words: a 45% salary cut because he suffered a cardiac arrest doing his job. And that is pretty standard for injured players.

In a sport this violent, the question is not whether a player will get hurt, but when. According to a 2017 Harvard analysis, the mean injury rate in the NFL is 5.90 injuries a game, compared with 0.45 in MLB, 0.16 in the NBA and 0.59 in the NHL. The enormous health risk means teams don’t want to commit to the kind of long-term, guaranteed deals seen in other sports. But that risk is exactly why financial security is so important to players. They’re expected to play hard all the time – and yet they could be one tough tackle away from a massive loss of earnings. The new collective bargaining agreement (CBA) agreed in 2020 raised the number of regular-season games from 16 to 17 and expanded the playoffs from 12 to 14 teams. And more games means more injuries.

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“I’m sure agents are now all going to say: ‘You can’t give me a split [a lower rate while injured], look what happened to Hamlin’. The argument on the other side is going to be, that’s once in a million,” says Brandt. “If they do something unique with that contract there’s going to be a line at the door of every team of players wanting to be treated that way.”

Oh, and be careful if you’re an NFL player out jogging near your home, or sweating on your personal Peloton: it might cost you your $10m salary even if you’re lucky enough to have an injury guarantee in your contract. After Ja’Wuan James suffered an achilles injury at a private gym in 2021, the league warned: “an injury sustained while a player is working out outside of team supervision in a location that isn’t an NFL facility is considered a non-football injury, meaning the injury isn’t covered by the standard contractual injury guarantee.”

No pension before year three

As in the NBA, players are eligible for the NFL pension plan after three seasons – down from four prior to the latest CBA. For eligibility purposes a season means three or more games on a roster. Other benefits are available depending on length of service, such as severance pay and five years of health insurance after retirement. Players can start drawing their full pensions aged 55; the new CBA will reportedly see the average annual pension rise to $46,000.

Healthcare is a contentious issue given the threat of injuries, and the effects of concussions may not be felt until many years after retirement. Disability compensation is up to $265,000 a year, but considering the average career length is 3.3 years according to the players’ association (or six years if a player makes an opening-day roster, per the NFL commissioner), many players do not qualify for the full suite of benefits. In baseball, meanwhile, players become eligible for the MLB pension scheme after only 43 days. The NHL scheme is also structured more favourably to players.

Financial stress is common; a 2015 National Bureau of Economic Research study found that nearly 16% of former NFL players filed for bankruptcy within 12 years of retirement – a far higher rate than in the wider US population.

Ordinary players have little leverage

With 55 players on an NFL roster, there is a vast cast of expendable rank-and-file members beneath the top layer of stars, in contrast to the NBA, where smaller squads magnify individuals’ importance. That makes it harder for ordinary players to agitate for better pay and conditions and may also help explain why basketball has led the way on calls for social and racial justice.

A study by David Niven of the University of Cincinnati found that after the national anthem kneeling protests against racial inequality, “a far greater percentage of protesters [than non-protesters] received a salary cut, that protesters’ overall salaries grew at a notably slower rate, and that protesters were vastly more likely to be sent to another team.”

The former Washington defensive back DeAngelo Hall told The Undefeated (now Andscape) in 2017: “If you had a guy making $100m in the NFL and it was a fully guaranteed contract, he’d probably be able to voice his opinion on several social issues. But the NFL is a year-to-year deal. You could be great one year and not great the second year and you’re in the process of taking a pay cut or getting cut. It’s definitely not LeBron James.”

The salary cap limits wages

The NFL salary cap was introduced in 1994, when it was $34.6m per team. This season it was $208.2m, far outstripping the US inflation rate over that period. Minimum salaries are also on the rise, and will continue to increase each year this decade from the present annual amount of $705,000 for a rookie. But the league’s estimated revenue has soared, too, from $4bn in 2001 to $18bn this year.

The cap is a far stricter limit than in MLB, where teams often sail over the threshold because they’re willing to pay a “luxury tax”. The NFL cap and the accounting rules for prorated bonuses discourage generous contracts because they reduce flexibility for front offices who are wary of having their current and future competitiveness hamstrung by payments to injured, ineffective or former players. That’s the case with the Atlanta Falcons, stuck with $40.5m in “dead money” in 2022 after they traded quarterback Matt Ryan to Indianapolis.

As a collective, the NFL franchise owners are tough and united negotiators and the present CBA runs until the end of 2030, limiting the potential for reforms before then. Still, the astonishing five-year, $230m contract the Cleveland Browns handed the quarterback Deshaun Watson in March 2022 – the most guaranteed money in NFL history – had the feel of a paradigm shift at the time. However, it reportedly drew a backlash from other owners intent on ensuring it remains an outlier. “Those of us in the industry thought this might be a precedent,” says Brandt. “That did not happen. Owners were able to stem the tide.”

Injury pay cuts and limited leverage: five brutal truths about NFL contracts (2024)
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