Why NFL contracts are vastly different from NBA contracts

As we'll see when NBA free agency opens, the NFL's way of doing player business varies significantly (and is much less player-friendly) than the NBA's. From the reasons behind player trades to contract guarantees, let's dig into it.
Publish date:

We’re approaching that time of year when NFL players and agents need to avert their eyes. During the first two weeks of July, NBA free agents will sign deals that will remind us once again that when it comes to contract security and allocation of risk between the team and player, NFL players are sitting at the children’s table. Indeed, even before free agency the NBA market was full of contract activity. The business of the NBA is much more prolific, and thereby more player-friendly, than the business of the NFL.

Osweiler aberration

Compared to NFL trades, NBA trades are often less about talent and more about business. When former Nets center Brook Lopez was traded to the Lakers last week, the headline was not about “how good” Lopez would be for the Lakers; rather, it was about opening up cap space in 2018 (when Lopez’s contract is set to expire) and dumping the albatross that was Timofy Mozgov’s contract.

Last March I was downright giddy about the Browns trading for Brock Osweiler and his (relative to the NFL) onerous contract to acquire a future asset (a second-round pick). It was the closest the NFL has come to an NBA-like trade, and even Sam Hinkie would have been proud of the Browns.

My nerdish exuberance about the Osweiler trade is tempered by the reality of how few “bad contracts” there are in the NFL. When a team wants to dump a contract, it simply does, since there are no remaining contract obligations, only leftover cap charges. The Osweiler deal was an aberration, and we may not see anything similar for a while.

HOW ALL 32 NFL TEAMS HANDLE ANALYTICS: Who is embracing the new wave of information, and which teams are still going old-school?

NBA vs. NFL: The future of guarantees

As we do with the NBA now, we gawk at the size of NFL free-agent deals in March. The difference, of course, is that NBA contracts are secure: if the contract is for $80 million, that means $80 million will go into the player’s pocket. An NFL contract worth $80 million may be worth $20 million now, maybe $35-40 million by next year and then “we’ll see” about the rest.

The default rationale is that there are far fewer players in the NBA, but that is overly simplistic. Should all players in leagues with smaller teams (including the NHL and MLS) necessarily make more than NFL players? Shouldn’t revenues, where the NFL dwarfs the NBA, matter? Last year the NBA had a $94 million salary cap with a quarter of the players of the NFL, which had a $155 million salary cap—not great for NFL players. And for those claiming that guarantees are problematic because there’s a greater injury risk in the NFL, that’s a strong argument ... for the owners.

Implementing more guarantees in the NFL must be a combined effort from the players’ collective agent—the NFLPA—and their individual agents. Highly leveraged superstars, especially quarterbacks, need to push the envelope, confronting teams about whether they really want to be able to release them in a few years. As to the team (and public) narrative saying, “Well, these quarterbacks aren’t going to get cut!” agents and players should respond saying, “If that is true, then just guarantee it.” Once-leveraged quarterbacks such as Colin Kaepernick, Tony Romo and Jay Cutler all had contracts for this season that many felt would never be cut short.

Indeed, this week featured a contract extension for one of these players with incredible leverage, leverage not used to its full weight, which brings us to...

Derek Carr’s contract

Like the on-field product, NFL contract negotiations are packaged for maximum viewer interest—the bigger the number, the bigger the headline.

The Raiders QB’s contract sells well with a total value of $125 million and a reported $25 million average per year (APY), eclipsing the previous record held by Colts QB Andrew Luck. Behind the curtain, however, we see that it is a six-year—not five-year—deal, with five years added to the existing year where Carr was scheduled to make roughly $1 million. Thus, the true total value is six years for $126 million, or $21 million APY, a number certainly not as sexy as the $25 million APY. This is the “presentation” issue with contracts: teams can sell it to their owners with “total money” averages like $21 million APY, while agents can sell it to their clients with “new money” averages as $25 million APY.

• BREAKING DOWN THE NUANCES OF AN NFL PLAY: James Urban, one of the league's most respected assistants, with a lesson in play design

In comparing Carr’s deal with Luck’s, negotiated a year ago, Luck did have more leverage with a “starting point”—scheduled pre-extension salary—of $16 million, compared to Carr’s paltry $1 million starting point. Conversely, Carr had the advantage of being a year later in a rising marketplace. With that context, here are some key markers for the two deals (in millions):




Signing bonus



First-year money



Full guarantee at signing



Guaranteed within 12 months



Total guarantees



Three-year earnings



Four-year earnings



As to the guarantee discussion above, Carr’s $125 million translates to $47.5 million over the next two seasons and then “we’ll see.” While we certainly expect Carr will be a Raider for much longer than two years, the point is that the risk shifts entirely to him. Remember how Kaepernick’s contract was pilloried for being “two years and we’ll see”? The same is true with here.

Like Carr, Russell Wilson negotiated his contract after the third season of a non-first round contract, with a similar low starting point, $1.5 million in pre-extension salary. Wilson’s deal, done two years ago, compares favorably with Carr’s on two important terms: its eye-popping signing bonus of $31 million, dwarfing Carr’s $12.5 million, and a length of four—not five—extension years, allowing another major contract extension a year earlier.

As with virtually every NFL deal, the shiny objects are not what they appear to be on Carr’s contract.

Deals ahead

Before the ink dried on Carr’s contract, speculation began on the impact for Matt Stafford and Kirk Cousins, both presently under contract only for this season. These deals should both be considerably higher with starting points significantly higher than Carr.

Stafford, the second-to-last “bonus baby” (Sam Bradford was the last) from the prior CBA to take advantage of the bloated top rookie contracts, is on pace to become one of the highest earning players in NFL history. Even without an extension, he is due $16.5 million this year and on pace to earn $127 million by age 30. Thus, to have an apples-to-apples comparison to Carr, he would have to earn about $15.5 million more in early contract value, discounting his $16.5 million starting point to Carr’s $1 million.

• ​THE BATTLE OVER BIG DATA IN THE NFL: How WHOOP is the future of wearable data

Similarly, for an apples-to-apples comparison, Cousins—due $24 million this year on his franchise tag—would have to earn about $23 million more in early contract value than Carr, discounting his $24 million starting point to Carr’s $1 million.

As for Cousins, many debate a potential contract value based on future franchise or transition tags, leverage, etc. but that is secondary here. Cousins will decide soon whether to play for $24 million this year or accept a deal that the Redskins can live with, knowing it is not what Cousins could—or even should—command. I smile when I hear so many talk about Kirk Cousins’ incredible leverage because I see it differently. The franchise tag allows the Redskins to negotiate without specific concern for the market, they have his rights either way. And my sense is they will make a deal, one that, while impressive, not be what some suggest he “should” make.

Ok, NFL contract school is out; enjoy your holiday week…