Explaining the NFL Opt-out and the Salary Cap Impact
This story was updated to include confirmation that offensive tackle Nate Solder IS opting out of the 2020 season.
The NFL’s official opt-out window has yet to officially begin—that seven-day window will commence once the NFL and NFL Players Association formally sign off on their agreement.
However, that hasn’t stopped a slew of players, including some big names from around the league, from opting out of 2020 amidst concerns over COVID-19.
Offensive tackle Nate Solder, whose young son Hudson has been undergoing cancer treatments, was thought to be one member of the Giants who might be leaning toward taking an opt-out. Solder did in fact release a statement announcing that he is opting out.)
The Voluntary Opt-Out
The voluntary opt-out applies to any player. Players who opt-out under this category will receive a $150,000 advance against their 2020 base salary, and their contract will toll (freeze).
Once the contract resumes in 2021, the player will only be eligible to collect their base salary and any performance escalators; they will not be able to receive any roster bonuses paid out in 2020. In addition, he will not be credited with an accrued or credited season toward free agency and certain benefits if he opts out this year.
So let’s say "Player A" was due a $1 million roster bonus and an $850,000 base salary. Player A will collect the roster bonus and the workout bonus, but only $150,000 of the base salary.
In 2021, his contract will resume with him scheduled to collect the remaining $750,000 of his 2020 base salary. He will not be able to collect a second $1 million roster bonus.
Similarly, if the player received a signing bonus as part of his 2020 payout (as would be the case with any player who signed a new contract), he will not receive another signing bonus.
For a player to be eligible for this category, he must be under contract or subject to a tender. Over the Cap notes that players who were free agents all of 2019 but were signed as a tryout will not receive an advance, nor will an undrafted player in 2020.
As for how the salary cap will be affected, NBC Boston reported that players who voluntarily opt-out will not count against the current year’s salary cap. This belief is also shared by Jason Fitzgerald of Over the Cap, who notes:
I believe that a player will keep the cap charges for any bonuses paid before the opt-out. I think the players base salary will drop to $0 with an adjustment made after the season for stipends paid out. It is also possible those will count this year. For voluntary opt-outs, they will have their 2021 base salary reduced by $150,0000. In any event, a player's 2020 cap number should drop significantly.
As an example, if a player has a $15M base salary, $5M in bonus proration, a $3M March roster bonus, and a $500,000 workout bonus, his cap charge should change from $23.5M to $8.5 million for 2020. Those savings can either be rolled over into 2021 or spent on signing free agents this summer.
It would certainly make sense that the contracts of players who voluntarily opt-out result in a cap credit for their teams since they're not collecting their full base salary this year.
As such, that would mean an abundance of cap space could become available for teams to use this summer or to roll over into 2021, depending on how many players voluntarily opt-out.
The Medically Higher Risk Opt-Out
The NFL and NFLP defined 15 different conditions under the “medially higher-risk” opt-out category. Among those conditions includes cancer, Type 2 diabetes mellitus, hypertension (high blood pressure), and an immunocompromised state (weakened immune system).
Players in this category who choose to opt-out will receive a $350,000 stipend. This stipend is not considered an advance against his 2020 salary, but is instead is counted against the Total Player Cost.
Like the voluntary opt-out category, the player’s contract will toll. As is the case with the voluntary opt-out, the player will not be eligible to collect any roster bonuses or signing bonuses paid out in 2020 again in 2021 (unless his contract already had a separate roster bonus provision).
A higher-risk player will receive credit for an accrued season toward free agency and a credited season good towards benefits.
As is the case with voluntary opt-outs, if a player receives a new diagnosis of any of the 15 conditions covered by the “medically high risk” category after the deadline passes, he can seek to opt-out. Also, once a player opts out, he cannot change his mind and request reinstatement.
The Cap Ramifications
If a player opts out, his base salary and the prorated signing bonus get credited back to the team's salary cap.
For example, the Giants will receive a cap credit of about $16 million for Nate Solder, including his $9.9 million base salary and his prorated signing bonus ($6.5 million). If the Giants look to cut Solder next year, they will be hit with a $13 million dead money cap hit since Solder's contract is tolling.
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