Do NFL teams have to place money in escrow for guaranteed contracts?

[Luvnit2]

I put his here because the Bengals are looking at a lot of large contracts sooner than later. It seems they answer my be no to having to place the full amount of guaranteed money in escrow.

https://profootballtalk.nbcsports.com/2023/04/02/nfls-funding-rule-isnt-mandatory-did-the-browns-make-escrow-payment-for-deshaun-watson-deal/

We have lots of discussion on the cap also the impact teams have on guaranteed contracts. I was under the impression teams were handicapped if they fully guaranteed contracts or even in cases of huge contracts without full guarantees hampered if they place a huge mount of money in escrow to cover the guarantee.

"The section on “Funding of Deferred and Guaranteed Contracts” appears at page 178 of the CBA. It begins like this: “The NFL may require that by a prescribed date certain, each Club must deposit into a segregated account"


I am not sure how the NFL can arbitrarily make some teams make guaranteed money (NFL approves all contracts) be placed in escrow based on the language in the CBA I quoted from the article above.

Thoughts?

[jfkbengals]

(06-17-2023, 11:18 AM)Luvnit2 Wrote: I put his here because the Bengals are looking at a lot of large contracts sooner than later. It seems they answer my be no to having to place the full amount of guaranteed money in escrow.

https://profootballtalk.nbcsports.com/2023/04/02/nfls-funding-rule-isnt-mandatory-did-the-browns-make-escrow-payment-for-deshaun-watson-deal/

We have lots of discussion on the cap also the impact teams have on guaranteed contracts. I was under the impression teams were handicapped if they fully guaranteed contracts or even in cases of huge contracts without full guarantees hampered if they place a huge mount of money in escrow to cover the guarantee.

"The section on “Funding of Deferred and Guaranteed Contracts” appears at page 178 of the CBA. It begins like this: “The NFL may require that by a prescribed date certain, each Club must deposit into a segregated account"


I am not sure how the NFL can arbitrarily make some teams make guaranteed money (NFL approves all contracts) be placed in escrow based on the language in the CBA I quoted from the article above.

Thoughts?

The traditional answer is "Yes", the fully guaranteed money must be placed in escrow.  BUT, as you mentioned above, the verbage sates MAY REQUIRE, not SHALL REQUIRE.  This first came to light after either the Watson or Mahomes deal, and no answer has ever been made public on the league's stance as to when it is or is not required to do so.  If memory serves, it was PFT who first brought the issue to light and was attempting to get a public answer as to when it is or is not required.


EDIT:  It was PFT after the Watson deal, the very article you linked.

[Luvnit2]

(06-17-2023, 12:29 PM)jfkbengals Wrote: The traditional answer is "Yes", the fully guaranteed money must be placed in escrow.  BUT, as you mentioned above, the verbage sates MAY REQUIRE, not SHALL REQUIRE.  This first came to light after either the Watson or Mahomes deal, and no answer has ever been made public on the league's stance as to when it is or is not required to do so.  If memory serves, it was PFT who first brought the issue to light and was attempting to get a public answer as to when it is or is not required.


EDIT:  It was PFT after the Watson deal.
https://profootballtalk.nbcsports.com/2023/04/02/nfls-funding-rule-isnt-mandatory-did-the-browns-make-escrow-payment-for-deshaun-watson-deal/

The 'may' versus shall is a huge deal to small tickets and those who owner is not worth 170 billion like some existing owners.

For Bengals sake, I hope it is not mandatory.

[jfkbengals]

(06-17-2023, 12:48 PM)Luvnit2 Wrote: The 'may' versus shall is a huge deal to small tickets and those who owner is not worth 170 billion like some existing owners.

For Bengals sake, I hope it is not mandatory.

As the linked article points out, the clause was pushed by the NFLPA to prevent owner insolvency causing a player to get screwed out of his money.  Presumably this was directly pointed at the Brown and Spanos families.  But the value of broadcast contracts continually climbs to a point where the only threat of insolvency is by new ownership groups, and the league vets them so well I doubt it could ever happen in the modern NFL.  Just because it happens to Antonio Brown's team (too soon?) doesn't mean it will happen to Mike Brown's team.

[*bfine32*]

I think it's up to a "super majority" vote of the owners.

[Housh]

Isn’t this Mike Brown and Burrows decision? Like WHEN he gets his money? If we wanted to frontliad the contract we’d have to have it in escrow but if he spreads out his bonus creatively we could get at least a few “bargain” years before we really gotta start paying him.


I’m not sure 100% but doesn’t it go like that?

[Joelist]

https://www.cbssports.com/nfl/news/2022-nfl-contract-drama-how-an-old-rule-favors-rich-owners-and-could-impact-joe-burrow-justin-herbert-deals/

I'll take CBS Sports over Florio on this (and most things).

[jfkbengals]

(06-17-2023, 05:19 PM)Joelist Wrote: https://www.cbssports.com/nfl/news/2022-nfl-contract-drama-how-an-old-rule-favors-rich-owners-and-could-impact-joe-burrow-justin-herbert-deals/

I'll take CBS Sports over Florio on this (and most things).

Interesting comment when linking that article, as they quote PFT for all of the information.

That said, the article linked in the OP was when PFT followed up to see if the money had in fact been placed into escrow by that date.  It was at that point they noticed the MAY instead of SHALL verbage.

[Joelist]

(06-17-2023, 07:19 PM)jfkbengals Wrote: Interesting comment when linking that article, as they quote PFT for all of the information.

That said, the article linked in the OP was when PFT followed up to see if the money had in fact been placed into escrow by that date.  It was at that point they noticed the MAY instead of SHALL verbage.

And the article specifically states the escrow is required. It hasn't just been CBS other sources have said the same thing - it is required and also is an issue.

This is part of why things like the Paycor deal happened - the Bengals need to stack up cash for this exact situation. 

[casear2727]

(06-17-2023, 03:12 PM)Housh Wrote: Isn’t this Mike Brown and Burrows decision? Like WHEN he gets his money? If we wanted to frontliad the contract we’d have to have it in escrow but if he spreads out his bonus creatively we could get at least a few “bargain” years before we really gotta start paying him.


I’m not sure 100% but doesn’t it go like that?

Signing bonuses can be prorated for 5 years.

Roster bonuses cannot be prorated.  Future roster bonuses do not require escrow.

Mahomes contract has many roster bonuses.  When you read that KC has "reworked" Mahomes deal they are simply converting that year's roster bonus to a signing bonus so that they can prorate the amount over 2-5 years.

[*michaelsean*]

(06-17-2023, 12:54 PM)jfkbengals Wrote: As the linked article points out, the clause was pushed by the NFLPA to prevent owner insolvency causing a player to get screwed out of his money.  Presumably this was directly pointed at the Brown and Spanos families.  But the value of broadcast contracts continually climbs to a point where the only threat of insolvency is by new ownership groups, and the league vets them so well I doubt it could ever happen in the modern NFL.  Just because it happens to Antonio Brown's team (too soon?) doesn't mean it will happen to Mike Brown's team.

Seems insane that the NFLPA would push this. The money is going to be there. If there were no salary cap it could be an issue, but with a salary cap the money will be there.

[Housh]

(06-17-2023, 11:06 PM)casear2727 Wrote: Signing bonuses can be prorated for 5 years.

Roster bonuses cannot be prorated.  Future roster bonuses do not require escrow.

Mahomes contract has many roster bonuses.  When you read that KC has "reworked" Mahomes deal they are simply converting that year's roster bonus to a signing bonus so that they can prorate the amount over 2-5 years.

So the trick should be to load it with a bunch of roster bonuses that Burrow will be able to easily do like play 75% of the snaps or throw 15 TDS or something.


This contract is gonna be crazy