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Jalen Hurts Contract

Archer : 5/13/2023 7:25 pm
Jalen Hurts contract
I am confused by the structure of Hurts contract.
Perhaps someone can explain how the CAP implications are created.

The contract is:
(5) year extension $255,000,000.00.
$179,399,000 fully guaranteed, with $23.294M to sign. This contract is in addition to the remainder of his rookie contract, and $15,000,000.00 in potential incentives.


Below is the actual contract as per various sites.

• 2023: $1.01M base. CAP $6,154,286
• 2024: $1.125M base, $38.875M option. CAP $13,558,800 (actual CAP $21,333,800.00) *
• 2025: $1.175M base, $40.83M option. CAP $21,769,800 (actual CAP $37,712,800.00) **
• 2026: $1.215M base, $49.875M option. CAP $31,771,800 (actual CAP $65,232,360.00) ***
• 2027: $51M base. CAP $41,832,800 (actual CAP $74,993,460) ****
• 2028: $51M base. CAP $47,149,000 (actual CAP $80,309,660.00) ****


I am not certain how the CAP can be carried over into non contract years.
OTC shows CAP costs in non-contract years below. I imagine that these go away once the options are exercised.
• 2029: no base CAP $97,553,000
• 2030: non prorated bonus $29,808,000 CAP $0
• 2031: non prorated bonus $19,851,000 CAP $0
• 2032 non prorated bonus $9,920,000 CAP $0

Some rules that I read about contracts are.
Option bonuses are like roster bonuses and can be spread over a maximum of (5) years. So, if the option bonuses are exercised then the established CAP will increase.

For example, in 2024 if the option is exercised ($38.875M) / 5 is $,7,777,000.00 added to the Eagles CAP that year to $21,333,800.00. *

2025 $40.83M option is exercised then the CAP hit will be $7,777,000.00 + $8,166,000.00+ $21,769,800.00 = $37,712,800.00**

2026 $49.875M option $7,777,000.00 + $8,166,000.00+ $17,517,660.00 + $31,771,800.00 = $ 65,232,360.00***

2027 $7,777,000.00 + $8,166,000.00+ $17,517,660.00 + $41,832,800 =$74,993,460.00****

2028 $7,777,000.00 + $8,166,000.00+ $17,517,660.00 + $47,149,000.00 = $80,309,660.00 *****

2029-2032 are non-contract years, so I am confused as to how they are calculated in the OTC CAP calculations. There is +/- $150,000,000.00 of dead money.

Is this all smoke and mirrors and will the actual CAP impacts be greater than presently calculated ?
If that is the case then the Eagles will be in a significant bind starting 2026.
There are $90m in void year cap hits.  
BillT : 5/13/2023 7:31 pm : link
It’s a big time “kick the can”. And yes, it’s very confusing.
Archer  
pjcas18 : 5/13/2023 7:33 pm : link
I'm not a cap expert, someone on here probably knows, but when you conclude with this quote below, to me it means "shoulder shrug" this is so far away in terms of football seasons and salary cap, I think it's no big deal. I read about the Eagles and Cowboys cap hell every year. Never happens. they restructure one or two contacts and bye bye cap hell.

Quote:
...If that is the case then the Eagles will be in a significant bind starting 2026...
The Rams are a perfect example of the consequences  
Jay on the Island : 5/13/2023 7:56 pm : link
of constant restructuring.
The Rams  
pjcas18 : 5/13/2023 8:00 pm : link
haven't had a 1st round pick since 2016.

half of those years they didn't have a 2nd round pick either.

I'm sure restructuring contracts has contributed to their current state, but also it's probably more than just that.
The cap stuff is complicated.  
mfjmfj : 5/13/2023 8:39 pm : link
A few simplifying points:

1). What really matters is not cap hit in a given year, but how much cash you have paid, are paying, and have guaranteed to a player. So for a guy like Leonard Williams you hear lots of talk about his cap hit, and we should restructure, etc. All meaningless. We pay him $18MM if he plays this year. If we don't want to pay him that much, then you cut him, or give him a paycut or a new deal at lower cost. All the rest of the money is money we have already paid him that we have to take on the cap at some point, and that point being no later than his last year on the team. And if we need cap space there is no need to restructure him. Just add void years.

2). The reason only cash out matters, is because teams have nearly infinite flexibility as to when to take the hit for a certain player through the use of void years. So Lane Johnson, who is 33 has a cap hit of $14MM, a dead cap of $60MM. He is set to make $100MM from 2023 to 2027. At the end of that time period that are 3 more void years totaling another $20MM of cap hit. So he is under contract through 2027, but is on the books through 2030.

So can you spend whatever you want and not worry about? For one year, yes. Eventually, the numbers catch up with you. What is not clear is how long eventually is, and how painful the catch up is. The Eagles have taken the biggest gamble on this strategy I have ever seen. If a few players cannot play to expectation (Hurts, Johnson, Brown, Kelce, etc.) they are hosed. So let's assume Brown cannot come back after 2023. They have a $50MM cap hit for him in 2024. If one or two of these backloaded guys become problematic soon they are hosed. There current cap space for 2024 is $5MM. They have push $45MM more out to future years, just to get back to even.

Looking at their structure you can see they are playing for a two year window and then potentially blowing it all up. Interestingly, if you look at NYG salary structure, they have also built to this two year window, and after that can blow up almost everything and have a pretty clean slate. So DJ essentially has a 2/$82MM contract with a team option for 2 more years. with the Waller restructure they can easily get out after 2 years. The Giants seem to be getting in position to make their run after the Eagles blow up.
mfjmfj  
Archer : 5/13/2023 9:27 pm : link
Thanks for the explanation it makes sense.


A couple of questions.

How is it possible to have a (5) year extension but Cap costs are deferred for and additional 4 years.

When does the contract actually end?

In reading the NFL criteria for contracts. It stipulates that bonuses can be spread out for (5) years. How is it that the Eagles are able to spread out their bonuses 8-9 years?

Also what happens when the Eagles pay Hurts his options ?
How is that money dealt with for CAP purposes?

Also if Hurts makes his full contract $255,000,000 over the (5) years and there is $100,000,0000 of CAP not accounted for ?
RE: The Rams  
Jay on the Island : 5/13/2023 9:30 pm : link
In comment 16116296 pjcas18 said:
Quote:
haven't had a 1st round pick since 2016.

half of those years they didn't have a 2nd round pick either.

I'm sure restructuring contracts has contributed to their current state, but also it's probably more than just that.

They traded those picks for key stars on their team. Not having those picks also creates cap room also.
RE: RE: The Rams  
stoneman : 5/13/2023 9:35 pm : link
In comment 16116351 Jay on the Island said:
Quote:
In comment 16116296 pjcas18 said:


Quote:


haven't had a 1st round pick since 2016.

half of those years they didn't have a 2nd round pick either.

I'm sure restructuring contracts has contributed to their current state, but also it's probably more than just that.


They traded those picks for key stars on their team. Not having those picks also creates cap room also.


They had to pay the players they traded for - there was no cap savings over rookie contacts
RE: mfjmfj  
mfjmfj : 5/14/2023 6:59 am : link
In comment 16116348 Archer said:
Quote:
Thanks for the explanation it makes sense.


A couple of questions.

How is it possible to have a (5) year extension but Cap costs are deferred for and additional 4 years.

When does the contract actually end?

In reading the NFL criteria for contracts. It stipulates that bonuses can be spread out for (5) years. How is it that the Eagles are able to spread out their bonuses 8-9 years?

Also what happens when the Eagles pay Hurts his options ?
How is that money dealt with for CAP purposes?

Also if Hurts makes his full contract $255,000,000 over the (5) years and there is $100,000,0000 of CAP not accounted for ?


Don't want to infer expertise I don't have since what I know is based on reading the contract details/breakdowns in various places especially spotrac. With that said my attempt at answers.

1). A contract ends when the player leaves the team. At that point you have to pay the piper. That is why we would not cut Golladay. His entire salary was guaranteed and cutting him would accelerate cap hit we had pushed into future years.
2). In short I don't know. I agree that bonus spreading is limited to 5 years. So possibilities - an option bonus in a later year that is spread over 5 years; a one year deal of a promise to pay that does not include the promise to play; I am reading the spotrac chart wrong; the spotrac chart is wrong; some other unexplained contract shenanigans. I think it is option 1, but I could be wrong.
3). I think the answer to this is each option bonus, which I think would get paid at the beginning of league year, then gets spread over 5 years.
4). If they do not sign Hurts after the 2028 season (the last season of his contact), they will have a cap hit of $100MM, which is the void years and also matches his cash paid that has not yet been accounted for in the cap. So if they cut JH after any given season I think the cap hit is:

2023: $104MM
2024: $107MM
2025: $116MM
2026: $107MM
2027: $103MM
2028: $103MM

My numbers are different that spotrac because I am taking the year end and they are looking at in year (i.e. after a march vesting.) More importantly their dead cap number does not include the void years, so to get their true number you have to add the void years to the dead cap number.

Put simply the Eagles have sucessfully pushed $100MM of cap hit to the distant future, but it will be accelerated when Hurts leaves. Keep in mind they can always split the dead cap hit between 2 years by making it a post june 15th cut. If Hurts is a one year wonder (unlikely in my view) they are hosed. Add to this that they have similar deals (at much lower but still big dollars) for Kelce, Johnson, Brown, etc.
The void years......are a "trick" to spread bonus pay.  
George from PA : 5/14/2023 7:34 am : link
Eagles are paying all their key players in bonuses....with minimal salaries.....with void years.

They will either have to add more void years.....as the cap already accrued in void years are above current cap

Or

Hope the cap grows exponentially


Many keep saying....they will need to pay the piper........but it never happens.

The Rams is the one team....that it did....they went all in for their Super Bowl victory.....and basically was only able to keep 2 players Stafford and Donald.

At least, we got a pretty decent DT....thanks Rams cap managers!
This is how they are doing it to some extent  
BillT : 5/14/2023 8:13 am : link
“an option bonus in a later year that is spread over 5 years”. They keep adding bonus money in later years which starts the 5 year clock on that bonus. So, a bonus in year say 3, 4 or 5. Spreads the money out 2, 3, and 4 years past the end of the contract. And since they are certainly planning on resigning Hurts they will incorporate the void year monies into his next contract.
Hurts  
Archer : 5/14/2023 9:05 am : link
Thanks for the feedback.

In reading the contract there is an additional $15M of performance bonuses.

Can these bonuses be deferred over (5) years as well ?

I think that the NFL will evaluate the rules for contracts and voidable years. It is also curious that the Eagles do not assign base salaries for the voidable years.

This is not just about Hurts contract but almost all of their contracts.
RE: Hurts  
BillT : 5/14/2023 10:26 am : link
In comment 16116455 Archer said:
Quote:
Thanks for the feedback.

In reading the contract there is an additional $15M of performance bonuses.

Can these bonuses be deferred over (5) years as well ?

I think that the NFL will evaluate the rules for contracts and voidable years. It is also curious that the Eagles do not assign base salaries for the voidable years.

This is not just about Hurts contract but almost all of their contracts.

Not sure about performance bonuses but I think they count fully the year they are given. There are never salaries in void years. That’s the point of them. They are years where deferred bonuses count but the player isn’t signed so no salary.
Let’s say  
LittleBlue : 5/14/2023 3:42 pm : link
Jalen Hurts leaving Philly without “serving” his void years makes Philly’s cap situation untenable. In other words, they must Re-sign him to spread that cap number further into the future.

Could the giants (if we had some cap room) offer Hurts a mega over pay contract for one year, just to force Philly to match and be crushed or not match, accelerate that cap hit and self-immolate?
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