Do NFL teams have to pay out the contracts of players they cut?

Typically, no. Unlike Major League Baseball and the NBA, where nearly all contracts are fully guaranteed, NFL contracts are, by default, not guaranteed. That is, players typically only get paid when they are on a team’s roster each week (or in a special designation like injured reserve).

To guard against what can be a supremely unfair outcome—football players are often injured and careers are typically short—players and their agents tend to attempt to work in some guarantees to a contract. The most common guarantee is a signing bonus; in a hypothetical 3-year, $30 million contract, for example, there might be an $8 million signing bonus due to the player immediately. There might be a “morals clause” in the contract that would allow the team to clawback some of the signing bonus if the player was to get arrested for a serious crime or get injured due to a non-football reason (such as a motorcycle accident), but typically, that money belongs 100% to the player the moment the deal is signed.

Other common bonuses include “roster bonuses,” so that a player gets paid a chunk of change at the start of the year for making a 53-man roster (or sometimes, even just reporting to camp), even if the player then proceeds to get injured and/or plays poorly. Many contracts contain bonus clauses for hitting on-field performance targets or winning awards, etc. And finally, some bigger stars are starting to see portions of their annual salaries being guaranteed; to use the same hypothetical contract above, it’s becoming more common to see something like “first year [or two] fully guaranteed” or “$10 million of the remaining $22 million after signing bonus guaranteed,” etc. These days, when a player signs a contract, it’s common to also report the amount of guaranteed money, e.g., “$30 million, $18 million guaranteed.”

But absent negotiated guarantees, if a player is cut, he becomes a free agent and the team that previously signed him owes him nothing. There is a salary cap in the NFL, and things like signing bonuses typically are amortized over the life of the contract for salary cap purposes, so let’s use the same contract and assume that the player is cut before the third year of his deal. For an $8 million signing bonus over a 3-year deal, a team would retain one-third of that amount, or $2.67 million, in “dead money” that would count against its salary cap that season, even though it doesn’t owe the player any more money and paid the signing bonus at the time the contract was signed.

If the player is still owed guaranteed money, however, then yes, the team owes it, although there are typically offset clauses in the contract, such that if the player goes to another team, he doesn’t get paid twice. Let’s say, for example, that the cut player was due $4.5 million in the final year of his deal and that the money was guaranteed. If the player is cut in camp and signs a one-year deal with another team worth $2.0 million, then the cutting team typically only owes the player another $2.5 million, and the player will receive $4.5 million in total, not $6.5 million.

In 2017, the Denver Broncos signed Brock Osweiler (a former Bronco) to a 1 year, $775,000 contract; however, he is still owed money for his contracts with Houston Texans (a dead cap hit of $9 million) AND Cleveland Browns (a dead cap hit of either $15,225,000 or $16,000,000 – I’ve seen both numbers). There’s an explanation at Browns cut ties with Brock Osweiler, send him away with $16 million parting gift and some interesting charts at Brock Osweiler Contract Details, Salary Cap Charges, Bonus Money

Osweiler is blessing his agent for how much guaranteed money was in the contract with the Texans ($37 million the first 2 years with the Texans), the Broncos are thanking their lucky stars for the deal they got, the Texans and Browns are hoping Osweiler turns out to be as big a bust for the Broncos as he was for both those teams. (By the way, the Texans got him for $72 million 2 years ago and essentially “paid” the Browns to take him last year).

In other words, it depends on how much in a contract was guaranteed. This is nothing new: in 1987, Brian Bosworth signed a 10-year, $11 million contract with Seattle and was waived 2 years later (physically unable to perform) but still collected $8.5 million in base salaries through 1996 tax free because HE paid the insurance policy guaranteeing that money – and he paid it with “after tax income”.

Players keep all signing bonuses.

Players will receive all guaranteed money.

There are also some provisions for situations like a serious injury (called an “injury settlement”) in which they would receive money even though it may not have been part of the guaranteed amount.

When you read about some massive NFL contracts, they need to be taken with a grain of salt. A 6 year/$90 million contract rarely pans outs that way. At some point they player may be cut (if for no other reason than his salary cap hit), or renegotiate (also typically for salary cap reasons).

They have to pay any guaranteed money that hasn’t already been paid, unless the money was only guaranteed against injury.

If the player is a veteran (on the regular roster of a team for at least 6 games in at least 3 seasons) who was on the roster for the first game of the season the team has to pay the player’s salary for that year unless he signs with another team.

The “guaranteed” money in it, yes, unless there is “offset” language (i.e. sometimes they are “guaranteed” say 2 million, but contain “offset language”, meaning, generally, that if they get a new job, whatever their new team pays them offsets what the current team owes them, i.e. the new team pays them 1 million, then the original team only pays an additional 1 million, at least that is my understanding of it, limited as it is).

One part of NFL contracts that has not been addressed is camp players and practice squad players. None of their money is guaranteed and they are paid on a weekly basis for however long they stay on the team. Once they are cut, that’s it.