Estimating Vernon Gholston's Contract
The league finally released some details on the Vernon Gholston contract today. Gholston will earn base salaries of $295,000, $2,900,000, $3,480,000. $4,060,000, and $4,640,000 in each year of his contract. We already knew he had signed a deal worth a realistic value of 32.5 million dollars with a potential to reach 50 million dollars if he hits every incentive in the contract. Using these figures we can put together an educated guess as to what type of cap hits Gholston is going to have for the New York Jets.
So How much is the cost in Year 1?
The first year of the contract should be relatively simple to predict. There are no workout bonuses to consider and any incentives are all going to be considered NLTBE(Not Likely to be Earned) for the season. That leaves us with base salary, roster bonuses, and signing bonus prorations. Based on the NFL Collective Bargaining Agreement a rookies salary can not increase by more than 25% per year based on the amount paid to the player in the first year of his contract, unless he is never paid more than the minimum NFL salary. Signing bonus prorations are not included in this calculation. Since Gholston will earn more than the minimum salary Gholston must earn at least $2,320,000 in his rookie year to meet the 25% rule regulations. This allows him to earn a raise of $580,000 per year, which happens to be the exact amount his yearly raises are in 2009, 2010, 2011, and 2012. So itís a safe bet to assume that Gholston received a 2.025 million dollar roster bonus upon signing his contract.
The only question left is whether or not he also received a signing bonus. The assumption is that he did not. More and more NFL players are giving up the signing bonus. The Jets negotiated a deal with DíBrickashaw Ferguson that had no signing bonus and he was selected in a similar spot to Gholston. Also, the Jets are only allowed to spend 4.9 million on all their drafted rookies and for Gholston to take up even more cap room in year 1 than the 2.32 million he has to have earned would really limit the Jets with their other players.
What else can Gholston earn in year 1? The team probably has some clauses in there where he will earn money if he wins defensive rookie of the year or makes the pro bowl. There is also likely an easily attainable incentive equal to half of his roster bonus if he plays in something like 45% of the snaps for the team and the Jets win more than a game or two. None of these would count towards the cap in 2008, however, as they are all considered not likely to be earned amounts.
What happens in Year 2?
Well the Jets control that option, but the likely scenario is that the Jets will pick up a hefty contract option somewhere in the neighborhood of 13-14 million dollars that will be prorated over the next 4 years. The basic gist of the option is that the team will be prepaying Gholston for future years. In return for the option money, Gholston will agree to reduce his yearly salaries to the minimum, which would be $385,000 in 2009 and $470,000, $555,000, and $650,000 in subsequent seasons. He may also give up part of a guaranteed bonus that he would have been expected to earn regardless of how bad he may have been. His cap charge for the year should be approximately 4.9 million, though its possible the Jets will tinker with the number giving if they give him a slightly lower bonus closer to 12 million with easily attainable roster bonuses down the line to make up the difference .
Where does the rest of the money come from?
So far with his option we have accounted for 19.6 million of the 32.5 million dollars, which leaves 12.9 million in extra money for Gholston. A large sum of that money comes in the form of escaltors which are typical for draft choices. There are many different types of escalators players can earn, but for the sake of this contract the only ones to look at are the simple escalators. These escalators are often tied to a minimum amount of playing time, usually 45-55% of the snaps, and some easily attainable team incentive. It could also be tied to sacks, either cumulative over a period of time or in an individual season. Using old contracts as a baseline its likely Gholston will earn somewhere between 7.5 and 8 million dollars in easily attainable escalators spread out over the last three years of his contract, which leaves us with only 5 million or so unaccounted for.
When Gholston earns the pay raises he is also going to earn the ability to earn around $500,000 a year in offseason workout money which leaves us with another 3.5 million to come up with. That extra 3.5 million will come from some bonuses which will only be earned in the event that Gholston is an excellent player, paid out each year that he earns them. They could be for reaching the pro bowl, playing more than 75% or 85% of the snaps, or some type of other individual incentive such as a high amount of sacks. None of these will be considered likely to be earned and will only count against the cap if he is a great player every year.
So thatís 32.5 million, now what about the 50 million dollar number?
Gholston will never see 50 million dollars from the Jets on this contract. That extra 17.5 million is basically funny money put in a contract to sound fantastic for the media, but the odds of earning it are slim and none. Rich Cimini of the Daily News reported that he would have to win multiple super bowls and play like Lawrence Taylor to get that money and while that was probably an attempt at humor its probably not far from the truth. This money would all be given to Gholston as a huge salary escalator in 2012 if he earned it during the life of his contract, which means the Jets could either just walk away and cut him or renegotiate the deal to keep him. These types of escalators are common in the NFL. Robert Gallery would have received a 23 million dollar salary in the final year of his deal if he made a few pro bowls. Larry Fitzgerald had 16 million coming to him by making 2 pro bowls and being a decent WR. No player ever actually sees that money.
Where does the guaranteed money come from?
So where does the guaranteed 21 million dollars come from? Well if the Jets do not exercise the option on Gholstonís contract itís likely that his base salaries are all guaranteed by the team. That over 15 million right there. With his rookie roster bonus we have now reached 17.4 million and the 2nd year roster bonus is probably guaranteed over the life of the contract regardless of whether he is cut or injured. That 18.4 million the Jets have shelled out in guarantees leaving another 2.6 million unaccounted for. That money is also likely protected as a one time bonus along with that year 2 roster bonus in the event that the contract option is not exercised by the Jets. If the Jets do pick up the option bonus there are new guarantees in the contract. Having earned around 14 million in the option bonus along with over 3 million in roster bonuses and 700K in base salary, Gholston will have received 18 million from the Jets in just two seasons of work. Gholstonís escaltors, which will either kick in with the option or a very easily attainable playing time incentive, should have guarantees. The escalated salary in 2010, estimated to be around 2.3 million puts him at 20.3 million dollars, which probably means the team guaranteed 700K of the 2011 escalator.
Ok I actually read the whole thing, so what cap damage is Gholston going to cause?
Assuming the Jets pick up the option bonus and he plays decently they should be around:
2008- 2.32 million
2009- 4.95 million
2010- 6.4 million
2011- 7 million
2012- 8.2 million
If he is a total bomb, those last 3 years will be closer 4.5, 5, and 5.5 million. Let's hope that doesn't happen.