Login
FacebookTwitterSoundCloud
 
Inside The PylonInside The Pylon
Inside The Pylon
Know Football, Love Football
  • NFL
  • CFB
  • Glossary
  • Listen/Watch
    • Podcasts
      • Breaking the Plane
      • Pylon U
    • Videos
  • About
    • About
    • Our Writers
    • Join ITP
  • NFL
  • CFB
  • Glossary
  • Podcasts
  • Video
  • About

ITP Glossary: Prorated Bonus

June 29, 2016Leave a commentFront Office, GlossaryBy Ryan Dukarm
glossary

Football is littered with specialized terminology. From punt gunner to climbing the pocket, commentators rarely get to explain everything you need to know before the next play. Inside The Pylon’s glossary was developed to give fans a deeper understanding of the game through clear explanations, as well as image and video examples. Please contact us with any terms or phrases you’d like to know more about.

Prorated Bonus

A prorated bonus is the mechanism used to account for a player’s signing bonus against the salary cap for the duration of the contract. While the player receives the bonus at the point when the contract is signed, the actual salary cap ramifications are spread out for the length of the contract.

Prorated bonuses allow for more flexibility when teams sign players. The signing bonus on any contract is divided by the number of years on the contract and counts against the cap evenly for each year. The maximum number of years a bonus can be prorated is five – any contract over that length does not have a prorated bonus counting against the cap for any years after the fifth.

Looking at new Jaguars DL Malik Jackson and his six-year, $85.5 million contract:

We see the prorated bonus of $2 million per year for the first five years of his contract and no bonus for year six. Jackson received all $10 million of his signing bonus on his first day as a Jaguar, but the $2 million per year will count against the cap for the first five years of the contract as fully guaranteed.

If the player is released from his contract, the remaining prorated bonus will count against the cap as dead money in the year he was released. Many contracts are structured in such a way that allows teams to restructure salaries and roster bonuses into prorated signing bonuses. This allows further proration in the later years of the contract to free up immediate cap room.

Contracts can also include voidable years, which allow the team to spread out the impact of a signing bonus with the proration, yet still sign players to smaller a contract. For example, a four-year contract with a signing bonus of $8 million has a prorated bonus structure of $2 million per year. If the final two years are voidable, those two years of bonuses become a dead money charge of $4 million in the third year. This makes the contract essentially a two-year agreement, but allows the team to avoid a larger signing bonus spread out over only two years. Voidable years on a contract are a common tool to keep money accelerated and early cap charges small by taking advantage of the prorated bonus.

Contract information and graphic from overthecap.com

Click here for more Glossary entries. Follow us @ITPylon.

Ryan Dukarm wrote this entry. Follow Ryan on Twitter @DBRyan_Dukarm.

Jacksonville JaguarsMalik Jackson
Share this post
FacebookTwitterGoogle+
About the author

Ryan Dukarm

Ryan Dukarm is a student at Haverford College outside of Philadelphia, PA, studying economics and statistics while playing on the varsity squash team. Long suffering Bills fan from Buffalo, NY, who loves the NFL Draft, scouting, and football in general.

Related posts
Talk of Trade: Business was Boomin’ but is a Decline Loomin’?
January 11, 2019
Dan Hatman’s 2019 NFL Scout Movement Tracker
January 4, 2019
2019 NFL General Manager Candidate Study
December 10, 2018
An Updated Look at the Browns in the Post-Hue Jackson Era
December 5, 2018
How Hue Jackson’s Needless Self-Preservation Pushed the Browns to Rock Bottom
November 4, 2018
Football Term Glossary
ITP Glossary: Sluggo Route
September 11, 2018
Leave Comment

Cancel reply

Your email address will not be published. Required fields are marked *

clear formSubmit

Search
Recent Posts
  • Nik Needham is the Best NFL Draft Prospect You Don’t Know
    February 12, 2019
  • Super Bowl LIII: The Blowout That Wasn’t
    February 7, 2019
  • Tom Brady, Josh McDaniels and the 2018 Patriots’ Passing Game
    January 30, 2019
  • The Hypothetical NFL Playoff MVP
    January 30, 2019
  • Aaron Donald: Where He Wins
    January 29, 2019
  • The New England Secondary: Exploit the Hesitation
    January 28, 2019
Pylon U
Follow Us
  • Twitter
  • Facebook
ITP Newsletter
Recent Articles
  • Nik Needham is the Best NFL Draft Prospect You Don’t Know
  • Super Bowl LIII: The Blowout That Wasn’t
  • Tom Brady, Josh McDaniels and the 2018 Patriots’ Passing Game
  • The Hypothetical NFL Playoff MVP
About ITP
About
Advertise
Contact Us
Media Inquiries
Press Room
Write for ITP
Buy 17 Drives
Follow Us
  • Twitter
  • Facebook