Teams ‘may’ not have to deposit guaranteed contract amount despite previous belief

Deshaun Watson, Lamar Jackson, Joe Burrow and more have had this issues discussed about them

The Cleveland Browns acquisition of QB Deshaun Watson has had ripple effects across the NFL. It started with their own team and trading away former top pick Baker Mayfield and the impact of the 11-game suspension on Cleveland’s 2022 season.

While we may never know the full truth, we do know that Watson had ruled the Browns out of contention for his services before changing his mind and choosing where he wanted to be traded. While Watson has noted he focused on what was the best place for him to win, the huge fully guaranteed contract that came from Cleveland is assumed to be a big piece of his decision as well.

Coming out of that contract was a lot of talk about how that amount of guaranteed money could impact other teams whose owners may not have a lot of liquid assets. The understanding was that Jimmy Haslam had to deposit the guaranteed portion of the contract into an escrow account by a certain date. Reportedly, that amount was $160 million in an account by March 31st of this year.

With Lamar Jackson locked into a battle with the Baltimore Ravens, assumedly about guaranteed money, and players like Joe Burrow, Jalen Hurts and Justin Herbert next in line for big deals, it has been assumed that owners must put that huge amount of money directly into an account that they couldn’t use for other things or earn interest.

This was assumed to be the reason the Cincinnati Bengals finally took a stadium naming deal, so Mike Brown had the money to pony up for Burrow.

Now, according to Pro Football Talk, the actual language is called into question:

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 . . . .”

One of the first things they teach you in law school is the difference between the words “may” and “shall.” The first is permissive. The second is mandatory.

So if it’s “may,” it’s not required. The NFL doesn’t have to do it.

Could it be, as Mike Florio notes in his piece, that the NFL has allowed the narrative about “mandatory escrow account” to continue to have an excuse for not paying guaranteed contracts? While Watson’s deal was significant, but not the first fully guaranteed contract (Kirk Cousins), it may not have caused the problems some believe it has.

Florio reached out to the NFL and Cleveland seeking clarification but did not have a response at this time.

The size of the Watson contract, overall, is actually fifth in the league behind Patrick Mahomes, Josh Allen, Russell Wilson and Kyler Murray. There is a large drop-off, at this point, behind Watson with Daniel Jones, Dak Prescott and Matthew Stafford all having contracts totaling $160 million.

If NFL owners are not required to make that deposit, it certainly changes some, not all, of the narrative around guaranteed contracts.