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The Benefits of Performance Bonuses in NFL contracts
Author: Scarinci Hollenbeck, LLC
Date: June 22, 2015
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Performance bonuses are included in many sports contracts, and are given out for fantastic feats of athleticism, such as reaching touchdown milestones or for making one of the NBA All-Defense teams.
By fulfilling these performance bonuses, athletes can earn millions more than their base contracts would otherwise indicate, making them an attractive option in their contract.
For example, incentives and salary escalators are included in some NFL contracts. Performance bonuses are often used in professional football when two sides can’t come to an agreement on base salary. If a team is unsure how a player will perform in the upcoming season – and thus, isn’t willing to pay them the extra $1 million they demand – but isn’t yet ready to give up on them either, performance incentives can prove to be an effective negotiating tool.
Salary escalators boost a player’s base pay when they reach a performance milestone. Elvis Dumervil, of the Baltimore Ravens, managed to fulfill an incentive that triggered escalators in his contract last season. In a December 2014 game, he reached the 12-sack mark for the season, and set off boosts in his base salaries for 2015, 2016 and 2017. His pay for each of those three seasons jumped by $1 million when he took the New Orleans Saints’ quarterback to the ground.
As for incentive payments, Vince Wilfork’s contract offers an example of how they work. The defensive tackle took a pay cut to resign with the New England Patriots last season, after suffering a season-ending injury the year before. Though he agreed to a lower salary, his contract included a performance bonus clause. If Wilfork managed to play 50 percent of New England’s defensive snaps, he would earn $500,000 – which he did.
For players who are coming off of injuries, who haven’t yet proved themselves on the field or who are simply aging, performance incentives can function as helpful contract clauses for both sides of salary negotiations.
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