NFL Contracts Explained: Option Bonus

An option bonus is similar to a roster bonus. However, rather than receiving money for remaining on a team on a certain date, the team has the “option” to pay the bonus or terminate the player’s contract.

When an option bonus is exercised, it is subject to probation like a signing bonus. If the option is not exercised, the team is not obligated to pay the player or the amount does not affect the salary cap.

Example: Peyton Manning

When the Indianapolis Colts released Peyton Manning in 2012 and sent shockwaves through the sports world, it was an option bonus that forced the Colts’ hand.

On March 3 of that year, Manning was due a $28 million option bonus. The team was in a dilemma. As Manning was coming off multiple neck surgeries, the team had the first-overall selection in the draft, and Stanford quarterback Andrew Luck was the obvious choice.

The Colts either had to commit to paying Manning the entire $28 M or let him go. Knowing Luck was the quarterback of the team’s future, the team decided not to exercise their option to retain one of the greatest quarterbacks of all time.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Powered by WordPress.com.

Up ↑

%d bloggers like this: