There has been no shortage of ink spilled on the current salary cap situation of the Seattle Seahawks, with the deadline to come into cap compliance now looming over the horizon just over three weeks away. Fans, observers and analysts have proposed multiple ways for the Hawks to not just gain cap compliance, but to free up significant amounts of space in order to rebuild the roster.
One of the moves that had been very quickly proposed by many fans is the release of outside linebacker Uchenna Nwosu ahead of the date on which $6M of his $14.48M 2025 base salary would vest from guaranteed for injury only to fully guaranteed. That deadline, of course, was set to arrive Friday, but according to a report from Brady Henderson of ESPN, the team and Nwosu agreed to push back the vesting date.
That brings the question around to why the ‘Hawks would agree to that. Nwosu is set to earn as much as $26.5M over the next two seasons from the Hawks, in spite of consecutive injury plagued campaigns in both 2023 and 2024 since signing his current contract. It’s extremely unlikely any team would be willing to splurge in such a manner that Nwosu could make more after being released, which leads to the question, then, of why Seattle didn’t simply release Nwosu.
And, that is where things get murky and where an understanding of the contractual structure used by the Seattle front office becomes necessary.
In short, the answer to that is that the Seahawks couldn’t simply release Nwosu because it would jeopardize future contract negotiations by blowing apart the structural precedent the Hawks have long used on second contract.
Fully Guaranteed versus Effectively Fully Guaranteed/Virtually Fully Guaranteed/Practically Fully Guaranteed
At issue with Nwosu’s contract is, of course, the $6M of injury guarantees that are set to vest into fully guaranteed money, and the difference between guaranteed for injury only and fully guaranteed is the razor upon which the Seahawks structure their contracts in order to avoid the escrow requirements of the Funding Rule.
The Funding Rule is an old rule set by NFL Owners to prevent other owners from bankrupting a team and requiring a bailout from other owners, and an exception of the first $15M of fully guaranteed future salary is laid out in Article 26, Section 9 of the Collective Bargaining Agreement (Author’s Note: Bolding added to relevant portions for emphasis).
Section 9. Funding of Deferred and Guaranteed Contracts: The NFL may require that by a prescribed date certain, each Club must deposit into a segregated account the present value, calculated using the Discount Rate, less $15,000,000 (the “Deductible”), of deferred and guaranteed compensation owed by that Club with respect to Club funding of Player Contracts involving deferred or guaranteed compensation; provided, however, that with respect to guaranteed contracts, the amount of unpaid compensation for past or future services to be included in the funding calculation shall not exceed seventy-five (75%) percent of the total amount of the contract compensation. The present value of any future years’ salary payable to a player pursuant to an injury guarantee provision in his NFL Player Contract(s), shall not be considered owed by a Club under this Section until after the Club has acknowledged that the player’s injury qualifies him to receive the future payments. The $15,000,000 Deductible referenced in the first sentence of this Section 9 shall apply to the 2020-28 League Years only. This Deductible shall increase to $17,000,000 for the 2029-30 League Years.
What that basically says is that NFL teams are required to add up all the fully guaranteed salaries for players in future years after the current season, deduct $15M and then deposit that amount into escrow. Yes, this ignores the discount rate calculation, but given the shorter term nature of NFL contracts, the difference between actual contract dollars and the dollars reduced by the Discount Rate is small enough that it can be ignored for this discussion.
For the Seahawks this means that they have to add up the fully guaranteed salaries of players like Devon Witherspoon, Jaxon Smith-Njigba and every other player with fully guaranteed salary in 2026 and beyond, deduct $15M and put that amount in escrow.
Not wanting to put money into escrow, Seattle has long skirted this rule using vesting guarantees that hold fully guaranteed money as guaranteed for injury only until the season in which the money is due. The money becomes fully guaranteed the Friday after the Super Bowl, by which time it is no longer subject to the Funding Rule, and no escrow deposit is required by the team. These rolling guarantees avoid Fully Guaranteed money by disguising it as Effectively Fully Guaranteed or Virtually Fully Guaranteed or Practically Fully Guaranteed or whatever else one wishes to call it.
In short, the injury guarantees that vest into full guarantees are no more than placeholders designed to keep the team from being required to make a deposit into escrow.
Bringing this back to the Uchenna Nwosu situation
Coming back to the entire foundation for this salary cap classroom lesson, the reason the Seahawks couldn’t simply release Nwosu ahead of his guarantees vesting becomes apparent.
With the front office using these vesting guarantees as a way to skirt the funding rule, the only way players and agents will continue to agree to contracts with such vesting guarantees that avoid the funding rule is if the Seahawks continue to make good on these guarantees. Had the team released Nwosu before his guarantees vested, it makes negotiating future contracts with guaranteed money more difficult, and more costly, for the Hawks because the team honors these guarantees. It’s why they didn’t cut Jamal Adams ahead of his $2.56M vesting ahead of 2023. It’s why they didn’t release Geno Smith ahead of his base salary guarantees vesting in 2024. And it’s why they didn’t release Uchenna Nwosu ahead of the date of his guarantees vesting.
Simply put, they couldn’t because it would have destroyed their ability to negotiate going forward.
Thus, now fans and observers will wait to learn exactly how the Hawks and Nwosu will restructure his contract, though the likely outcome is something along the lines of:
Reduced base salary of $2M
Renegotiation bonus of $4M
Gameday active roster bonuses totaling $1.7M
and incentives for sacks, making the Pro Bowl, the Seahawks making the playoffs and winning the Super Bowl totaling somewhere around $7.3M.
Such a structure doesn’t alter the effectively fully guaranteed $6M Nwosu was set to earn, letting the Seahawks maintain their preferred contract structure without throwing a wrench into any future negotiations. In addition, it frees up a significant amount of cap space, getting Seattle much closer to cap compliance ahead of the start of the new league year in March. Meanwhile, for Nwosu such a restructure provide the opportunity to earn some, if not all, of the money he would have earned prior to a restructuring, even if the top end of the spectrum includes potentially hard to reach incentives.
Now it’s just a matter of when the two sides come to an agreement on the specifics and announce it.
