How Joe Burrow’s contract structure helped the Bengals extend Ja’Marr Chase

The Bengals are going to use the same cash to fund both Joe Burrow and Ja’Marr Chase deals.

There has been no shortage of discussion on the recent huge contracts the Cincinnati Bengals gave to receivers Ja’Marr Chase and Tee Higgins, with the team making Chase the highest-paid non-quarterback in league history and Higgins the highest-paid number two receiver in league history at the time of signing.

However, a topic that has not really been covered is how the contract extension Joe Burrow signed 18 months ago in September of 2023 facilitated the contracts of Chase and Higgins. To understand exactly why that is the case, the first requirement is to take a step back and understand what is known as the Funding Rule in the NFL.

What is the NFL’s Funding Rule in regards to guaranteed money?

The discussion starts with a need for a very basic understanding of Article 26, Section 9 of the 2020 NFL collective bargaining agreement, which in all of its glorious legalese reads: (Author’s Note: Bolding added to relevant portions.)

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.

In simple terms, what all of that means is that when teams give out significant guaranteed money in future league years, they must put money into escrow at the time of signing to cover the guarantees. This protects the other owners from having to bail out a team should its owner hand out huge guarantees and then drive the franchise into the ground financially. How this ties back in with the big contracts the Cincinnati Bengals have signed over the past eighteen months comes back to timing.

The Joe Burrow and Ja’Marr Chase timing worked for the Bengals’ coffers

As noted above, the funding rule only requires deposits to cover guaranteed money in future years, as guaranteed salary amounts due in the current league year can be covered out of the revenues teams receive from television contracts and league revenue sharing.

Thus, what becomes interesting is what is revealed when looking at the vesting dates of future guarantees in the contracts of Burrow and Chase. Specifically, the guarantees in Burrow’s contract either vested at signing or in the league year prior, right up until March 2026, at which point there is a full-year gap in the vesting schedule for his guarantees.

Now, maybe that gap is coincidental, but looking at how that one year vesting gap happens to create an opportunity for roughly the same amount of 2027 guarantees to vest in Chase’s contract seems almost too perfect to be the result of happenstance.

In short, the $35.25 million or so that the Bengals would be required to have in escrow to satisfy the funding rule for Burrow’s 2025 guarantees would no longer be needed at the start of the 2025 league year, but by simply leaving them untouched, that same cash on deposit would then flip to cover the 2026 guarantees in Burrow’s contract. Then, in March of 2026 that same amount could again simply be left untouched, with it then satisfying the requirements of the funding rule by covering the 2027 guarantees in Chase’s contract.

Boiling it all down, it doesn’t appear that the timing of the contracts inked by Chase and Higgins was random, and looking at it from an accounting standpoint, it almost looks like the Cincinnati front office has had the timing of these extensions planned since inking Burrow to his monster contract in September of 2023. Maybe that’s looking too far into things and seeing things that aren’t really there in order to give too much credit to the Bengals front office, and that’s entirely possible.

Of course, the flip side to this is that if the front office had things planned out so far in advance, wouldn’t it have been better to have made moves earlier in order to save some of the extra cap space it cost by waiting? That’s certainly a valid question, but returning to the start of where the conversation was in early March on what was driving the holdup on the team reaching extensions with Chase and Higgins, perhaps the reality of the situation is that the front office was more concerned with cash spending than cap spending.