Voidable Contract

Teams can include "voidable years" to their contracts as a mechanism to "stretch" signing bonus proration over additional years. The voidable contract year is triggered by specific performance levels that are written into the contract.

NFL teams experience a negative impact with voidable contracts when the acceleration of unamortized signing bonus money is absorbed into the existing year.

For example, if a player receives a $5,000,000 signing bonus on a 5-year contract, then the NFL Management Council will charge the team $1,000,000 for each year of the contract ($1.0M, $1.0M, $1.0M, $1.0M, $1.0M). If the player "voids" the fifth year of the contract by playing in 60% during any of the first four years, then there is immediate acceleration into year four at the amount of $2.0M (current proration = $1.0M + $1.0M potential acceleration).

The use of voidable contracts has become uncharacteristic in the NFL, because it basically "borrows future salary cap dollars" in return for a lower "early-year proration" of signing bonus values.

The following paragraph is actual void language that has been used:

"2004 REGULAR SEASON VOID"

If Player participates in 60% or more of the offensive plays (excluding special teams) during any one of the 2000, 2001, 2002, 2003 Regular Seasons,

AND

Player is on the active 80-man roster on the 23rd day preceding the first day of the 2004 League Year, then Player"s 2004 contract becomes null and void, at the Player's discretion. Player must notify the Club of his void decision on or before the 24th day preceding the first day of the 2004 League Year, through written notice via certified mail.