Deshaun Watson’s Contract Details, Salary Cap Impact, and Bonuses

Since the Houston Texans hired Nick Caserio, rumors of Deshaun Watson’s unhappiness have been rife. How does Deshaun Watson’s contract shape up, and what would be the impact for both the Houston Texans and the NFL team acquiring his remaining salary?

Deshaun Watson signed a contract extension prior to the 2020 season

Right before the 2020 NFL season got underway, Watson seemingly committed his future to Houston. Deshaun Watson and the Houston Texans agreed to terms on a four-year, $156 million contract extension, with guaranteed salary at signing through 2022.

Watson signed the deal entering the fourth year of his career. Therefore, he still had two years remaining on his rookie deal, including the fifth-year option. Counting the 2020 season, the contract extension meant Deshaun Watson was committed to the Texans for six seasons. Watson is under contract with the Texans until 2025 as it stands.

Following the hiring of Nick Caserio, the relationship dissolved

The relationship between the Texans and Deshaun Watson has appeared tense at times. The trading away of DeAndre Hopkins was likely the start of the problem. Then, throughout the struggles in 2020, Houston fired head coach Bill O’Brien.

O’Brien served as the head coach and the general manager for the Texans. Therefore, the Texans were left searching for a replacement for both roles. They hired Nick Caserio as their general manager, who was part of the New England Patriots organization. However, it was immediately obvious from Watson’s Twitter account that he was not happy with the decision.

While he has not publicly requested a trade, and he hasn’t even officially reached the first year of his contract extension, speculation has begun widely about Deshaun Watson’s potential landing spots if he were to leave. As of today (1/28/21), reports are coming out that Deshaun Watson has indeed requested a trade.

One such location that previously seemed unlikely was the Miami Dolphins. Chris Mortensen tweeted Sunday that despite having a no-trade clause, “informed speculation from a source is that he [Watson] would consider the Miami Dolphins.”

If Watson was to be traded, what impact would this have on the salary cap for the Houston Texans and the team acquiring Watson?

The Texans would not be in a terrible situation if they traded Watson

Watson’s extension included a $27 million signing bonus. This salary cap hit of this signing bonus prorates across up to five years. Therefore, Watson’s signing bonus counts $5.4 million against the cap every season from 2020 to 2024. If Watson is traded, the remainder of that prorated money accelerates onto the Texans’ salary cap in the year he is traded.

Trading Deshaun Watson and his contract in 2021 would leave the Texans with a dead money charge of $21.6 million.

Trading Watson would not add much damage to the salary cap in 2021

As it stands, Watson is set to count $15.94 million against the cap in 2021. $5.4 million of that is the prorated signing bonus. The remaining cap hit is Deshaun Watson’s $10.54 million guaranteed salary.

As that $10.54 million in salary would transfer to the team acquiring Watson, the Texans would only have the $21.6 million in dead money from the signing bonuses acceleration. Therefore, trading Watson adds just $5.66 million to the Texans’ salary cap for Watson this season. The Texans are already projected to be $17.8 million over the 2021 salary cap, so they would need to be prepared to free up nearly $25 million in cuts and restructures if they trade Watson.

Deshaun Watson has a no-trade clause in his NFL contract

As part of his contract extension, Deshaun Watson has a no-trade clause. Watson has the ability to reject any trades to teams that he would not wish to be traded to. Therefore, Watson has some power over his potential destination.

However, Watson cannot simply decide on his team and make the trade happen. The Texans still have leverage over Watson with the structure of the contract.

If Watson holds out, the Texans can take a number of actions. There are mandatory fines that will be triggered if he does not appear. There are also a number of times in the deal where the Texans can request Watson to pay back portions of his signing bonus. Some of these are at the Texans’ discretion, while others are mandated by the Collective Bargaining Agreement.

How much salary would the team acquiring Deshaun Watson be taking on?

Watson’s salary cap charge in 2021 would be just $10.54 million for the team acquiring him. Even teams tight against the cap in 2021 can likely free up the $10.5 million they would need to make the deal work.

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The tougher part of Deshaun Watson’s contract for the team acquiring him comes in 2022 and beyond. Watson’s salary cap hit jumps to $35 million and above in 2022 and 2023. It does drop back below $35 million in 2024 and 2025.

The clauses in Deshaun Watson’s contract add a little complication

Deshaun Watson is due to earn a fully guaranteed $35 million salary in 2022. However, with the signing bonus cap hit remaining with the Texans, that is all he will count against the cap for the team acquiring him.

In 2023, Watson is due to count $37 million against the salary cap. Of that money, $20 million of that is in salary, with a $17 million roster bonus. As it stands, that money in 2023 is only guaranteed for injury. However, if Watson is on a roster under this contract on March 22nd of 2022, that money becomes fully guaranteed. Therefore, any team trading for Deshaun Watson is essentially locking themselves into a three-year contract worth $82.54 million.

Relatively, that is nothing for a QB of Watson’s talent level. However, teams will use the fact they are essentially locking themselves in for three years as a negotiating point. The final two years of the deal essentially work out as two $32 million team options. Prior to either 2024 or 2025, the team can choose to move on from Watson at no cost to themselves in terms of their salary cap.

Trading for Watson gives a team a QB under contract for five years. During that time, Watson will cost $146.54 million in cash and salary cap hit. Getting a QB widely viewed as one of the best in the NFL for under $30 million a year is an absolute bargain. Throw in that you can get out of the deal after three seasons, and the value just increases. Any team with the cap space in 2021 should be investigating how to trade for Deshaun Watson and his contract.

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Ben Rolfe is a Senior Managing Editor at Pro Football Network and is also a member of the Fantasy Sports Writers Association (FSWA). You can find him on Twitter @BenRolfePFN.