Deshaun Watson contract restructure: Implications for Browns

Deshaun Watson’s contract with the Cleveland Browns is very straightforward but also unique. Signed in the spring of 2022 as part of the trade that sent Watson from Houston to Cleveland, the deal pays Watson $230 million over five years — exactly $46 million each year, fully guaranteed. No fancy roster bonuses or option bonuses. He received a $44.965 million signing bonus and a $1.035 million salary in 2022, and he was scheduled to get $46 million in salary in each of the 2023, 2024, 2025 and 2026 seasons.

As NFL contract structures go, it’s about as basic as they come. So it’s worth explaining why the team would change it — as the Browns did Thursday by restructuring it for the second year in a row and increasing next year’s cap number to $72.935 million.

Last year, the Browns restructured Watson’s contract for salary cap relief, converting all but $1.08 million into a signing bonus and adding a void year in 2027. Teams do this all the time because a signing bonus, even if paid up front in its entirety, can be spread out over as many as five years for salary cap accounting purposes. So of the $44.92 million in 2023 salary that the Browns converted to a signing bonus, they only have to count one-fifth ($8.984 million) against their cap each year. That lowered Watson’s cap number to $19.057 million in 2023 and increased his 2024, 2025 and 2026 numbers to $63,774,678 (and added that “void year” where the cap number is the remaining $8.984 million; otherwise they would have had to count one-fourth of the new signing bonus each year instead of one-fifth).

That $63,774,678 would have been the highest cap number in the league this season, so on some level, it was no major surprise to learn Thursday morning that the Browns had restructured Watson’s deal again, converting $44.79 million of Watson’s salary into a signing bonus, adding another void year in 2028 and lowering his 2024 cap number to $18,984,678.

Of course, as it did last year, this has the effect of jacking up his future cap numbers. As of now, Watson’s 2025 and 2026 cap numbers would be $72.935 million. And that’s for a team that was already projected to be about $44 million over the cap in 2025!

So why do the Browns keep doing this? And aren’t they going to get crushed for it with massive dead-money cap hits down the road? Let’s explain this a little bit and look closer at what it means for the team and Watson going forward.

THE ANSWER TO “why?” is short-term salary cap relief. Thursday’s restructure means the Browns now have more than $62 million in 2024 cap space, more than any other team in the NFL. (They already had north of $25 million in room before the move, too.)

The natural reaction to that is, “So what? Free agency was months ago. Why would a team need all that cap space?” Well, it’s important to remember that cap space can be rolled over from year to year, so even if the team doesn’t use any of that $62 million-plus this year, Cleveland can apply it to next year when, as mentioned above, it is going to need it.

The reason to do it now is that no team knows when it might need cap space. Having $62 million-plus in cap space positions the Browns to do whatever they might want to do this year in terms of player acquisition. Any player who becomes available in a trade, no matter how expensive, is someone the Browns now have the ability to acquire.

This is a wildly extreme example, but let’s say Bengals receiver Tee Higgins, Steelers edge rusher T.J. Watt and 49ers offensive tackle Trent Williams all became available in trades. You’d need about $62 million in cap space to absorb those salaries if you wanted to trade for all three of them, and the Browns actually have it! No matter how unforeseen the situation, they’ll be able to at least explore that possibility. It’s maximum short-term flexibility for a team with Super Bowl aspirations.

BUT WHAT ABOUT the future? Aren’t the Browns just pushing a potential problem further down the road and making it worse? Watson hasn’t played well for the Browns, starting 12 games over two seasons, completing south of 60% of his passes and throwing 14 touchdowns to nine interceptions. And if he plays poorly this season and Cleveland decides it wants to cut him to move on after 2024, the Browns would not only owe him another $92 million in guaranteed cash but also incur an incomprehensible dead-money cap charge of $172.77 million.

To put that in perspective, that’s higher than the per-team NFL salary cap was as recently as 2017. Even if the Browns designated him a post-June 1 cut and split the hit up over two seasons, they’d take a dead-money hit of $86.385 million in each. The most dead money any team has ever taken on by cutting a player is the $85 million in cap space it cost the Broncos to release Russell Wilson this past offseason.

So sure, when you put it that way, it sounds ridiculous.

But the Browns don’t look at it that way. First of all, they expect and believe that Watson will play better. They brought him in to be their long-term franchise quarterback, he’s two weeks shy of his 29th birthday, and assuming he stays healthy, they believe his best is yet to come. In their perfect world, they’re looking at extending his contract after the 2024 or 2025 season, and if they do that, they can fold all those future cap hits into the new deal with extra void years and fun devices like that.

Second, the Browns and many other teams expect the NFL salary cap to keep going up. Maybe not as much per year as this year’s $30.6 million increase, but even if it increased by half that much every year, the cap would hit $300 million as soon as 2027 and close in on $350 million by 2030. The amount of dead money teams deem acceptable is only going to increase with it. A few years ago, an $85 million dead-money hit would have sounded impossible — a fold-the-franchise-type number. But as long as Bo Nix can play, the Broncos will be past it in a year or two and end up just fine.

So yes, the worst-case scenario is that the Browns end up having to move on from Watson at the end of the contract or even sooner. If that happens, they have bigger problems than dead money. At that point, there’d probably be different people in charge of making the decisions about whom to pay and how much to spend. And to that end, worst-case scenarios aren’t something the current front office is spending a ton of time thinking about.

LET’S BE CLEAR. It isn’t likely that we’ll look back on the price the Browns paid to acquire Watson (in terms of trade assets and the contract itself) as a good move. Even if you disregard the off-field behavior that got him suspended for the first 11 games of his first season in Cleveland — he was accused by more than two dozen women of sexual misconduct during massage sessions — fully guaranteeing a five-year veteran quarterback contract in a marketplace where all of your competitors refuse to do the same is a wild overpay. This isn’t a defense of that decision.

But there is some reasoning behind the math of this restructure. The bottom line is, if Watson plays well, the Browns will be fine because they can extend him. And if he doesn’t, they’ll be in a reset anyway, the way the Broncos are right now … but in a universe where the salary cap is much higher. Teams jump through all kinds of financial and accounting hoops these days to pay quarterbacks what they cost now. The Browns’ hoops aren’t impossible to jump through. They’re just a little different than the rest.