NFL’s funding rule isn’t mandatory; did the Browns make escrow payment for Deshaun Watson deal?
In the immediate aftermath of last year’s fully-guaranteed $230 million Deshaun Watson deal in Cleveland, we reported that the NFL’s funding rule requires the Browns to place $160 million into escrow by March 31, 2023.
So March 31, 2023 has come and gone. Did the Browns place $160 million into escrow before the supposed deadline?
We’ve asked both the Browns and the league on Saturday. There has been no response. (We tried again this morning.)
The reason for the question is simple. The relevant portion of the Collective Bargaining Agreement does not include mandatory language for the funding of future guarantees.
The section on “Funding of Deferred and Guaranteed Contracts” appears at page 178 of the CBA. It begins like this: “The NFL may require that by a prescribed date certain, each Club must deposit into a segregated account . . . .”
One of the first things they teach you in law school is the difference between the words “may” and “shall.” The first is permissive. The second is mandatory.
So if it’s “may,” it’s not required. The NFL doesn’t have to do it.
The funding rule was put in place years ago at the NFL Players Association’s behest, to protect players against potential owner insolvency. Now that no one is going broke, there’s no need for the funding rule.
More specific to the terms of the CBA, there’s no reason for the NFL to require funding of fully-guaranteed deals.
For now, the question is whether the NFL required the Browns to do it for Watson. If the league didn’t, some may wonder whether the funding rule is, at this point, nothing more than a phony device used by teams as an excuse to not give full guarantees.
And it would seem to strengthen any argument that teams and the league are colluding to refuse to fully guarantee contracts.