Derek Newton Contract Renegotiation

Veteran right tackle Derek Newton has completed a contract renegotiation with the Houston Texans for the remaining three years of his contract.  Currently the contract runs through the 2019 season making Newton an unrestricted free agent in 2020.  On May 12, 2017 the Houston Texans placed Newton on the Physically Unable to Perform (PUP) Reserve list effectively ending any chance of him playing during the 2017 season.

Under the original five year contract Newton was scheduled to earn a salary of $4,750,000 in 2017, 2018, and 2019 totaling $14,250,000.  Under the renegotiated three year contract the value now totals $10,000,000.  The Texans and Newton agreed to new terms in addition to how the cash flow is set-up for the remainder of the contract.

2017

P5 (base):  $1,750,000

Roster Bonus:  $500,000 (date paid unknown)

Cap Charge:  $2,250,000

Savings:  $3,250,000

Newton’s base salary was reduced by three million dollars, however the team fully guaranteed the salary to ensure Newton would remain on the roster.  The $2,250,000 in cash is over a million dollars more than Newton would have been entitled to under injury protection had the team released Newton from his contract.

2018

P5 (base): $2,250,000 ($550,000 split)

Roster Bonus:  $500,000 (date due unknown)

Per Game Roster Bonus:  $2,000,000 (paid $125,000 per game active)

Cap Charge:  $2,750,000 initially up to $5,500,000

Savings:  $2,750,000 initially down to $0

Under this renegotiation Newton has the opportunity to earn the same amount of cash ($4,750,000) as he would have under the original contract.  The split salary designation dramatically lowers Newton’s salary if he is not recovered from his 2016 injury.  Newton will need to be healthy enough to pass the team physical to avoid the salary reduction, and then he will have an opportunity to earn the remaining $2,000,000 by being active for all 16 games during the 2018 season.  The team essentially lowered the initial salary while giving Newton the opportunity to re-earn the remaining cash.  The split salary designation provides the team injury protection since the amount is slightly less than Newton would have been entitled to under extended injury protection provided by the CBA.  Should Newton be placed on Reserve again in 2018, his salary will lower down to the $550,000 rate.

2019

P5 (base):  $2,000,000 ($1,000,000 split)

Per Game Roster Bonus:  $1,000,000 (paid $62,500 per game active)

Cap Charge:  $2,750,000 initially up to $3,750,000

Savings:  $2,750,000 initially down to $1,750,000

The terms are similar in 2019 as 2018 however the cash value for the year is lowered by $1,750,000 as part of the renegotiation.  Newton will have the opportunity again to earn back $1,000,000 through per game roster bonuses.

The team has provided Newton with a lowered but fully guaranteed 2017 salary in exchange for new terms in 2018 & 2019 that provide the team injury protection while giving Newton the opportunity to earn back the cash.

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