Explaining Option Bonuses, Which Made Micah Parsons’ Contract Affordable

GREEN BAY, Wis. – As part of the trade to acquire Micah Parsons from the Dallas Cowboys, the Green Bay Packers and Parsons agreed to a four-year contract extension that will tie him to the Packers through the 2029 season.

The financial impact will last significantly longer.

The fifth-year option of $24 million, along with the extension, which is worth $186 million and includes a $44 million signing bonus, brings the total value to $210 million over five years.

It’s mind-blowing money but leaves open a window for the Packers to keep the young core of their roster together because it includes low base salaries and cap charges for the first three years.

2025: $1.17 million base salary, $9.97 million cap.

2026: $2.387 million base salary, $19.237 million cap.

2027: $3.107 million base salary; $26.845 million cap.

“First of all, I’ve got to give Russ Ball a ton of credit because really the blood, sweat and tears were a lot on him with this contract, a lot of the work, and he did a great job,” general manager Brian Gutekunst said on Friday. “I really like the three-year cap numbers. I think that’s going to give us the flexibility with a lot of really good players coming up that we’re still going to be able to keep those guys.”

A big part of the total value of Parsons’ contract is wrapped up in almost $72.5 million in option bonuses, which immediately begs the question:

What are option bonuses?

“I like to think of option bonuses as ‘preapproved’ or ‘pre-spread’ salary-cap contract restructurings,” explained Ken Ingalls, an independent salary-cap analyst.

This complicated tool is the reason why Ball was able to keep Parsons’ salary-cap charges relatively affordable in 2025, 2026 and 2027.

Here’s Ingalls’ explanation:

The first word – “option” – means there is a trigger in the middle of a contract the Packers have the option to exercise or decline. In the case of Parsons, the option is tied to adding another void year on the back end of the contract.

The contract language is complex, but the important takeaway here is this new year is a void year only used for salary-cap purposes. Make no mistake, the real contract ends after 2029 and none of the option years will keep Parsons on the field in Green Bay longer without a new contract.

The second part of the option bonus is where the “bonus” comes in and the financial benefit of the option. In 2026, Parsons is set to receive a $38 million option bonus. What does this mean? Right now – on paper – Parsons has a guaranteed 2026 base salary of $2.387 million plus an additional guaranteed $38 million for a total of $40.387 million base salary.

If the Packers exercise the option, which they will, the extra $38 million is automatically through contract language restructured to a midcontract bonus and spread out for cap purposes as $7.6 million per year for five years – 2026 through 2030 – thanks to the void year added with the option-exercise trigger.

That’s why if you jump over to OverTheCap.com and look at 2026, you will see base salary of $2.387 million and option bonus of $7.6 million. Salary-cap rules assume this will occur, even though as I write this the option has yet to be exercised.

If for some insane reason the Packers would decline the 2026 option, the preapproved restructure would no longer go through and Parsons would receive a base salary of $40.387 million and the Packers’ salary-cap hit would increase another $30.4 million for 2026 instead of benefiting from the five-year spread rules.

The whole point of the option is to game the salary cap. In 2027, Parsons has another $34.443 million option bonus tied to adding another void year on the back of the deal for 2031.

Again, this is just for salary-cap purposes and is already pre-spread on the books as if it were exercised. This $34.443 million sits as guaranteed base salary and will auto-convert to a bonus once the team exercises the option to reduce the salary-cap hit to $6,888,600 per year for five years.

What these options do is keep the salary-cap impact of the first three years of the deal relatively cheap. But there is no free lunch, and you eventually must pay off the credit card. The first three years of the deal total only $56 million of salary-cap hit despite paying $124 million of cash.

This is made up in the final two years of the contract, with ballooning cap charges of $64,288,600 in 2028 and $68,288,600 in 2029. The Packers surely will look to restructure or extend before the 2028 season to further clear the financial runway, but by then there will be nearly $68 million of cap credit card debt racked up in order to keep the window of 2025, 2026 and 2027 somewhat manageable.

The financial gymnastics give Gutekunst the ability to keep the nucleus of the roster together because, to use his words, the Packers have a lot of “really good” free agents coming up.

For next offseason, the list includes linebacker Quay Walker, backup quarterback Malik Willis and 2022 draft picks Christian Watson, Sean Rhyan, Romeo Doubs, Kingsley Enagbare and Rasheed Walker.

The following offseason includes center Elgton Jenkins, cornerback Keisean Nixon, defensive tackle Devonte Wyatt and 2023 draft picks Jayden Reed, Luke Musgrave, Tucker Kraft, Colby Wooden, Dontayvion Wicks, Karl Brooks and Carrington Valentine.

The Packers were never going to be able to keep them all, and Parsons’ contract means they’ll keep even fewer.

“There’s no doubt when you acquire a player like this, who’s going to take up that much of the cap, that you’re going to have to make some choices. You always do,” Gutekunst said. “But, looking at it right now, the cap numbers for ’25, ’26 and ’27, I think are pretty solid for us and we’ll kind of see where that goes.”

After the trade, with the dead-money fallout of dealing Kenny Clark dumped onto the cap along with Parsons’ fifth-year option, the Packers had only $1.45 million of cap space. With the extension taking the $24 million option off the ledger, they will roll into the season with about $14.55 million of cap space, according to OverTheCap.com.

The challenges will begin this coming offseason. According to OTC, the Packers for 2026 have about $10.24 million of cap space. However, that’s with only 38 players under contract. Adding enough players to get to a 51-player roster – the number upon which the offseason salary cap is based – puts them about $1.27 million in the hole in terms of “effective cap space.”

With no more option bonuses in the contract, Parsons’ base salaries will soar to $40.55 million in 2028 and $43.55 million in 2029. So, after the low-cost years of 2025, 2026 and 2027, here’s what the end of the contract looks like:

2028: $40.55 million base salary; $64,288,600 cap.

2029: $43.55 million base salary, $1 million roster bonus, $68,288,600 cap.

2030 (void): $21,377,200 cap.

“I expect the team to figuratively pull out the Mastercard to pay off the Visa,” Ingalls said. “When it eventually comes time to exit the Parsons relationship, there will be 10-figure financial pain – just like when we saw the Packers move on from Aaron Rodgers, David Bakhtiari, Aaron Jones, Preston Smith, Jaire Alexander and Kenny Clark over the past few seasons.”