Gronkowski Slightly Tweaks Contract

Per ESPN’s Field Yates, the Patriots slightly reworked the contract of Tight End Rob Gronkowski, by paying him a $4 million signing bonus and reducing his end of the year option from $10 million to $6 million. Technically the move has no impact on the salary cap changes since the option was already being prorated starting this season, but I believe it does modify Gronkowski’s cap treatment this year and the Patriots cap the next season. though I’m not 100% certain on this treatment, I’ll explain my thought process and then see if anyone has any additional info on the topic.  Continue reading Gronkowski Slightly Tweaks Contract »

Mayo Agrees to Restructured Contract with Patriots

According to Ian Rapoport of NFL.com, the Patriots and linebacker Jerod Mayo have worked out a contract that will reduce Mayo’s salary from $7 million to $4.5 million for the season, all of which is guaranteed. The contract will contain a non-guaranteed option, apparently worth $4 million, for the 2016 and 2017 seasons.

The move should coe as no surprise. Mayo has been relatively invisible since 2012, struggling with injuries and seeing action in just 12 games over the last two seasons. He had a large amount of guarantees in his contract and was currently protected from release by a $4.5 million injury guarantee that would have kicked in if he did not pass a physical upon termination. That $4.5 million is the figure used as his new base salary, bascially a way to keep the player on the team for the same price that they would have owed had they released him.

Mayo had been set to count for just under $10.3 million against the cap this year and the cost to release, factoring in the injury guarantee, would have been $10.5 million, making that difficult for New England. While no details are known about the structure, they should be able to lower that to just under $6 million if they maximize his signing bonus but do not include voidable contract years. His cap charge could also be impacted by the option decision at the end of the year, if there is a bonus attached to it and not a contractual guarantee. The Patriots have typically opted for the latter, though Rob Gronkowski’s has the bonus payment.

Eventually these types of option contracts are either going to come under more scrutiny by the NFL or will become a common practice around the league. In general these are contracts designed to manipulate the rules of the compensatory draft system while still exhibiting some control over the player’s future.  The Patriots had three such contracts last season and did not pick the option up and any of the three players. The Cowboys are currently the other team in the NFL that seems to be moving in this direction with some of their players as well.

Vikings Extend John Sullivan

The Vikings have extended the contract of center John Sullivan through 2017 according to ESPN’s Field Yates.  Technically the extension is valued at one year for $8.5 million, but the reality is that the contract is a $2.25 million raise for this season and $3 million over the next two years. Such a contract avoids any potential contractual problems this summer, keeping the team’s starting center happy and fully involved with the team.

Sullivan, who was scheduled to earn $4.75 million this year, will now earn $7 million, but just $1 million of that raise comes from a signing bonus, which keeps the Vikings accounting records clean in the event they want to move on from Sullivan at any point in the future. His actual “extension year” carries a $5.5 million salary, but he could be released that year with just $333,334 remaining on the salary cap, so this is essentially a pay as you go style contract.

The Vikings lost $1.333 million in cap room by extending Sullivan. Sullivan had previously counted for $6 million on the cap. His new cap charge this year is $7.333333 million. The following two seasons will have Sullivan at cap charges of about $5.83 million each year. Sullivan had been OTC’s pick for best contract on the Vikings due to their decision to lock him up early rather than allowing him to test free agency. The $6 million he can earn over the next three seasons puts him somewhat back in line financially with his actual production.

Tony Romo Restructures Contract with Cowboys

I’ve talked extensively about Romo’s contract and the Cowboys options with him, but today the Cowboys finally pulled the trigger according to the Dallas Morning News. The Cowboys converted $16 million of Romo’s $17 million base salary into a signing bonus that will be prorated from 2015 through 2019. The move created $12.8 million in cap space for the Cowboys this season and will add an additional $3.2 million per year in every season thereafter. The potential dead money in Romo’s contract increases considerably with the move, essentially tying the Cowboys to Romo though the 2017 season.

The fact that Dallas waited so long to make this move makes me believe that this wasn’t something they necessarily wanted to do, but were prepared to do if the situation called for it. Dallas only had about $1.6 million in cap room as of today, which was not even going to be enough to sign their rookies this summer, let alone fit Rolando McClain under the cap, who they just agreed to terms with today. So this became a necessity. Dallas may have also wanted to sit on their cap space in free agency as a method to try to negotiate a more team friendly contract with DeMarco Murray, who eventually signed with the Eagles a few weeks ago.

Though there will be much speculation about what this means for other Cowboys possible transactions, namely looking to acquire Adrian Peterson, really all this move does is give Dallas the ability to pay for a full season of Greg Hardy.  If Hardy hits his incentivized roster bonuses his cap charge will rise considerably this winter and the Cowboys needed room for that move. More would need to be done to bring in a player like Peterson, even if he agreed to an incentivized or deferred money contract.  The Cowboys would still likely need to do something with the contract of Brandon Carr to make that happen. Carr could still be a June 1 (or I guess now a May 12) cut to help with that, but it would not help getting McClain signed now.

If Romo continues to play well there is little danger in this move. His cap hit in 2016, at $20.835 million is manageable, though the $24.7 million cap hit in 2017 is a bit more worrisome, depending on how the cap continues to rise. It is possible that when Romo reaches one of those last few seasons on the deal that Dallas can approach him about pulling a Brady or Manning and reducing his salary for the good of the team.  If Romo’s back flares up and he goes downhill then the contract becomes much more troublesome for the Cowboys.

Aldon Smith Restructures Contract with 49ers

In a somewhat interesting salary cap move, 49ers pass rusher Aldon Smith has restructured his one year contract to essentially remove the guarantee from the deal according to Matt Maiocco. According to Maiocco Smith will receive a $2 million roster bonus in April  (likely April 1) and then roster bonuses paid out through the season. Smith’s $9.754 million salary was currently guaranteed for injury and would become fully guaranteed on March 10, now most of the salary is not guaranteed. Sounds strange, right?  Lets speculate a bit.

Smith’s demons off the field are well known and he has spent signifiant time on the non football illness list and suspended list the last two seasons. During that period his performance has slipped somewhat as well. In Smith’s first two seasons in the NFL he combined to sack the quarterback 1.05 times per game. In the last two seasons that ratio has fallen to 0.58.

Though he does have immense talent both things combined might be enough for him to consider his current earning potential if released. It is possible that in order to earn the same salary as he was scheduled with the 49ers he may have to give up years of free agency in incentive laden contracts. This allows him to play out free agency like planned and hopefully have a strong season with no off the field transgressions that should get him into the $14M per year discussions. The 49ers are also the team most likely to extend him so playing ball with the team on a contract only helps the relationship.

Now before we go off the deep end with Smith giving up guarantees it is quite possible that the contract is essentially virtually guarateed. The April 1 payment is likely guaranteed, at the least for skill and injury.  His P5 I would imagine is also guaranteed. For the sake of argument lets assume his new salary is $754,000 and his per game roster bonuses are paid out in installments of $437,500 per week ($7 million total). That $7 million is not guaranteed but it likley has a very high likelihood of being earned.

Normally we associate those bonuses as requiring being active on Sunday, but that is not always the case. It is not uncommon for per game bonuses to include payment to a player for being on injured reserve or the PUP list. So in that respect they can be identical to salary. I would imagine that the negotiation will not pay him for games in which he lands on the NFI or Suspended/Exempt lists, which is basically the same as what would have happened if he had another off the field issue (base salary is not paid on those lists either, regardless of guaranteed status). So as long as he makes it through the summer he is likely going to end up paid the same as before.

So what’s in this for San Francisco then?  Mainly salary cap relief. Per game roster bonuses are valued against the salary cap based on the players performance last season. Smith was only active for 7 games last season so using our hypothetical example Smith’s salary cap figure drops from $9.754 million to $5.8165 million, savings of nearly $4 million in immediate salary cap relief for the cap hungry 49ers.

There is a catch, however. That hidden money that is not counted against the salary cap now will need to be accouned for on a weekly basis during the season if earned, which should be pretty likely. So while it gives temporary relief the team still needs the space to account for it in the regular season. What that tells me is that the 49ers front office is strongly considering using the June 1 cut on one of their players.

The way a June 1 cut works is the player designated a June 1 cut will have his cap charge count in full until June 1 and then on June 2 only his current year’s proration will count against the cap with the remaining acceleration hitting the following year. This gives no cap relief for free agency but helps for in season cap management.

If we look at a player like Ahmad Brooks, cutting him now provides San Francisco with just $1.5M in cap relief, which isnt a very big help for free agency. If they designate him a June 1 they will gain $4.7 million for 2015, which more than offsets those roster bonuses being earned by Smith.

While I have no idea if that is the team’s intention it is the way I would look at this deal. Reworking Smith gives me the immediate cap relief right now for free agency and then a player like Brooks pays it back in June. Its a creative way to get some extra cap dollars to spend in free agency while remaining in full compliance with the cap.

Cardinals and Larry Fitzgerald Hammer Out New Contract

One of the big salary cap stories of the last two seasons has been the contract showdown that would happen between the Arizona Cardinals and future Hall of Fame receiver Larry Fitzgerald.  Fitzgerald was set to count for $23.6 million against this year’s salary cap leading to the two sides to come to an agreement on a new deal. According to Pro Football Talk the two sides renegotiated the terms of the 2015 and 2016 seasons, guaranteeing Fitzgerald $22 million in the process and reducing his cap number by about $13 million.

If the $22 million in full guarantees is true it is a pretty staggering number for Fitzgerald. The only other active wide receivers to have gotten a true guarantee of that much money are Calvin Johnson, Mike Wallace, and Vincent Jackson. Fitzgerald’s prior contract also had a guarantee that large, none of whom were Fitzgerald’s age at the time if signing.

Fitzgerald was set to earn $16.25 million this year and $15.25 million in 2016, none of which was guaranteed. So it sounds as if he will take a $9.5 million pay cut in return for $22 million guranteed over the next two seasons. That’s a pretty good take for Fitzgerald, whose career contract negotiations have probably been the closest thing to perfect from the player’s perspective as is possible in the NFL.

While there are no details of the actual restructure the Cardinals had characterized the contract as a two year deal. Fitzgerald had four total years remaining on his contract and my guess would be those are now void years.  Assuming they did not add a fifth season the contract could look something like this:

YearBaseProratedWorkoutCapDeadSavingsCash
2015$1,250,000$9,350,000$250,000$10,850,000$35,900,000-$25,050,000$9,500,000
2016$12,250,000$4,350,000$250,000$16,850,000$25,300,000-$8,450,000$12,500,000
20170$4,350,00000$8,700,0000

The above chart assumes an $8 million signing bonus and a voidable 2017 that woud leave Arizona with $8.7M dead against the salary cap. As soon as we see the details reported somewhere or find out ourselves we will post the correct  numbers and update Fitzgeralds charts accordingly.

Thoughts on the Tom Brady Restructure with Patriots

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According to ESPN’s Adam Schefter and Mike Reiss Tom Brady resturctured his contract with the Patriots to convert his guarantees from skill, injury, and cap to injury only in exchange for an extra $1 million per year. This is not really a salary cap maneuver but simply a move made to improve the cash situation of the Patriots next year.

Teams that have a skill guarantee with a player prior to the season will be required to set aside that money such that it is guaranteed to be covered in the event the player is terminated from his contract. For the Patriots that meant in March they would have to deposit $24 million, Brady’s full guarantee, in an account that they could not touch. Once converted to injury only the Patriots are not required to deposit the money unless Brady was so injured that the injury guarantee could kick in. This is one of the reasons some teams will use vesting guarantees in a contract when the guarantees seem as if they are fully guaranteed upon signing.

Brady’s actual salary this year was set to be $7 million and it will now increase to $8 million, so the real cash flow gain for the season by the Patriots is going to be $16 million rather than the $24 million being reported. Based on the reports this move will reduce New Englands available cap space next year by $1 million. For Brady this is a no risk restructure as he would likely earn at least what he gave up if he was released and put on the open market.

Brady’s relationship with the Patriots is one of the most interesting dynamics in all of sports. His willingness to do these things almost creates an unfair advantage as no other high end QB has ever played ball to this level with a team.  Brady’s initial $24 million extension was signed at a time when he would have likely commanded between $55 and $60 million over the same timeframe on a regular contract extension.

Brady’s $8 million salary in 2015 ranks 17th in the NFL, a ranking that will fall further once quarterbacks are extended and other drafted in the top 5. His cap charge of $14 million also ranks 17th. Meanwhile his closest contemporaries of Peyton Manning, Drew Brees, and Tony Romo will carry cap charges of $21.5, $26.4, and $27.7 million and actual salaries of $19, $19 and $17 million. There is likely no other player in the NFL that would work with a team in this manner and the Patriots should be thankful for having a player like Brady.

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