NFL Cutdown Day 2015 Part I: Salary Cap Considerations

Its not often that the first cutdown day in the NFL brings with it much news, but over the last 24 hours there have been a few moves with cap implications and there may be more to come as teams need to reach 75 players by Tuesday at 4PM. I’ll keep this as a running thread for updates on some of the name players that are moving on from their teams over the next day so to discuss the cap implications so check back every now and then for updates. Continue reading NFL Cutdown Day 2015 Part I: Salary Cap Considerations »

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.

49ers Stars Planning Retirement

Per multiple news outlets it sounds as if both Patrick Willis and Justin Smith will retire from the NFL rather than returning to play to the 49ers in 2015.  The deal will clear a great deal of cap space for the 49ers, but will also mark the end of the careers of two exceptional players who helped the 49ers to a period of great success that nearly culminated in a Super Bowl win.

Willis was the premier inside linebacker in the league for his generation. He was rewarded with a $10 million per year extension in 2010 that has stood as the gold standard for the position since then. The 49ers and Willis did a wonderful job in working together on his contract such that they dumped millions of charges into the uncapped 2010 season and expected down 2011 season to make his cap hits manageable in the future. Willis really had no “dead money” protection in his contract by agreeing to such a structure. Because of the way his contract worked Willis will only count for $843,500 against the 49ers salary cap if he retires. That will give the 49ers $7,424,500 in cap relief this season, which is a significant number.

Smith also found a home in San Francisco and became one of the best defensive ends in the NFL after signing with the team in 2008. He had signed a very reasonable contract extension with the team in 2013 despite possibly being able to earn more by playing his contract out and hitting the open market. The 49ers will carry $2.187 million in  dead charges for Smith, but it opens up $4.25 million in space for the team.

If both players do retire this will likely mark the end of an era for the 49ers. I had speculated that their window had shut last season when they struggled to remain in playoff contention. Now it looks as if long term stars in Willis, Smith and Frank Gore will be gone. Mike Iupati will likely not be back and Ahmad Brooks should soon be out the door as well. It is hard to say that this is a rebuilding effort, but the team will clearly be looking at many new faces for the first time in years.

Quick Thoughts on First Wave of Signings

Today was the first day of the “unofficial” free agency period in which agents can begin discussion with outside organizations. While no deals can be signed between players and new team’s, extensions are very common over the next few days. With a deadline of 4PM March 10, teams often put forth their best final pitch to a free agent. Player’s also should have a better idea of where they officially stand around the NFL over this talking period as they get a better feel of interest than they did at the combine. While we don’t have much in the way of specifics on the contracts let’s take a look at the general overview of the signings.

Randall Cobb, WR, Packers- 4 years, $40 million

This is a big number for Cobb, who has primarily been a slot receiver in his career. Prior to this contract the best real deal for a slot player was the Giant’s Victor Cruz coming in at $8.7 million a year. Cobb will also earn more than Jordy Nelson, by a few hundred thousand a year, which is a very good deal for him. Cobb is also young and the 4 year term will likely give him another chance for a big deal down the line. This deal is probably a sign that the Packers were afraid of losing Cobb if they played hardball to the deadline due to teams with increasingly large cap surpluses to spend. I’d consider this contract a strong sign overall for the receiver market and Jeremy Maclin in particular.

Kareem Jackson, CB, Texans- 4 years, $34 million, $14 million guaranteed

This contract sent shockwave around the NFL as two years ago a player like Jackson would have struggled to reach the $6 million a year mark, let alone a first year payment of $14 million. This is a thin group of cornerbacks and the Texans may have feared losing him because of that so they came in with a lucrative offer. If this is a sign of things to come then expect corner Byron Maxwell and safety Devin McCourty to get big money next week. However I do caution to take this deal cautiously as last season the Packers jumped the gun on a new contract with Sam Shields due to fear of losing him and as it turned out they overpaid considerably.

Derek Newton, RT, Texans- 5 years, $26.5 million, $10 million guaranteed

Though Newton had struggled through a good portion of his career he played well last season which helped him earn this contract. From an annual value persepctive this contract is below the top tier of the market (all at $6M or more) and kind of hits a mid point between the Breno Giacomini’s of the world and the top tier. That said the initial cash flows of $13.5 million over two years will track with the top tier, which I would imagine was a compromise on the lower APY. I’d consider this a pretty market neutral contract indicating minimal shifts from the past.

Doug Free, RT/G, Cowboys- 3 years, $15 million, $6 million guaranteed

I was a little surprised Dallas brought back Free only because it would have helped them slightly with their salary cap had they done this sooner. When they allowed his prior contract to void I assumed that the door was shut. From a football perspective this makes more sense than re-signing Jeremy Parnell who haa almost no track record whereas Free is a solid veteran. Based on the reported guarantee I would expect that Dallas can escape this deal after one season. The price is what was certainly expected for a veteran player.

Mark Ingram, RB, Saints- 4 years, $16 million

Many people asked me how the Saints can be over the cap and sign Ingram, but the cap isnt a concern until March 10 at 4PM. By then the Saints will have restructured a number of contracts to be under the cap. Bringing back Ingram was likely a sign that there was lukewarm interest in Ingram at a high price outside of New Orleans so it made sense to come back to the place where he began his career. I would not be shocked if the first year payout and guarantee match the $5.2M or so salary he would have earned if the Saints picked up the option year on him last year. This contract should be a sign that the Marshawn Lynch deal has no bearing on the market and that prices will remain unchanged from last season.

Brett Kern, P, Titans- 5 years, $15 million

This is one of those signings where people get caught up in the $15 million number for a punter, but from an annual value perspective this only rank’s 8th in the NFL. Kern gets a lot of use in Tennessee so I’d say the contract is well deserved.

Seahawks and Marshawn Lynch Agree On Contract

According to Pro Football Talk, Marshawn Lynch and the Seattle Seahawks seem to have agreed in principle on a new contract extension that will pay Lynch up to $24 million in new money over the next three seasons. The delay on officially agreeing, one would think, is on the forfeiture provisions in the event Lynch were to retire after this season. Lynch will receive, according to PFT, a $7.5 million signing bonus of which $2.5M a year could be tied to wanting to play football.

The contract itself, despite the high $24 million new money pricetag, is most likey going to simply be a raise for Lynch of $5 million for this year to entice Lynch to come back to the Seahawks. He was previously under contract for $7 million and had indicated he might retire. The way the contract is structured the Seahawks would keep the same cap charge for Lynch in 2015 as if they never reworked the contract. That leads me to believe that they are just dumping some added cap charges into 2016 when he retires/is released.

Lynch’s $12 million payout this year is essentially what would be paid to a “franchise player” on a one year contract. The fact that the new money annual value works out to an even $12 million a year also indicates what the intention is here and they will deal with next season when it happens.

The big question is will this impact the running back market?  Probably not. This salary moves Lynch into the class of recent contracts signed by Adrian Peterson and Chris Johnson, both of which were considered outliers in the market. Lynch is in a very unique situation in Seattle where he clearly is their most important offensive player and his style is not really “plug and play” like most of the players currently in the NFL. Peterson would be the one player who could potentially argue that this makes his $13 million salary legit for the 2015 season based on his projected significance to an offense and his past performance.

View Marshawn Lynch’s Projected Contract Details

Jets to Trade for Brandon Marshall

According to a number of different reporters the Jets will be trading a mid round draft pick to acquire Brandon Marshall from the Chicago Bears. My assumption is that the pick will be a 5th rounder since the Jets 4th and 6th round picks will technically be tied up in the Percy Harvin trade from last season through the NFL draft.

Marshall is a very accomplished receiver that had posted seven 1,000 yard seasons in a row before falling to just 721 last season as he struggled with injuries and an ineffective offense. Marshall is 31 years old and should be able to produce for at least two more years at the 1,000 yard level, provided he stays healthy. The Jets will take on $7.7 million in salary for Marshall this year. His 2016 and 2017 salaries of $8.1 and $8.5 million are non-guaranteed, meaning that if the 700 yard season was a sign of things to come he can be released without future salary cap implications. Neither side should push to rework the contract given that Marshall was just signed in 2014.

The Bears had signed Marshall to a contract extension last year that paid him a $7.5 million signing bonus and $7.5 million salary. The team ended up getting just one year for $15 million, essentially as if he was a franchise player, so from that perspective the extension was a disaster for the Bears. The Bears will now carry $5.625 million in dead money for Marshall this season, but that will allow them to create another $3.95 million in cap room. For Chicago this is probably a sign of the lack of faith that the new regime has in the roster that was constructed by former GM Phil Emery and they will be looking to turn over as many veteran pieces as possible.

This move should signal the end of Harvin’s brief tenure with the Jets last season. Harvin was acquired in the middle of the season when then GM John Idzik was getting hammered in the press for not being proactive in his approach to help the team. Harvin was highly overpaid by the Seahawks and had been overvalued for some time around NFL circles. With the Jets already having Eric Decker, Jeremy Kerley and Jace Amaro under contract, Harvin should be the odd man out.

Harvin was set to earn $10.5 million this season and he would need to bring that number down if he wanted to stay. Reports were that he balked at such a move and this trade would seem to indicate that the Jets realized it was time to move on. Marshall is not only more productive but also cheaper. Last season Harvin did not reach 500 receiving yards. He will likely struggle to earn $6 million a year if he is released.

The trade can not be official until March 10, which likely means the Jets would not make a move with  Harvin until that date. We will not update any of the cap charts to reflect the trade until it is actually official with the NFL.

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.