Looking at the Greg Hardy Contract With the Cowboys

Defensive end Greg Hardy signed a contract today with the Dallas Cowboys, officially taking the last monster free agent off the market. It is a very unique contract that is designed to protect the team in the event Hardy remains on the exempt list or suspended while offering both salary cap and actual cash protection.  So let’s look at the way the contract works.

The base value of Hardy’s contract is $11,311,000 with the potential to max out at $13,111,600. Why such an oddball number?  The $13.116 million was Hardy’s salary last year on the franchise tag. Being that he was will last year to sign that contract it was likely an easy to agree to number. The base value is made up of a $750,000 base salary, 1,311,600 workout bonus, and $9.25 million roster bonus that is earned in weekly installments for being on the active 53 man roster.

The roster bonus is the most important part of this contract. Hardy spent all but the first two games of the season on the exempt list, so for salary cap purposes the NFL will only consider 2/16 of Hardy’s roster bonus against the salary cap, a charge of just $1.5 million. This fully protects the Cowboys interests while the NFL decides what to do with Hardy during the season.Because it is tied into being on the 53 man roster any injury, PUP, NFI, exempt, or suspension designation will prevent Hardy from earning the money. Had the money been in the base salary it would be more protected from the injured or PUP lists. That is likely the tradeoff for the Cowboys taking a risk on signing a player who is a PR problem for the NFL right now.

The odd workout bonus is really what should be considered the signing bonus of the contract. This is the same amount that Hardy received from Carolina last season as a salary advance, so again an easy negotiating point. Once Hardy is reinstated he should be able to participate in offseason workouts since any suspensions won’t take place until the games begin in the regular season. Once Hardy’s earns his workout bonus that money can not be attacked in the event of suspension or any other off the field issues that could trigger an automatic forfeiture of bonus money. It is his to keep provided he shows up for the offseason workout prorgam.

All told I am calcuating his cap charge at just $3,217,850 (It will be about $2.6 million if I am incorrect about his exempt date), which fits him easily under the cap…for now. Yes there is a catch to this contract that we need to consider. When we deal with per game roster bonuses that do not count against the salary cap in the offseason, we have to be prepared for taking those charges on in the regular season.

For each week Hardy is active beyond the two week expectation his cap charge will grow by $578,125. If he plays all 16 games that means he will eventually count for the full $11.311 million against the cap in 2015. Obviously Dallas does not have the room to deal with that at the moment.

I would imagine that this puts Brandon Carr on the chopping block for a June 1 cut designation (or simply to be cut in the summer). Releasing Carr after June 1 creates $8 million in cap room, which would offset this potential charge for Hardy. While I would not expect Dallas to do anythin until the Hardy situation with the league is resolved, they should have all the leverage to approach Carr now about a pay cut if he wants to remain in Dallas. Another option is restructuring Tony Romo’s contract during the season as the need arises for more money.

So it is definitely a creative contract that allows the team to bring in a potential devastating pass rusher now and then come up with a way in a few months to deal with the potential cap charges assoicated with the move.

  • Velox

    This article is incorrect. Greg Hardy’s contract for games 3-16 at NLTBE. Those bonuses, as well as the performance bonuses (8+ sacks), will never count against the cap in 2015. The CBA’s new rules cause the NLTBE bonuses to be rolled over into 2016. That means the Cowboys will be sitting on as much as $8.8M in dead money in 2016 for Hardy’s contract.

    • Ryan Feder

      Straight from the CBA. Take note of exception (1).

      (xxi) Any portion of an incentive bonus that is earned, but which had not been

      deemed likely to be earned, will be deemed earned at the end of the season and not

      immediately upon attainment of the required performance level, except: (1) as provided

      in Subsection (xix) above in regards to per play or per game occurrences; (2) if the incentive

      bonus is actually paid before the end of the season, in which case it will count when

      paid; (3) if a player leaves the team’s roster prior to the end of the season and the conditions

      of the incentive clause are satisfied prior to leaving, in which case the entire value

      of the earned bonus will count immediately; or (4) if the contract is renegotiated and the

      incentive has been earned prior to such renegotiation

      • FairOaks

        Right but section (xix) is:

        (xix) Any incentive bonus that is stated in terms of a per play or per game occurrence automatically will be deemed “likely to be earned” to the extent the specified performance was achieved by the player (if an individual incentive) or by the team (if a team incentive) in the previous year.

        So it sounds like the per-game roster bonuses (at least for 14 or 15 weeks, depending if he was on the 53-man roster for 1 or 2 games in 2014) will be deemed NLTBE. But it sounds like they will be counted as part of this year’s cap if Dallas actually pays them out before the season is over. So if they are able to wait until the end of the year to pay out some or all of the roster bonuses, that much could be deferred to the following year by the looks of it.

        • Guest

          So what the hell does it all mean??? Does it mean Dallas is gonna need to keep cap space open for Hardy through the year in case he plays all 16 games??? They currently are only 2+ under the cap, just rookies will put them over, so they’re gonna have to do work now just to stay under the cap in 2015, now what happens if he starts hitting a couple roster bonuses and they start going over the cap?? I, like the other Guest always thought bonuses were either LTBE or NLTBE, LTBE counts against the 2015 cap from day 1, and NLTBE would end up hitting the cap the following year if he did earn em.

          • FairOaks

            Based on that clause, it sounds like some types of NLTBE bonuses can count in the current years’ cap, so yes it sounds like once Hardy plays his third game his 2015 cap number will start increasing. He may get suspended… so if he’s gone for six games, then he’ll have 8 roster bonuses added to the cap.

            I can only presume that Dallas plans to cut some players after June 1, which would push dead money into 2016 but save space this year. I think cutting Brandon Carr after June 1 would save 8 million off this year’s cap and that may be enough by itself for rookies + Hardy. I suppose they could also go to the restructure-Romo well once more as a last resort.

            They will get a much better idea once the league rules on Hardy’s situation, I guess.

  • buk

    You have to wonder if this move to sign Hardy and the departure of Murray will affect negotiations to sign Dez Bryant to a long term deal. The excuse which Dallas execs leaked to the media is that Bryant’s off field concerns made them hesitant to sign a long term deal. Murray’s departure could be viewed as a Cowboy’s unwillingness to reward productive players.
    Now they sign Hardy and no matter how his contract is structured he has immense off the field concerns beyond what is known about Bryant. If i’m Bryant i’m not happy with the current situation especially when fellow RB Murray will step on field with 20mil guaranteed because the Cowboys did not tag him. Given the guaranteed money players like Revis, Clay, Julius Thomas etc received this year it’s clear Bryant done very well had he become a FA. Cowboys need to careful they don’t send mixed messages about which players are or are not risks off the field as well as rewarding players new FAs vs your own players.

    • McGeorge

      I’d like Dez to leave and go to … Oakland.
      Nice weather, no pressure. Just collect a paycheck.

      • Wayne Van

        If they had listened to you, the season may have been completely different.

        Trading or releasing Dez would have allowed the Cowboys to keep Murray. This, in turn may have lead to more of a running game and (perhaps) avoided Tony’s injury.

        From there, everything could have changed.

        • McGeorge

          IT’s not too late to get DeMarco Murray.
          The Eagles don’t want him at the salary they signed him to.
          Maybe the can make a deal with Dallas.
          The Eagles convert some of his guarantee to a Bonus, then trade him to the CowBoys who get him back at a reduced salary. This saves the Eagles money as well.

  • ZMan

    The previous “Guest” is incorrect.
    Any roster bonus which is deemed not “likely to be earned” based upon the player’s performance during the prior year shall immediately be included in Team Salary when earned. Preseason roster bonuses are automatically deemed “likely to be earned.”