Looking Back at the Panthers Restructuring of Contracts

I had a request from Rachael to glance over what the Panthers did to maneuver themselves out of cap trouble and get to $12.8 million under the salary cap and what ramifications those moves will have in the future. Primarily the concern here was the restructuring of a number of deals to be cap compliant. So, based on the information I have, which I hope is accurate, here is an overview of what they did and some thoughts on the moves.

Ryan Kalil- the Panthers opened up $3.6 million in cap by converting $4 million of his base salary into a signing bonus and adding a voidable year onto his contact for proration purposes. The move adds $550,000 to Kalil’s top of the market cap charges in each season and will leave the Panthers with an additional $1.8 million in dead money that will hit the cap either when his contract voids in 2017 or whatever year he is cut. The cost to cut him in 2015, the year in which he turns 30, increases by $2.9 million dollars.

Haruki Nakumura- Was set to earn $1.3 million in salary. His restructured deal  reduced his base to $715,000 and included a $65,000 signing bonus and $35,000 workout bonus. In return for the paycut the Panthers agreed to void Nakumura’s contract following the 2013 season. This saved the team $517,500 in 2013 cap space and will only add $32,500 to next years cap. Barring an extension, Nakumura will count for $365,834 in dead money in 2014. The team should be able to find a low cost veteran safety to replace him next season making this a positive cap move.

Greg Olsen-  The restructuring of Olsen’s deal opened up $2.4 million in cap space. To do so the Panthers converted $3 million of base salary into an option bonus and added two voidable seasons for proration purposes. By using the void seasons the Panthers locked themselves into $1.2 million of dead money unless he is extended before 2016. Olsen’s cap will increase by $600,000 in 2014 and 2015.

Jordan Gross- This was a big, and perhaps questionable, move. Gross was set to count for $11.7 million in cap with a base salary of $8.7 million. Gross accepted a paycut from $8.7 to $5.5 million which would have been a reasonable $3.2 million in savings in 2013. However, Carolina freed up a whopping $6.8 million of cap room by adding four voidable years onto the tail end of Gross’ contract to mitigate the effects of a $4.5 million dollar signing bonus.  Had Carolina not made the move Gross’ dead money in 2014 would have only been $2 million. Instead they will take a $5.6 million dollar charge for a player not on the roster. When you factor in the cost of tackle, even in a depressed market, the Panthers stand to have significant cap charges associated with the position next season.

DeAngelo Williams- Williams did not take a paycut in 2013, but did take one for future years, reducing his 2014 and 2015 base salaries from $5.75 and $6.75 million to $1.85 million a season. They also added a $1 million dollar option to the 2015 season for Williams. To give cap relief this season the Panthers again turned to the void clauses, tacking on two additional void seasons for the purposes of prorating a $4 million dollar signing bonus in lieu of $4 million in base salary in 2013. The void year provision saved the Panthers $3.2 million in cap room this year. His 2014 cap figure dropped by $3.2 million as well, but with dead money charges rising from $6.4 to $9.6 million the Panthers essentially guaranteed Williams a spot on the 2014 team, despite the fact that he fell out of favor with the club in 2012.  He will be cut in 2015 due to the option bonus which will leave them with $5.6 million in dead money.

If we play the old contract out he likely would have counted $8.2 million against the cap this year and then would have been cut in 2014 at a dead charge of $6.4 million, making the total bill for Williams $14.6 million in cap over two years. Under the new structure he will count for $11 million in cap charges over the next two seasons and then $5.6 million in dead money in 2015. That is a total of $16.6 million.  Considering he could have been designated a June 1 cut in 2014 to split the $6.4 million across two seasons I can’t really understand the reasoning behind this move unless they expect a major resurgence from a 30 year old running back.

Jon Beason- We covered Beason’s restructure earlier today in which he saved the team a little over $3.3 million. Unlike the other contracts no bonus money was put into this contract. This was a pure paycut.

Final Conclusions

All told the Panthers freed up $19.83 million in cap space  in 2013 via the restructure/renegotiation mechanism. The cost of those moves will be felt in the future as the team has now locked into $9.032 million in dead money that did not exist before the season. The dead money impacts future decisions for players like Kalil and Williams and may tie the Panthers into players for a longer time than they would like. The average dead money per team in the NFL this year is around $9 million so the Panthers essentially locked in a whole seasons worth of dead money via the void clause use.

The challenge in proceeding with this type of contractual system is not the short term gains but the long term implications. Despite all the chopping of salary the Panthers cap next year remains right near the limits for the NFL putting them right back to square one and needing to get back in and restructure more deals. The last thing a team wants is to have players going into their 30’s and have a dead money situation where their spots are essentially protected. The NFL is a young players league and the voidable years and high prorated money charges for veterans can provide for a tough cap situation.

The Panthers have a terrific young star playing Quarterback that is going to earn anywhere from $17 to $20 million a year starting in 2015. They have to get everything in order and convince him that they are going to be able to upgrade the talent around him by that time. That may be difficult if this restructuring path becomes the norm for the franchise.

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