The Replacement Cost of Panthers WR Steve Smith

The Carolina Panthers made the signing of WR Jerricho Cotchery official today and I got a copy of what I believe to be accurate contract terms and was a bit surprised at the numbers. As we all know the Panthers released lifelong Panther Steve Smith earlier this offseason and allowed Brandon LaFell to sign with the New England Patriots. The Panthers receiving corps was more or less non-existent, with the team devoting just about $3 million in salary cap charges before the Cotchery signing.  While I don’t think anyone will argue that Cotchery was brought in to be a number one option for the team (the consensus on Twitter was maybe he is a LaFell replacement)I wanted to look at this from a financial standpoint and compare him with Smith and see if there was really any financial justification to releasing him.

I had speculated when the Panthers were rumored to be trading/cutting smith that this situation was about money. Smith was going to be 35 and at that age the future salaries that he was to be paid were not sustainable. I thought a fair compromise was to pay him in the ballpark of $9 million over two years and $12 over three, which is similar to the $13.5 million he ended up with between the Ravens’ and Panthers’ salary commitments. Maybe the Panthers just felt there was no price that they could really agree on but you always need to factor in a replacement cost and this is what just seems so strange with the whole decision making process.

Cotchery is a nice player who had a very solid run with the New York Jets from 2006 through 2009. Cotchery struggled with injuries in 2010 and was (quietly) upset with becoming the forgotten man of sorts with the Jets. In 2011 when he was going to be pushed to fourth on the depth chart he basically asked for a trade or release which the Jets granted him.  He signed with the Steelers on a contract that was essentially for the veterans’ minimum with a chance to compete for the team. Cotchery did not do much but the team kept him on a two year deal worth a maximum value of $3 million. In 2013 he ended up as the number 3 target and had a renaissance of sorts putting up 602 yards and a stunning 10 touchdowns.  It was his first time since 2009 that he put up more than 450 yards. He’ll be 32 years old in 2014.

Smith produced 745 yards in 2013, a steep decline from his 1,000 plus yard seasons in 2011 and 2012. He’ll be 35 in 2014 and I think it is a legitimate question that he could be finished as a top player. But would you rather take your chances on a 35 year old Smith that has caught 216 passes for 3,313 yards over the last three years or the 32 year old Cotchery that has caught 79 passes for 1,044 yards over the same time frame?  I think that answer should be clear. While the response from the defenders of the Panthers’ front office is that there is a financial component that needs to be considered here I certainly agree, but after looking at Cotchery’s contract numbers there really is not one.

When a team decides on a fate of a player there always should be a replacement cost analysis involved. While you are gaining cash and cap relief from moving on from a player you do need to replace the player and there can be a big cost component to that. Smith already had $3 million of his contract guaranteed with no offsets, a parting gift to the organization by their former General Manager that pretty much destroyed their salary cap structure.  To keep Smith a Panther in 2014 it would cost the team $4 million more, assuming he did not renegotiate his contract. I can see that cost being maybe too high except Cotchery will cost the team $3.5 million.

Let’s first look at the 2014 scenarios, with Smith designated a June 1 cut

 

Scenario

2014 Cash

2014 Cap

Keep Smith

$7,000,000

$7,000,000

Cut Smith

$6,500,000

$6,700,000

Difference

$500,000

$300,000

 

So in 2014 the Panthers will generate a grand total of $500,000 in cash savings and $300,000 in cap space to bring in Cotchery over keeping Smith. Let’s extend it out to 2015 with the assumption that Smith is cut and Cotchery is kept (his cap is similar if he stays or goes):

 

Scenario

2015 Cash

2015 Cap

Keep Smith

$0

$6,000,000

Cut Smith

$1,500,000

$5,950,000

Difference

-$1,500,000

$50,000

 

Again it’s essentially no savings. The only savings in this case is realized if Cotchery plays out two years and you are certain that you would cut Smith in 2014 and need to replace him with a player who would cost more than Cotchery.

What if you offered Smith the same deal he signs with the Ravens such that you could keep him for two seasons like they expect to keep Cotchery?

 

Scenario

2014 Cash

2014 Cap

Rework Smith

$7,500,000

$7,166,666

Sign Cotchery

$6,500,000

$6,700,000

Difference

$1,000,000

$466,666

 

Scenario

2015 Cash

2015 Cap

Rework Smith

$3,000,000

$6,166,666

Sign Cotchery

$1,500,000

$5,950,000

Difference

$1,500,000

$216,666

 

I guess the bottom line is that over a two year period the Panthers expect to save $2.5 million in real dollars by releasing Smith and signing Cotchery as a replacement. The team only saves around $640,000 in cap over the same timeframe. If Cotchery would prove to be a one season rental and the alternative option was to keep Smith for just one year the teams saves just $500,000 in cash and cap.

In this case I just can’t see the cost savings justifying the decision that the Panthers made here.  The upside with Smith  is so much greater than Cotchery that it just doesn’t seem to make much sense to make the move. For the move to work out Cotchery is going to have to put together back to back decent seasons for the first time since 2008-2009 while Smith completely flames out in Baltimore.  The Panthers front office has to be pretty convinced of it to make the moves they did this offseason.


 

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