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Mar 09

The Financial Impact of Releasing Rolando McClain

One of the recent reports coming out of Raider nation deals with the pending release of LB Rolando McClain, a 2010 draft selection who has, lets just say, not seen eye to eye with Oakland. McClain is a talented player but may be someone who proves to be uncoachable at this level. I think there have been a number of differing reports as to what happens if he is released so lets sort through it and  look at the mechanisms at play if McClain is released.

Having been a top 10 pick under the old CBA, McClain’s contract is pretty much a salary cap minefield filled with escalators and guarantees. McClain received an option bonus in 2011 of $12,100,000. That was prorated over the life of the contract. If cut the remaining unaccounted for money will immediately accelerate onto the salary cap. That amount is $7.26 million.

The Raiders would then have an option of how to account for that money. They could opt to have it all count in 2013 or they could designate McClain a June 1 cut. What the June 1 cut would do is allow them is to hold McClain on the books at his current cap charge of $6.675 million until June 1st at which point his cap number would reduce to $2.42 million in 2013 and he would then have a 2014 dead money cap number of $4.84 million.

From there the contract becomes significantly more complex. McClain has an additional $3.635 million in fully guaranteed salary that he is owed by Oakland. Because McClain is not yet a vested veteran he would be subject to the waiver claim process meaning 31 teams could claim his contract and the guarantees with it. The problem is what happens if no team claims him?

If no team was to claim McClain that money will immediately accelerate onto the Raiders cap making the charge right a touch below $10.895 million after applying a present value calculation. That makes waiving McClain an extremely risky prospect for the Raiders who would lose $4.22 million plus the cost of a replacement player off their current cap figure. That puts the Raiders right back in the danger zone for continued restructures. It was in my opinion why the Raiders did not waive him last year- their salary cap at the time could not absorb the charge associated with it if he went unclaimed.

While the June 1 designation is an option it would not apply to the guaranteed portion of his salary. Per the CBA:

Any portion of Salary guaranteed for any period after a player is released for a reason covered by the guarantee (e.g., future years’ guaranteed Salary, when the player is released for a reason covered by the guarantee) shall be immediately included in Team Salary at the time of his release at its present value rate calculated using the Discount Rate.

If designated a June 1 cut the Raiders would incur a cap charge of $6.055 million in 2013 and $4.84 million in 2014. While they would receive credits for that salary owed to McClain it will all be dependent on the timing of his signing or being claimed by another club. The possibility of a near $11 million dollar acceleration  that would cut their cap space in half would severely compromise the team in free agency, even if just on the books for a few days. Remember once March 12 rolls along the salary cap is active 24/7 so you cant jump the cap to make a signing even if you know an additional $3 million is coming off the books in a few days.

Unless the Raiders could work out a trade in which it was a guarantee that his contract was being taken on by another club I would think this uncertainty makes the June 1 release the only option for the team to maintain their $8+ million cap cushion during free agency. Unfortunately that means pushing more money into the future which is something the Raiders need to stop doing. Its just another level of complexity that comes with attempting to effectively manage the salary cap.

  • Jim

    I’ll have a post up after he clears waivers, but that dead money will all be hitting this year due to the fact he was placed on waivers and not released. Since he only has 3 years of service, he isn’t vested, and thus has to go through waivers and can’t be designated as a June 1st.

    • http://www.nyjetscap.com/ Jason Fitzgerald

      I have to admit I have never heard of such a rule. The usual process is that the player has to be placed on waivers and then if he clears the contract is officially terminated. You should be able to designate at that point. The CBA definitely does not make a distinction on “vested” vs non-vested, they simply say a contract terminated. My interpretation is that you go through waivers and if claimed it all accelerates but if it passes through you should be able to spread it out if you desire. Guarantees are also under question right now as well. Guess it depends on the language in his deal.

      • Jim

        I have a funny feeling we haven’t heard the last of this saga. Tafur tweeted it, later tweeted by Corkran who said Clayton said McClain wasn’t designated. Then others started following suit. Perhaps it is as you speculate that once the contract is terminated, the designation can be applied. It seems the current assumption is that the designation has to be applied when the move is initially made. An article on, I think, nfl.com stated that all non-vested players had to be placed on waivers, so that would tie it together. All vested veterans are not subject to waivers unless released after the trading deadline, but before the end of the current year. That article was published in 2008, so it’s entirely possible that things have changed.