I thought for this year I would put together a running post that listed the players who have officially been released by their teams and take a look at the financials of their contracts. This is to just get an idea of how much was earned relative to the actual contract value and the new guarantee in the contract, which I think helps illustrate how inflated contract totals can be and how important the guarantee was or was not for each player. For players who were on multiple teams the numbers will include earnings from the prior team(s).
One of the more misunderstood rules of the NFL offseason is the application of and salary cap treatment of the post June 1 designation for a player who is being released. Hopefully this post can work as a primer of sorts for the offseason to help better discuss the options in front of a team.
When a player is cut from a team around the start of free agency the calculation is pretty straightforward. All future prorated money and salary guarantees accelerate onto the salary cap and become what is referred to as “dead money” for a team. In some cases the number can be very large, so large that it is prohibitive to release the player due to salary cap purposes.
To help fight back against basically having black hole roster spots created by the cap the NFL created a distinction in how a release is treated if made after June 1st in any given year. Starting on June 2nd any player who is released will have any future prorations land in the following season (the guarantees would still accelerate) rather than the current season. This can have a dramatic impact on the cap charge.
For example lets say a player has four years remaining on his contract and $5 million in prorated charges in each of those seasons. If he was cut prior to June 1 that would lead to $20 million in dead money this year. If cut after June 1 the player would instead have just $5 million in dead money in 2023 and now $15 million in 2024. While still the same number over two seasons the team has an out rather than being stuck due to the salary cap.
Still this requires a team to carry a player until June on the roster. During that time the player may earn an option bonus, roster bonus, workout bonus, etc…increasing his dead money and making the June 1 worthless. This is what lead to the NFL’s creation of the Post June 1 designation. What a team is allowed to do is declare a player a post June 1 cut and get the benefit of the June 1st salary cap treatment while also avoiding any offseason payments or guarantees from kicking in.
That being said there is a catch to this rule and this is often overlooked. The team has to carry a player at his full salary cap charge until June 1st even though he has been released from his contract. So the dead money split does not occur in March. It does not help the team create cap room for free agents. It simply gives the team more cap room to use during the rookie signing period and to function when cap accounting expands from 51 players in the offseason to the full roster during the season.
Because of this treatment we usually look for specific traits in a player contract or team situation in order to use a June 1 designation. The main trait is that the players salary cap number and dead money have to be pretty similar for there to be any real benefit. For example Andrus Peat of the Saints has a salary cap charge of $18.371 million in 2023 if he is on the roster. It would be $16.984 million if the Saints cut him which basically creates no cap room. That is an ideal contract structure for a June 1 designation. The Saints don’t really lose anything during free agency by carrying the full cap number and then on June 2nd his cap would drop to $6.5 million with $10.5 million deferred to 2024, giving the Saints plenty of space to sign rookies and function during the season. The Saints salary cap situation is so bad that having that added space for the season may also be needed to function.
A less beneficial use of the June 1 would be on a player like Adam Thielen of the Vikings. He has a salary cap number of $19.97 million. If he was cut in the offseason it would leave the Vikings with $13.55 million creating $6.4 million in cap room they can use toward becoming salary cap compliant and/or in free agency during the year. If designated a post June 1 cut, the team would carry $19.97 million all through free agency and then have it split to $6.55 million in 2023 and $7.0 million in 2024. While you never say never to such a move, for a team that probably wants to be active in free agency it might be better to realize the savings in March rather than in the summer.
The post June 1 designation can only be used on two players in a given year. Because of that the most ideal candidates would be those who have guarantees that vest or roster bonuses that are paid in the first week of March. While teams rarely use both designations if you did have a decision to make that would be a main priority for who you use it on. If a player does not have any guarantees that vest the team could simply carry the player on the roster until June 2nd and then cut him. That is the nasty side of the NFL rules but those dates give teams leverage and it is a big reason why more players should look for roster bonuses due in March to prevent that.
The post June 1 does not help a team become salary cap compliant in any possible way. We already discussed that the cap savings don’t occur until June 2nd, but you also have to keep the player on the roster through the first day of free agency. He can be released once the new league year begins but before that date he has to be on the 90 man roster. To be eligible he can not have his contract altered once the prior regular season ends. That is to prevent a team from artificially lowering the carry cost of the contract from March through June 1.
The final thing is that there is no such thing as a post June 1 trade designation. The Packers can not trade Aaron Rodgers in March and declare it a post June 1 trade to break up the salary cap charges across the 2023 and 2024 league years. If Green Bay needed to split the cost (Rodgers costs more on the cap to trade than keep) they would have to find a team willing to delay processing any trade for Rodgers until June 2nd. If they trade him before that date there is no other option but to take all of the dead money in 2023.
So to summarize- You can only use the post June 1 on two players per roster, not on an infinite number of players. The salary cap benefit of the June 1 is not realized during free agency and is used to create cap room for summer and in season needs. There is no post June 1 trade designation available to any team.
The team took a similar approach to both restructures by converting roster bonuses and almost all base salary over the minimum to a signing bonus and adding a voidable contract year for salary cap purposes. In both cases the Packers left the workout bonuses and per game bonuses untouched in the contract. This would likely be because that is salary that can easily be forfeited by a player if he is hurt or fails to attend the majority of offseason workouts.
The team ultimately converted $11.82 million of Alexander’s compensation for 2023 into a signing bonus, lowering his salary cap number by $9.456 million to $10.755 million. Alexander’s salary cap figure will rise by $2.364 million in each remaining season of his contract including the newly added void year. The restructure increases the dead money to $27.456 million in 2024 which should effectively guarantee his roster spot next year despite having no guarantees that year. The dead money impact drops to $19 million in 2025.
Smith had $8.3 million of his salary converted to a signing bonus, lowering his cap number by $6.64 million to $6.4 million in 2023. His cap figure in each remaining contract year will increase by $1.66 million. His dead money will increase in 2024 by $6.4 million to $13.96 million if released. These restructures are often riskier with older players like Smith because sometimes the salary cap space that is created winds up all hitting the following season as age catches up with the player.
The two restructures have put the Packers under the cap for 2023, leaving them with approximately $6.4 million in cap room. While that would not be enough space to trade Aaron Rodgers away the team does have more levers they can pull to create cap room. Silverstein mentioned the team may be working on an extension for Kenny Clark and a possible contract modification for David Bakhtiari. The other players that could save some cap room for the team via restructures are Rashan Gary ($7.85 million), Darnell Savage ($5.5 million) and Rasul Douglas ($3.4 million). Gary and Savage are in the final year of their rookie contracts and would need to either agree to add four void years for the Packers to realize any savings or sign an extension that lowers their cap hits.
With free agency approaching I started getting some questions about spending requirements this year. For those unfamiliar with the new CBA, the NFL requires teams to spend 90% of the salary cap each year within specific three or four year periods. One of those periods covers spending from 2021 to 2023, so this a year where some teams may be required to spend up. Give or take a few dollars the requirement would be $554 million in cash over those three seasons.
I went back and estimated cash spending for each team over the 2021 and 2022 seasons and then added in the 2023 numbers. Here is the breakdown:
Most of the teams in the league are well above the minimum threshold. Really there are only three teams that need to spend up this year- the Bears, Falcons, and Cowboys. All three of these teams are this low because the spending valuations treat cash commitments made in February/early March as belonging to a prior league year so teams that do a lot of restructures for cap purposes could lose money to a prior valuation period, which is what I believe happened to these three teams. That rule also means that our spending period really doesn’t end in January of 2024 either. It means that teams have until the start of free agency in 2024 to make the numbers work. So that kind of takes Dallas out as a must spend in free agency team because they have a Prescott salary cap situation to work with and Micah Parsons possibly getting extended. So realistically we are looking at the Bears and Falcons having to spend a bit in free agency to hit their numbers. Both will also be helped by the draft (the 1st pick will earn around $26.7M).
Teams that will likely dip below the number will also include the Giants and Panthers and possibly the Lions simply due to cuts. None should be so far below that they cant easily comply with just their draft picks.
The fact that so many teams are so far over shows just how meaningless that 90% number is. I discussed that years ago prior to the new CBA that the spending requirements should be at least 100% if not more. A 1 to 1 cash to cap ratio would require $615.5 million in spending. That would at least come close to splitting the league in half with 13 teams already on track to compliance. This is something that needs to grow much more the next time around.
Another way we can look at spending is to look at historical trends for teams. While many teams will see their budget fluctuate year over year there is usually more consistency in three year windows. I looked back at team’s cash spending trends and determined what is the average three year spend relative to the salary cap. Since we have good estimates of what the team’s spent in 21 and 22 already we can get an idea of what teams may have budgeted for the year if they follow typical trends.
Avg. 3Y Spend
Amount to Spend
While some teams will be impacted by salary cap constraints this should give us a much better idea of teams that will spend a lot just to meet their historical norms. Not surprisingly the Bears, Falcons, and Texans are at the top of the list. All three have purged their rosters due to the salary cap and changes at the top of the organization and should have a large war chest of savings that could be spent this year.
The Bengals come in at number 4, but I would expect much of that money to be put aside for Joe Burrow. If he is not extended this year then it will simply be used in 2024 to sign him. The 49ers and Raiders are both in an interesting spot. Both need a QB and both probably have the budget to pull off a big move though the 49ers will potentially be more hampered by the cap.
One of the most intriguing teams is the Ravens. They normally would only have an added $46M to spend and that alone is the going to be the cost for Lamar Jackson on a tag and way under what it would cost for an extension. So they are likely going to blow past their normal budget this year but I would wonder how much more they will really add to the team unless they can just have a massive spending year.
The Chiefs, who traditionally are among the lowest spenders in the NFL, don’t look to be in a position to spend much this year though they will get some relief if they cut Frank Clark. My gut feeling is they will focus on the draft anyway. The Chargers are a team that needs to fill some voids and is already close to their usual spending patterns. They have a QB extension on the horizon as well and that could all play a factor in some cuts this year. The Packers are already around their limit depending on what they do with Rodgers though the cap is an issue there. There is little to read into the Broncos since it is a new ownership group.
After that we get into the category of teams that may need to shed payroll. The Rams are slightly over their normal level and don’t have much flexibility with cuts. Trading players even if the cap ends up being a loss might make some sense. Miami had their big year last season so they are probably going to be less active this year unless desperation kicks in.
The Jets are already over their normal spending pattern but are interested in spending nearly $60M on Aaron Rodgers. They can free up some money with cuts but this is going to be a year where they go over budget if they do bring in an expensive QB.
The Bills, Jaguars, and Browns all look like teams that spent a lot in 2021 and 2022 with the expectation to cut back in 2023. I do believe the Bills will fit that mold this year and you will see more of a purge of the roster with a focus on finding low cost talent rather than the shortsighted Von Miller type signings. Jacksonville and Cleveland are interesting. Both have owners that show a lot of variance in spending and both need to improve from last season. The Browns may have a built in expectation for improvement with Deshaun Watson potentially going back to being a good QB. Jacksonville is a team that probably needs more holes filled and, like the Jets, could exceed their norms this year and put more brakes on in 2024.
We added a new feature to OTC today which I hope can paint guaranteed salary in a new light. For whatever reason when we discuss contracts we almost always use the new money averages when comparing contract values, but when it comes to guarantees we do not do the same. That makes the comparison between free agent guaranteed salaries and extension guaranteed salaries a bit difficult. So now we have a new table where we can view how much “new” money was actually guaranteed.
The way we calculate the new guarantee is by simply backing out any existing (“old money”) out of the guarantee . We don’t care if the salary was or was not guaranteed before since in about 90-95% of the cases it was virtually guaranteed already. Why do we say it was virtually guaranteed? Well if I am offering a player a contract extension worth $20 million a year, certainly I was going to be paying that player whatever his salary was in the current year even if it wasn’t guaranteed on a piece of paper. The exceptions are the few veteran players who signed an extension with two years remaining on their prior contract as it is possible that second year of “old money” was not virtually guaranteed in the event of a disaster season. Since that is a pretty small percentage of the NFL population we do not make that distinction in the calculation.
My hope is that this evens out the playing field a bit and puts a little more perspective on what is often given up in an extension since the focus is so much on the total guarantee rather than the percentage of the new contract that carries a guarantee. While there are reasons that extended players should be guaranteed less than a free agent this may help close some of that gap rather than just blindly putting out that in August that “player X signed a four year extension worth $100 million with $80 million guaranteed” with no context when the player was already set to earn $20 million in a season set to start four weeks from now. The real guarantee on that contract is $60 million if we want to compare apples to apples and that player probably deserved a bigger number.
There are going to be a few players who are off on the calculations, mainly players who have been traded and late season extension. This is something Ill iron out over time, but I think this will be a good tool for better discussing extensions signed this offseason and comparing them to some of the free agents contracts that come down.
With the rumor mill circulating about the future of Packers QB Aaron Rodgers I received a number of questions today, mainly from Jets fans, pertaining to his contract and his salary cap charges if he were to be traded. As I mentioned before when discussing Rodgers, his is a complex contract and the different “if’s and when’s” of the deal make it hard to present on OTC to cover all the various possibilities, so let’s break down the various costs.
A team who trades for Rodgers, as long as he is traded for prior to the regular season, would inherit Rodgers guaranteed 2023 salary, which is $59.465 million. If the team trades for him during the workout portion of the offseason that would be increased by $50,000, which is a workout bonus he will earn if he shows up for three days of the program. The team would also be responsible for a $49.25 million injury guarantee in 2024. That salary would be fully guaranteed if Rodgers is not released a few days following the Super Bowl in February.
Because these salaries are so large there is a great deal of confusion as to how a team could fit Rodgers under the cap, but that is where more of the complexity of the deal comes in. A team that acquires Rodgers (or the Packers if they keep him) has the option to pay Rodgers 2023 salary as a $1.165 million base salary and a $58.3 million option bonus. For salary cap purposes that option bonus is prorated across four years for a charge of $14.575 million per year. In 2024 the team has another option that allows them to split the salary up as $2.25 million in base salary and a $47 million option bonus, which for cap purposes would be prorated over three years at a charge of $15.666 million per year.
Rodgers also has a 2025 and 2026 season in his contract at very low salaries of $20.9 and $15.05 million. For all intents and purposes these are void years as there is no scenario that would see Rodgers playing at these salaries. My assumption is they were only included in the contract to make it easier to work out a retirement on the cap in 2025 and/or drive the APY on the contract lower so it would never look as if Rodgers received a $50M+ per year contract.
Here is the breakdown of how the trade would look on the salary cap assuming that both options are exercised and he is traded before the workout period this year:
Salary Cap Charge
As you can see the salary cap charges are very resonable for the 2023 and 2024 season and low enough in 2023 where arguably any team in the NFL could trade for him and absorb that hit.
The dead money in the deal could become concerning and there is no guarantee that Rodgers would even play more than this season for a team. If Rodgers decided he did not want to play in 2024 the team would sign him to a new contract that is really just for salary cap purposes. The contract would eliminate the 2024 option bonus and allow the team to carry Rodgers on the cap until June at a charge of about $16 million which would reduce to $14.575 million on June 2. The team would be responsible for $29.15 million in dead money in 2025.
The bigger charge would be if the team decided to walk away from Rodgers rather than allowing the guarantee to kick in. At that point they would lose their ability to June 1 him and instead would take on a cap charge of $43.725 million in 2024.
The dead money numbers get larger if Rodgers were to be on the team in 2024. At that point the team would have sunk costs of $30.242 million in each of those two “dummy” seasons and likely a player no willing to play for $20 million in salary or simply not play at all. The cleanest option here would be retirement where they would do the same thing mentioned before about taking out all bonuses from that year and process him as a June 1 retirement and take on a $30.242 million cap hit as dead money in both 2025 and 2026. If the two sides part ways then the team would take on a massive $60.483 million cap charge in 2025.
As for the Packers, they would take on $40,313,570 in dead money if they were to trade him. This is the prorated portion of the contract that comes from his $40.8 million bonus received last season and the remaining proration from a $14.26 million bonus from 2019 and a $14.465 million bonus from 2021. These costs do not travel to the new team.
An interesting option for Green Bay would be to delay the trade until after June 1, which would allow the Packers to split the dead money up as $15,833,570 in 2023 and $24,480,000 in 2024. In that scenario they would be required to carry Rodgers until June 1 at his current Packers cap charge of $31,623,570, which certainly does not help for free agency but would when it came time to sign rookies.
While this would be a highly unusual approach, Rodgers would likely not be much of an offseason participant anyway and it would allow the Packers to defer draft compensation until 2024. While I have no idea what a trade package for Rodgers would look like, given his huge salary this year and age, I can’t imagine a team throwing the farm for him since he may very well be a one year rental. Recent trades for Deshaun Watson, Russell Wilson, and Matt Stafford were for much younger players who were likely to sign extensions with their teams. Each was a trade with a logical time horizon of four to five years, not one. The two sides could easily set compensation based on performance in 2023 and Rodgers roster status in 2024.
Rodgers does not have a no trade clause in his contract so the Packers can trade him with or without his permission, but one would think that any team trading for him would need assurances from him that he will play for them. If Rodgers would like to play for one of the teams in the veteran “QB hunt” he would probably need to make a decision sooner rather than later.
Right now teams in the market for a QB are going to monitor Rodgers situation, Lamar Jackson’s situation in Baltimore, Derek Carr’s situation with Las Vegas, and the free agency of Tom Brady and Jimmy Garoppolo. Carr would be the first domino to fall with a trade either being agreed to right after the Super Bowl or his release coming that week. Teams would be free to sign Carr in February if he were released. Jackson’s franchise tag deadline will be March 7th. Teams will know at that point if Jackson will receive the non-exclusive or exclusive tag and if he were or were not to be available via trade. Free agency begins on March 15 at which point Brady and Garoppolo will be free to sign with any team they choose. Ryan Tannehill may also be an option at that point as well if he is released by the Titans. Team’s cant really sit and wait on Rodgers if these other options are in any way appealing only to have him decide he only will play for Green Bay in April.
The new contract will effectively turn the 2023 season for Thomas into a void year without it technically being one. Thomas will carry a minimum salary for 2023 and will have a large roster bonus due in 2024. If the Saints fail to release Thomas prior to the 3rd day of the league year that bonus becomes guaranteed. This is all procedural on the part of the Saints as this now gives them a two day window to declare Thomas a post June 1 release and spread the salary cap charge out over two seasons rather than taking the hit all in 2023.
This is a salary cap concept first put into practice by the Eagles a few years ago as a creative way to June 1 a player whose original contract would not allow a June 1 release due to salary cap considerations. Prior to this move Thomas’ salary cap number would have been about $28.2 million in 2023 and his dead money $25.452 million. Had he been designated a June 1 cut the Saints would have had a $28.2 million salary cap hold until June 2, which was not really feasible for the team. On June 2, the cap number would drop to $11.813 million and the defer $13.639 million to 2024, but the cap damage would already be done.
with the new contract the team will carry a $13.15 million cap charge once they exercise the June 1 designation. That will then reduce to $11.993 million on June 2 with $14.181 million hitting the 2024 salary cap, creating $15 million in cap room over the original contract. The reason for the slight difference in dead money between the two scenarios is because the Saints paid Thomas a $902,941 signing bonus as part of the restructure. This was not a payment for doing the team a solid but covers the 17th game check that he was entitled to as a benefit as part of the CBA which he would have lost due to the restructure. If Thomas is physically unable to play football next year he can qualify for a injury protection benefit though the structure of this leads me to believe he is healthy.
Thomas’ contract became a minefield for the Saints with massive amounts of restructures over the years and his body unfortunately broke down during the extension years and he missed multiple games for the team along the way. We now estimate the Saints to be about $39 million over the 2023 salary cap.