Last weekend the Dolphins and Saints agreed to a trade for linebacker Dannell Ellerbe, provided that Ellerbe was willing to restructure his contract for the cap starved Saints. According to Joel Corry he did just that, except most of the restructure is being paid out by the Miami Dolphins.
Miami has $7.8M of dead money instead of $4.2M for Dannell Ellerbe because of eating $3.6M in a pre-trade contract renegotiation.
— Joel Corry (@corryjoel) March 17, 2015
While this is not completely uncommon it would seem odd that the Dolphins would eat such a large number to facilitate a trade that brought them back Kenny Stills. So anyway here is a theory I have on the trade that I believe might be the way that this works. Again just a theory, but hopefully I can try to figure out the answer at a later date.
The Dolphins paid Ellerbe this $3.6 million in two forms. One is a signing bonus that is worth $1.5 million. The second is a fully guaranteed roster bonus that is prorated against the salary cap because it is fully guaranteed upon signing. So once the trade is executed the Dolphins immediately take the acceleration from those charges: $500,000 per year on the signing bonus and $700,000 per year on the roster bonus- a total of $3.6 million against the cap.
The catch there, however, is that the roster bonus is not actually paid until April 1, 2015 at which point Ellerbe is a member of the Saints. That would lead me to think that the Saints are actually on the hook for paying that salary to Ellerbe, but will be able to do so and not have it count against the cap this season since for salary cap purposes it counted against the Dolphins. If that theory is correct it gives the Saints the ability to have Ellerbe at less cap dollars in 2015 than normal.
If my theory is correct than at the end of the 2015 season the Saints will take a charge against their 2016 cap for the $2.1 million they actually paid him while the Dolphins will get a $2.1 million credit for a charge taken this year that they did not actually pay.
I’ll do my best to confirm it, but I would imagine that if Miami was going to eat the full number they would have wrapped everything in a signing bonus instead of a roster bonus that is going to be paid in April. With the Dolphins former general manager employed by the Saints it would not stun me to see a trade like this being worked out to help the Saints deal with the cap consequences for this year especially since the contract department is essentially the same as when he left.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.