Explaining the June 1st Designation

One of the questions I get a lot deals with what a “post June 1cut is and how designating someone a June 1 cut helps my team. So lets talk a bit about that today.

What we are talking about here deals strictly with the acceleration of prorated bonus money onto the current years salary cap. The NFL essentially breaks up its salary cap accounting for bonuses into two periods with June 1 being the trigger date. When a player is removed from a players roster prior to June 1st all his remaining unamortized bonus money immediately accelerates onto the salary cap. To illustrate this we see how the Kansas City Chiefs gave Steve Breaston a $5 million dollar signing bonus in 2011, which was accounted as $1 million in yearly expenses over the course of his 5 year contract. When he was released just the other day he had only completed 2 years of his 5 year contract meaning the Chiefs salary cap had only accounted for $2 million of the $5 million paid in 2011. The balance of $3 million dollars immediately accelerates onto the Chiefs 2013 salary cap.

After June 1 the NFL changes the way the acceleration works.  After June 1st only the current years expense remains on the books after the player is released. The balance accelerates onto the following years salary cap. So in Breastons case had the Chiefs waited until June 1st to release him his salary cap charge in 2013 would have been $1 million and in 2014 he still would be on the books at $2 million dollars.

This rule is really another way in which the league holds tremendous power over the players.  In some cases the acceleration of bonus money could throw a teams salary cap into chaos, if higher than the players current cap charge as an active player. Since teams need to remain under the cap at all times once the League Year begins the potential of the acceleration onto the current years cap would prevent a players release and allow them to continue earning their salary for the year. Instead they are thrust into a pool of summertime free agents when most teams are strapped for cap space and have made many of the decisions about their roster.

I think where many people get confused, though, is when they hear that “player x” could be designated a June 1 cut and immediately jump to conclusions that it means a spending spree in March. The league allows each team to designate up to two players per year as a June 1 cut for cap purposes prior to June 1. It’s the one concession that was given to the players as it allows a player to be cut in March and have time to explore free agency but have his cap hit spread out over two seasons, thus creating more cap space in the current year.   The issue though is the mechanism by which this works.

When you designate someone as a June 1 cut the player and his current contract remain on the books until June 1. Going back to the Breaston example has he been designated a June 1 cut his cap charge today would not be $1 million with $2 million on the books in 2014. His cap charge would be $5 million dollars, the same cap charge as if they never cut him at all. When June 1st hits his cap then moves down to $1 million and the other $2 million accelerate into the 2014 season. By that point in time free agency is finished and the extra cap room does not do the team much good. They would have been in a far better cap position during the important time of free agency by releasing Breaston outright as the Chiefs did.

The real purpose of the June 1 designation option is to benefit teams that have poor salary cap situations and need to either create space for rookie signings over the summer months or to cut players from the roster whose dead money charges are greater than their charge to remain on the team. In recent years this would be teams like the Dallas Cowboys and Oakland Raiders who have entered into some overpriced contracts for multiple players leaving them tight against the cap every season. The acceleration from one of these underperforming players would put the team over the cap or close enough to it to make it difficult to sign the draft class. Often waiting until June 1 is not an option because of offseason bonus money that would be due to the player if he is on the roster so the only option is to designate him a June 1 cut. So the rule gives the team the ability to avoid paying the player a bloated salary while also avoiding more cap problems. But by no means is it going to be a way to spend more money in the early stages of free agency and it does nothing to improve a teams cap position in March.