Houston Texans – Maneuvering the 2021 Salary Cap

With the 2020 regular season having come to a close for the Houston Texans (as well any 2020 game for Houston finished), all eyes now move towards the 2021 offseason. The organization is looking to hire a new General Manager and Head Coach. The new regime will be tasked with rebuilding the roster, along with repairing the team salary cap. Copious amounts of damage left behind from the short lived Bill O’Brien GM era. The team has two savings factors for any incoming front office: Deshaun Watson and quality book end offensive tackles.

For this article we will use $176 million as the league salary cap for the numbers. Unfortunately, the league will not announce the league cap until the middle of March. This generally occurs a few days prior to the start of the new league year. The 2021 league year begins at 4pm EST on March 17, 2021. The annual team adjustment is unknown at this point, expect that information to be leaked by media in the coming weeks.

2021 Cap Space

The team has recently completed the signing of future’s contracts, leaving the team with 54 number of player contracts for 2021 on the books; expectations are more future contracts are coming this week. With the 54 contracts, the team currently has approximately $202.98 million (Top 51 rule) in cap commitments for 2021. The team will roll over approximately $9.6 million of remaining 2020 cap dollars over to 2021. Absent the annual adjustment, the Texans will have approximately ($17.73) million, yes negative, in cap space to begin the offseason. While the team is currently projected over the salary cap, the need to be cap compliant is not due until March 17. There are available roster moves to get the team within compliance.

The new regime will examine the roster top to bottom for potential savings or adjustment. With any new regime, this means almost every player is available for some sort of transaction, the new front office will be not “married” to any player. At this point the only untouchable players are Deshaun Watson (QB), Laremy Tunsil (OT) and Tytus Howard (OT). As with any new General Managers it is difficult to project potential roster management without a clear history to reference.

The Texans finished the 2020 league year as the top team in cash spending on the roster, spending just over $250 million. This is a rare place for Houston as the team is generally in the bottom third of cash spending year over year. The heavy cash spending in 2020 could lead to a pull back of spending in 2021 to assist in balancing out the salary cap.

The 2021 league year will need to be a year of low cost veteran contracts and cost controlled rookies or 1/2 year experience players on minimum deals. The team has limited draft capital, and will likely sign a large undrafted class in hopes of landing 1 or 2 prospects.

Pending Free Agents

The Texans have a large group of pending free agents, however only a few players are heavy contributors for playing time. Below is the list of free agents and an opinion on how the team may proceed.

Resign (UFA)

  • Will Fuller (WR) – Fuller was well on his way to a career season before receiving a 6 game suspension from the league for performance enhancing drugs. Fuller played the 2020 season on the 5th year option of his rookie contract. Heading into a down cap year coupled with a strong wide receiver draft class, and given Fuller’s injury history; makes for a difficult projection on Fuller. The team likely would make an offer of two years at $11-13m APY and let Fuller explore the market. This value is down from initial projections of Fuller topping $14+ million APY.
  • Tyrell Adams (ILB) – Adams stepped in as the starting linebacker when Bernard McKinney was placed on season ending injured reserve. Adams has been adequate in his performance, despite his career high in snap counts. Adams played on a minimum level contract. Suspect Adams will need to accept a similar contract for 2021.
  • Roderick Johnson (OT) – The league is short on offensive linemen, but in a cost controlled cap year this will work against Johnson. Houston should bring back Johnson on a one year contract to compete with Charlie Heck as the OT3. This will be difficult for Houston with Johnson’s solid two game audition at the end of the season. Very likely he is signed elsewhere to compete for a starting job.

Let Walk (UFA)

  • Vernon Hargreaves (CB)
  • Gareon Conley (CB) – Unless new front office has change of heart.
  • Carlos Watkins (DL)
  • Jon Weeks (LS) – retirement?
  • Brennan Scarlett (Edge)
  • Phillip Gaines (CB)
  • Brent Qvale (OG)
  • Michael Thomas (S)
  • Dylan Cole (ILB)
  • A.J. McCarron (QB)
  • Kyle Emanuel (LB)

Restricted Free Agents

ROFR (right of first refusal) tentatively worth $2,133,000.

  • P.J. Hall (DT) – Attempt to resign at minimum level contract.
  • A.J. Moore (S) – ROFR tender to evaluate his continued development.
  • Pharaoh Brown (TE) – Attempt to resign at minimum level contract.
  • Buddy Howell (RB) – No resign.
  • Dontrell Hilliard (RB) – No resign.
  • Cornell Armstrong (CB/ST) – Resign at minimum level contract.

Exclusive Rights Free Agents

ERFA’s are prohibited from negotiating with other teams until March 17, 2021. The team will need to sign/tender the player by this date. Expect the team to tender all ERFA’s.

  • Geno Stone (S)

Proven Performance Escalator

Justin Reid (S) and Jordan Akins (TE) received a salary increase for playing time under the proven performance escalator; Reid received the Level 2 increase and Akins received the Level 1 increase. The Texans do not have any other 2018 draft picks eligible for the PPE.

If the above player re-signings and salary adjustments are completed the team will have (x) contracts on the 2021 cap with ($x) available in cap space. Now we turn our attention to ways the team can shed cap and cash for the 2021 league year. Cap savings listed after gross savings, not net after Top 51 replacement.

Potential Releases (amounts do not reflect net savings under Top 51 rule)

  • Benardrick McKinney (ILB) – McKinney still has plenty of talent, this release would be characterized as cap casualty. The team extended Zach Cunningham in 2020, making it difficult to keep McKinney on the roster at his current rate. The team could explore resigning McKinney at a lower rate. Release saves $7.0 million in cap and $7.75 million in cash.
  • David Johnson (RB) – Johnson has $2.1 million in salary guarantees for 2021. With a release the team would gain a cap credit in 2022 on that money if Johnson earns cash from another team in the 2021 league year. Release saves $6.9 million in cap and cash.
  • Zach Fulton (OG) – Fulton had another down year in performance in 2020 after taking a pay cut in the 2020 offseason. Release saves $3.0 million in cap and cash.
  • Duke Johnson (RB) – The team never utilized Johnson correctly after sending a 3rd round pick to Cleveland in 2019. Release saves $5.15 million in cap and cash.
  • Brandon Dunn (DL) – This contract was another Bill O’Brien special, over valuing Dunn at $4 million APY in February 2020. Dunn’s performance has not lived up to the contract. Release saves $3.25 million in cap & $3.75 million in cash.

The team could also look at veterans Senio Kelemete (OG) and Darren Fells (TE) for potential release. However both contracts have minimal savings when compared to replacement cost.

Potential Trades

  • J.J. Watt (DE) – The elephant in the room. The new front office will have a critical decision on their hands with one of the faces of the franchise. Watt is due $17.5 million in 2021 with no guarantees remaining. Watt will likely be looking for a contract extension regardless of which team he is on in 2021. 2020 will be Watt’s second full season of work in 5 years, and is 31 years of age. Dealing Watt for a draft pick would likely bring back a mid/late 2nd round pick. If the team plans to retain Watt, then an extension is needed to lower Watt’s $17.5 million cap charge for 2021. Trade saves $17.5 million in cap and cash.

Potential Extensions & Restructures

The team does not have any potential contract extension players beyond Justin Reid and Jordan Akins. The new general manager will likely expect both players to finish out their rookie contracts as the team builds their plans for 2022.

  • Brandin Cooks (WR) – As part of the 2020 trade for Cooks, Houston inherited the remaining years of Cooks’ contract. Cooks has zero dead money in his contract (currently), and is under contract through 2023. Houston could convert $9.0 million of his $12.0 million base salary to a signing bonus, creating $6.0 million in cap saving for 2020. However this move would increase Cooks’ 2022 and 2023 cap charges by $3.0 million each year respectively. The move would also create $6.0 million in dead money for 2022. This move likely would ensure Cooks is on the roster for 2021 and 2022.

Difficult Contracts

  • Whitney Mercilus (Edge) – Mercilus signed a large extension with Houston at the end of the 2019 season. The contract included an early vesting schedule for his 2021 salary, which is now fully guaranteed worth $10.5 million. Absent a retirement by Mercilus, the team would have to keep Mercilus on the roster for the 2021 season. Any kind of trade would need to include draft assets with it. Mercilus would quickly say no to any salary adjustment. This is an unfortunate contract left behind from the Bill O’Brien era, that the new front office will have to manage until 2022.
  • Nick Martin (C) – The Martin extension in 2018 was another over value by O’Brien. Martin is currently the 5th highest paid center in the league, based on APY. Martin grades out in the top 10 on pass blocking with PFF, however is near the bottom in run blocking. Martin does not have any guaranteed money remaining in his contract. The team could approach him about a salary adjustment, but when the team does that they need to be prepared to release the player if they quickly say no. A release of Martin just creates another hole on the roster that the team will need to fill with a free agent. Martin has been the center for all of Watson’s career. Release saves $6.25 million in cap and $7.5 million in cash.

What Does it All Mean?

If the above transactions are completed the team could realize a net cap savings of $29.74 million, placing the team near $12 million under the cap. This does not include any potential transaction with Nick Martin.

PlayerTransactionCap Created (mil)Cap Saved (mil)
W. FullerSign$11.00m
T. AdamsSign$0.95m
R. JohnsonSign$2.50m
P. HallSign$0.85m
A. MooreTender$2.13m
P. BrownSign$0.85m
G. StoneTender$0.78m
Total Created$19.06m
B. McKinneyRelease$7.00m
D. JohnsonRelease$6.90m
Z. FultonRelease$3.00m
Du. JohnsonRelease$5.15m
B. DunnRelease$3.25m
B. CooksRestructure$6.00m
J. WattTrade$17.50m
Total Saved$48.80
Net Savings$29.74
Houston Texans Potential Cap Savings

The the organization will need to manage the 2021 league year with low cost contracts via veteran minimums and rookie/low experience players as they rebuild the salary cap and roster for 2022. Absent the players listed above the core of the roster is well defined. Certain contracts are what they are, and will have to continue to utilize those players as best as can be done until they become moveable. This pertains to Whitney Mercilus, Randall Cobb, and Eric Murray.