June 1 represents an important day in the calendar year for the NFL. It is a day when various rules and tenders change.
The biggest impact for teams involves the modification of salary cap accounting rules for players whose contracts will be terminated after June 1 or whose contracts were terminated with the “Post June 1” designation. Prior to June 1 any player removed from a teams roster, either by release or trade, will have all their remaining salary cap allocations accelerate into the current League Year. For example a player with $1 million in prorated money from 2014 to 2017 whose contract is terminated will carry a “dead money” charge of $4 million in 2014.
However, after June 1 that “dead money” charge now splits between two seasons. Once released the team only needs to account for the current years prorated money in their 2014 salary cap accounting. All future years’ prorated money will now land as “dead money” in 2015. So for the example player above the “dead money” charges will equal $1 million in 2014 and $3 million in 2015. In practice this rule allows teams with underperforming, high priced players to release players before the season and remain salary cap compliant. If such a rule did not exist many teams would have a difficult time, with their salary caps often tight, to release a player with high prorated charges.
It is important to note, though, that the June 1 rule does not apply to future guaranteed salary. Such future guarantees immediately accelerate into the current season if a player is released. There is no split of those figures.
For many teams June 2 will open up significant cap room. This is because players designated a “June 1” cut in the offseason will finally come off the books for those teams. The offseason June 1 designation is used when players do not factor into a teams future plans but the team is usually unable to release the player due to the high “dead money” charge associated with the contract, which, in many cases, would make the team no longer salary cap compliant. Often the team does not wait until June 1 to make the move in order to avoid guarantees kicking in (usually the first week of free agency by sometimes as late as April), roster bonuses from being earned (almost exclusively in the first week or free agency) or non-exercise fees from option bonuses to be made. Prior to June 1 the players’ entire salary cap charge remains on the books even though they are no longer on the team. On June 2 only the current years’ proration will remain on the books with the balance being charged to 2015.
Here is the list of June 1 cuts who will come off the books next Monday, giving them the space they need for extensions, rookie signings, or just a functional budget for the upcoming season:
|Player||Team||Current Charge||New 2014 Charge||New 2015 Charge||Cap Space Gained|
Not surprisingly every one of these teams has less than $5.5 million in cap room as of May 28, 2014. In the case of the Giants, Steelers, and 49ers it is less than $3 million. So the money is a huge boost to them.
Other teams with very tight salary cap situations include the Detroit Lions ($1.1 million), New Orleans Saints ($1.9 million), Washington Redskins ($2.3 million), San Diego Chargers ($3.1 million), and Kansas City Chiefs ($3.6 million). Of those teams, the Chargers, Chiefs, and Lions all have their top draft selection unsigned, which will make that space even tighter. The Lions in particular do not have the space to sign TE Eric Ebron whose cap charge will be just over $2.2 million. For these clubs in particular the switch to June 1 accounting gives them some added leverage in talks to renegotiate a contract with or trade a high cap charge player.
June 1 is also the day in which NFL teams have a decision to make on their former players who were Unrestricted Free Agents and remain unsigned. The team has an option to extend a tender offer of either 110% of the players’ prior year salary cap charge (minus workout and incentive payments) if a veteran or 100% of the players prior years base salary if the player was on a rookie contract. If the June 1 tender is made the player has until July 22 to sign with another team. At that point his former team retains exclusive negotiating rights throughout the season. These June 1 tender amounts do not count against the salary cap until July 15.
If no tender is made, which is usually the case, the player immediately becomes what is referred to as a “street free agent”, meaning their rights were relinquished by another team. This is important because the player, if signed, no longer factors into the compensatory pick equation for the 2015 NFL draft. For teams like the Baltimore Ravens and Green Bay Packers who both do their best to avoid signing true UFA’s due to the compensatory draft this now gives them the green light to go back into the veteran player pool and consider bringing in talent.
For Restricted Free Agents who have yet to sign contracts their important date is June 15. It is on this date that the team can reduce the tender to 110% of his prior year’s salary. WR Doug Baldwin of the Seattle Seahawks would be the player to watch for this. According to reports Baldwin is currently negotiating an extension with Seattle. His RFA tender is a non-guaranteed $2.187 million. If no deal is made Seattle could reduce his offer in the $610,000 range. (Please note that this was written prior to Baldwin signing an extension with Seattle, so while this illustrates the manner this could work it is no longer valid for the specific player)
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.