The 49ers placed Colin Kaepernick on injured reserve yesterday, a few short weeks after benching him for what the 49ers said would be a temporary move to the bench to help Kaepernick clear his head. After backup Blaine Gabbert won his start with the team it seemed the 49ers were already pulling away from the temporary benching and this type of injury, much like Peyton Manning’s, is often a blessing in disguise for a team because it makes the whole process much neater. But since there may be some confusion on the Kaepernick contract I thought I would clarify some of the points surrounding the contract.
The decision to put Kaepernick on IR is likely 70% tied to finances. Kaepernick has massive injury guarantees in his contract which kick in if he is severely injured to the point where he can not pass a physical prior to his release. While Kaepernick had to take out an insurance policy with the 49ers as a beneficiary I would guess that primarily deals with football disability and not a relatively a minor injury that simply occurs near the offseason and prevents the team from cutting him before he gets healthy a few weeks later. Either way from a salary cap perspective the 49ers would have to wait some time to receive a credit and would be required to count Kaepernick’s contract in full on their 2016 salary cap.
Putting him on IR is essentially a way of managing the risk in his contract. When Gabbert went down for a few plays against the Falcons, Kaepernick had to come in as the backup. You do not want a minor injury turning into a big one by taking a bad hit in a game that you have no intention of playing him in. Even if this shoulder could not get worse, there is a tendency to try to hide your injured area and unwittingly expose something else to get hurt as well.
We are at the point in the season where a major injury would have implications on the release of a player in the offseason. On April 1 Kaepernick’s $11.9 million base salary becomes fully guaranteed and protected for the entire 2016 season. Currently it is guaranteed only for injury. We are about 19 weeks away from that point, which means there is ample time to recover from injury, but the later we get in the season the less recovery time is available and the more risk is absorbed that the player will not be fully recovered by April 1. It’s a guarantee he’ll be fine by then now and can be released.
The 49ers also had $875,000 that they could prevent Kaepernick from earning this season by putting him on IR. Kaepernick has massive per game active roster bonuses in his contract, a concession he made in order to get a contract that on paper was valued as a top market contract. The 49ers could have deactivated him on gameday to avoid that payment, but that would have probably made a bad situation even worse and also damaged their leverage in trying to trade him in March. So this gives the team an easy way to neatly cut that $875,000 out of his contract. That $875,000 will be a credit applied to the 49ers salary cap in 2016 and his cap charge for next season will also be reduced in the offseason by $875,000.
30% of the move I would say is tied to planning for next season’s attempt to trade Kaepernick. The spin doctors will be out in full force discussing how this injury occurred early in the year but Kaepernick really tried to play through it. The spin will come from both the 49ers and his agents since both benefit from it so it should be a widespread effort. Kaepernick’s failures on the field will be chalked up to his hiding a bad shoulder in a game and in trying to protect it from future injury played poorly. Now he is all healthy and he will return to form looking like the dynamic player from 2012 and 2013.
I am actually surprised that the 49ers did not look for a way to IR him sooner to make his initial exit from the team easier to explain around the league. All I can guess is that they wanted to see Gabbert play and practice to see how the team reacted to him before pulling the plug on Kaepernick’s season. If the sides can spin the injury as the major reason for the poor play than delaying it had no impact.
The injury also creates an interesting contractual situation where a team that acquires him could hide millions in offseason cap money in roster bonuses to create an incentive filled contract that benefits both sides. Any per game active roster bonus next year will count 9/16ths against the cap and not begin to further accrue until game 10. This is the way the Cowboys were able to fit Greg Hardy’s contract under the cap in the offseason. Teams can find ways to manage these incentive payments if the player fails to prevent them from earning the money. Currently Kaepernick has $14.3 million in payments set for next year and would carry am offseaon cap charge in a trade of $13.425 million, somewhat similar to Sam Bradford’s salary this season. Bradford was traded in the offseason to the Eagles.
By no means is Kaepernick considered injury prone, but if he is really looking for a new start he may be willing to sign a contract that has even bigger roster bonuses than his current one. After all he bet on himself with this initial contract, so why wouldn’t he bet on himself again? This can also increase his trade value if he restructures with the 49ers in the offseason to facilitate the trade.
The 49ers can carry Kaepernick on the roster until April 1 with no financial liabilities beyond the sunk cost of his signing bonus prorations. So any move will happen between the start of the 2016 League Year and April 1. It would be pretty surprising at this point if he is a 49er on April 2.
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.