The Houston Texans officially benched struggling Safety Ed Reed yesterday which brings up many questions about his future in the NFL. With that in mind it should be best for all parties to simply release Reed from his contract to see if he can find another home.
I discussed a while ago how teams can attempt to use the waiver process as a means to essentially make a trade for cap space and for the Texans it is probably worth the risk even if no one bites on Reed. Reed will carry a salary cap charge of $5.333 million in 2014 which includes a $4 million base salary. They will free up $2.666 million in salary cap space by releasing him and clearly when you factor in both the $4 million cash savings with the cap savings his future in Houston is already set in stone. Releasing Reed now or in February has the same salary cap effect in 2014.
Reed currently earns two sets of payments from the Texans. The first is a fully guaranteed base salary that is paid out as $58,824 per game and totals $470,588 for the remainder of the year. If Reed was to go unclaimed the Texans would have to cut Reed a check for that amount. Reed also has a roster bonus that is paid at $62,500 for each week that he dresses for the game. This bonus is not guaranteed so the Texans would save themselves a potential $500,000 by releasing Reed. They could also avoid that payment by making him inactive on Sundays, but that would make what is likely a bad situation worse.
Because the weekend is upon us the Texans would still be responsible this weeks pay. If Reed was claimed by a contending team the Texans would save both the $411,765 guarantee and the $437,500 in bonus payments. Assuming he would be replaced by a rookie the net salary cap savings for Houston would be $682,500, a significant sum for a team with a delicate salary cap situation moving forward. If he went unclaimed the savings would be nearly $270,735 making it make financial sense to move on from a player with no future or real ties to the Houston franchise.
I would think it is possible that a playoff caliber team would take a flier on Reed for the balance of his salary and possible bonus payments to ensure they were entitled to his contract rather than allowing him to be a free agent. If Reed immediately signed with a club as a free agent he would earn $387,059 for the balance of the season so a team would really only be adding the roster bonus money to the equation. I could see a team making that additional investment if they believed he could still contribute.
Houston really has nothing to lose by releasing Reed. It gives him the chance to go elsewhere and finish his career while the Texans will get some cap relief and avoid any problems that may occur with him playing sparingly on a bad team. The Texans don’t owe Reed anything, but he is a sunk cost at this point and they will not be getting any value from him anyway in 2013. If they can save some money from this point forward its the best decision the team can make.
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.