49ers

Restructures: Roman Harper and Jonathan Goodwin

Posted on by Jason Fitzgerald

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With the summer approaching and teams needing cap room to sign rookies or to prepare for the regular season its only natural that more restructures occur. On Friday it was reported that Roman Harper of the Saints and Jonathan Goodwin of the 49’ers both reworked their contracts to provide their teams cap relief and I wanted to offer some thoughts on both deals.

Harper’s restructured contract was passed off as an extension on his current deal which pretty much was met with a collective “what?”.  Harper had two years remaining on his contract and will turn 31 towards the end of this season and has not justified the 4 year $25 million dollar contract he signed in 2011. Pro Football Focus rated him as the 2nd worst safety in the NFL last year and my own valuation of the position indicated under no circumstances should he play under his original deal .

Harper was set to carry a cap charge of $7.15 million in 2013 and releasing him would have saved the team $3.65 million in cap room. Had he been designated a June 1 cut the Saints would have saved $5.4 million in cap. Instead the Saints added a year onto his deal, calling it an extension, for the sake of cap savings. The Saints will now save $3.49 million against this years cap but have added an additional $1.94 million in dead money in 2014 if they choose to move on. Harper’s 2014 cap number was reduced by just over $2 million, but iat $5.87 million is still too high for his level of contribution.

The Saints have the worst cap situation in the NFL for next season and have taken a very short term approach this year to their squad in hopes that they can catch lighting in a bottle and return to the playoffs. Along with the Cowboys they have had the most over-reliance on contract restructures and cap deferrals to keep the team intact this season. On the defensive end it has been a head scratching decision because of how poor the defense played next season. The move now puts the Saints $5.185 million under this years salary cap and since they have signed their entire rookie class it will be the money they need for regular season operations.

The 49’ers made no such attempt to wrap up Goodwin’s move as an extension nor did they compromise their future salary cap for what they considered an underperforming player. Goodwin took a pure paycut reducing his salary from $3.7 million to $2.5 million, but the teams cap savings went even further. Goodwin also had LTBE incentives which counted on the salary cap at an amount of $650,000, which were wiped out in this renegotiation. That pushed the 49’ers cap savings to $1.85 million.

Unlike the Saints the 49’ers made this move just to get more rookies signed. San Francisco still had 4 rookies to sign at the time this move was made and by my estimates will cost the team $1,297,378 in net cap room.  Prior to the paycut and the signing of Tank Carradine the 49’ers only had $1.3 million in cap room. They now have $2.71 million to spend, which is enough to get their players under contract in the next week.

That said the 49’ers clearly still have work that needs to be done to create cap space to function during the season. Remember that once the year begins the roster expands from 51 to 53 plus all reserve players begin to count on the cap. Just the addition of 2 players plus maintaining a full practice squad will cost a team a minimum of $1.626, so the 49’ers dont have enough cap room to function come September.  That means more moves need to be made, the most logical of which would be extending DE Justin Smith who is in the last year of his contract. It could be a tricky renegotiation as Smith is set to make $8 million this year and is 34 years old, but he is coming off 4 straight Pro Bowls and has shown no signs of slowing down. The contracts given to Dwight Freeney and Osi Umenyiora could provide a starting point that gets his cap number down and gives him a little more job security, but he could choose to hedge his bets.

Other candidates could be S Donte Whitner and CB Tarell Brown, both in the final year of their contracts, and possibilities for extensions. The team could also approach RB Frank Gore about a pay reduction given the shrinking market for running backs, but that has been a contentious relationship and he may not be willing to accept reduced salary. Either way I’d expect more contract news about the 49’ers in the coming weeks.

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Anthony Davis’ Contract and its Meaning for Andre Smith

Posted on by Jason Fitzgerald

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RT Anthony Davis signed a 5 year extension with the San Francisco 49’ers worth about $33 million in new money. Matt Maiocco put the contract numbers out today which allowed us at OTC to come up with an estimate on the structure of the contract. While not perfect in terms of cap I am pretty confident in the cash flows of the contract. With Davis agreeing to the extension I think we now have a comparable player for Andre Smith, one of the few remaining “name” players on the free agent market.

Smith is a former top draft pick, selected 6th overall in the 2009 NFL draft by the Cincinnati Bengals. Davis was selected 11th in 2010. Both players had (and still have) red flags about weight and dedication to the sport. Davis will be 24 years old this year and 26 when his extension kicks in. Smith is 26 now.  In general the two players grade out as two of the best three right tackles in the NFL. Smith was reportedly looking for $9 million a year, which we knew he had no chance of ever seeing but with the market crash the question would be just how far he might fall. Now we probably have an answer.

Davis will earn $6,640,280 per year under his new 5 year deal. Because this is an extension there are a number of ways to look at the values of the contract. Using simply a new money valuation the cash flows of the contract would look at follows:

Total Cash

APY

Year 1

$11,801,400

$11,801,400

Year 2

$15,451,400

$7,725,700

Year 3

$20,451,400

$6,817,133

Year 4

$26,826,400

$6,706,600

Year 5

$33,201,400

$6,640,280

As is typical for many contracts, the deal contains “rolling” guarantees where Davis must be on the roster on a certain date (which is a very team friendly April 1st, typical for the 49’ers) to earn his full guarantee. Based on the cap damage of a release due to the prorations from his existing contract and the new prorations from a $7.5 million signing bonus received with the extension I would consider 2014 and 2015 to be functionally guaranteed, though I could see an argument against the 2015 year.  With that in mind the guarantee of the contract is around $15.879 million.

In addition, as Maiocco explains, Davis has a large amount of base salary tied into offseason workout participation and maintenance of his weight. He stands to lose $1.25 million per year if he fails to meet his weight during the year and skips voluntary workouts, reducing his total takehome to $26,951,400 if he fails to perform. While we are uncertain of the yearly bonus structure of the contract (I have estimated $1 million per year in roster bonuses) it is worth noting that the 49’ers are notorious for tying yearly bonuses to games active. Davis’ rookie contract called for significant bonuses that were tied to games active and it would not be surprising to see him earn around $62,500 for each game active. Essentially it is a play for performance contract.

Considering the similarities between Smith and Davis this is likely the model that Smith will be working from. Now the Bengals have more cap space than San Francisco and follow a different cap philosophy, but in general the cash flows, guarantees, and built in protections should be similar. Smith can try to push for more potential money to match the $7 million per year earned by Gosder Cherilus, but a good portion of Cherilus’ contract is backloaded money anyway. Here is the cash flow component of Cherilus’ contract:

Total Cash

APY

Year 1

$15,500,000

$15,500,000

Year 2

$16,500,000

$8,250,000

Year 3

$20,500,000

$6,833,333

Year 4

$27,500,000

$6,875,000

Year 5

$35,000,000

$7,000,000

Those first three years are very similar to the Davis deal with more money coming to Cherilus in year 1. Unlike Davis’ contract I would consider $20.5 million functionally guaranteed to Cherilus, though in part that is because Davis loses dead money protection by signing early. Smith’s functional guarantee should fall somewhere in between the two players. Based on the Davis deal you could argue that about 37% of the value is tied to health and workouts which will clearly be a part of the Smith contract.

Because the Bengals have so much cap room they can be more creative with Smith than the 49’ers were with Davis. The Bengals seem to like using a combination of a 1st year roster bonus along with a signing bonus and I would expect them to do something along those lines here. If Smith was more reliable they could frontload the contract, but with all the protection needed I can’t see that happening. They also need to set aside money to re-sign Geno Atkins either this year or next season. There have been some people talking about extending WR AJ Green after the 2013 season but with the WR market still vibrant there is no need to do that as the Bengals control his rights through the 2015 season at a very reasonable cost.

Back to Smith…I think its clear that the market has now been set. Realistically he is looking at around $20 million or so over 3 years of which I’d guess $5 million may be tied to weight, offseason participation, and general health. He could max out as high as $35 million but more likely will come in a shade under $34 million. At that price, a very similar price to his rookie contract,  it would seem to be a no-brainer for the Bengals to get the deal done and keep him as part of a young nucleus that has potential to win the division in 2013.

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Recapping Todays News…Chiefs, 49ers, and Rams

Posted on by Jason Fitzgerald

Kansas City Chiefs– The big news of the day came late with Chiefs RT Eric Winston announcing that he was being released by the Kansas City Chiefs. This is the second time in two seasons that Winston was released but I have a hard time believing he will have trouble finding a home. He may not be a good fit for a team with a new coach as Winston seems to always speak his mind (and I dont mean that in a bad way) which can rub some coaches who dont want to be questioned the wrong way.

The numbers we had on Winston indicated that he was going to count for $6.5 million against the cap but our dead money estimates were far different than those of Pro Football Talk who stated that he received a signing bonus of $8.3 million. Our information indicates that the Chiefs should save $3.5 million in cap room and only carry $3 million in dead money. The Chiefs will save $5.5 million in cash. If I hear otherwise on the contract I’ll fix it.

St. Louis Rams– Andrew touched on this earlier but the Rams released RT Wayne Hunter to save a bit over $4 million in cap room. Hunter was given a starting job with the Jets in 2011 and imploded. It got to the point where the Jets didn’t want him to go to a public family day because he had become such a target to the fans. The two teams eventually swapped contract mistakes with the Rams sending bust Jason Smith to the Jets in return for Hunter. Both players have been released.

San Francisco 49’ers– In a move that had been more or less known for at least a week the 49’ers moved on from K David Akers, creating $3 million of cap room in the process. Akers leg began to really fail down the stretch and considering the Niners tight cap space spending $3.57 million dollars on an older kicker is simply not possible.

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The Cap Implications of Trading 49’ers QB Alex Smith

Posted on by Jason Fitzgerald

According to CBSSports’ Jason LaCanfora a deal for the former starting QB of the San Francisco 49’ers is complete and will happen as soon as the new League Year begins on March 12

When the 49’ers signed Smith last year to a 3 year deal it was more or less a 1 year deal for the 49ers who knew last year that Smith could be replaced by Colin Kaepernick if the situation presented itself. To ensure that they could move Smith off the team without issue the 49’ers did not use a signing bonus in Smith’s contract instead opting to guarantee his 2012 base salary and a small portion of his 2013 base salary. For Smith’s benefit the contract contained a $1 million dollar roster bonus due on the 2nd day of the league year which would likely force the 49ers to either release him or trade him before that date, essentially giving Smith all of free agency to find a new team. If the 49ers failed to do that his entire base salary will guarantee on April 1st.

Provided the 49’ers make the trade official before 4PM on March 14, at which point his roster bonus will be earned, the 49ers will clear all of Smith’s $9.75 million in cap charges off the books free and clear. The team that acquires him will pick up the $1 million in current guarantees, the $1 million roster bonus obligation, and the remainder of his base salary guarantee that kicks in on April 1st. So this will be one of those rare cases where the entire salary cap charge transfers with the player. Included in Smith’s cap charge is a $1 million dollar performance incentive that I believe is still considered “likely to be earned”. If he did not earn that incentive last year then his cap number will be reduced by $1 million of what I have listed here.

Because the 49ers need to be under the salary cap prior to the start of the League Year, Smith’s current cap figure will still impact their 2013 salary cap for at least one day, still putting them in a position where they may need to cut a small amount of salary from their current roster before the season begins. The team trading for Smith will need the cap room to fit his salary cap number on the books on the day of the trade. The two teams rumored to be trading for him, the Chiefs and Jaguars, both have the cap room needed to execute the move.

Follow this link to view the cap charges associated with Smith’s 3 year contract.

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