The Salary Cap Impact of a Possible Tom Brady Retirement

In what could be the end of an era, Buccaneers quarterback Tom Brady has apparently decided to walk away from the NFL after an incredible 22 year career according to ESPN’s Adam Schefter

Now it sounds like there are conflicting reports on Brady’s future so he may not be retiring but that does not change the fact that he could be stepping away and with each rumor of retirement I have received a number of questions about how this impacts the Buccaneers salary cap for 2022.

As of right now Brady carries a $20.27 million salary cap charge for the Buccaneers in 2022. The cost on the cap to release him is $32 million which would cost the Buccaneers about $11.7 million in salary cap room, putting them over the projected salary cap for 2022. That clearly will not happen.

At the very least, regardless of when Brady makes it official, expect the Buccaneers to carry Brady on the roster until June 2nd. If they do not modify his contract the way this would work is Brady would remain on the cap at $20.27 million until June 2nd at which point they would put him on the retired list. Brady at that point would count for $8 million on the 2022 salary cap and $24 million on the 2023 salary cap.

The more likely option would be a contract renegotiation for salary cap purposes. Under this scenario the Buccaneers would lower Brady’s base salary and roster bonus from $10.4 million to $1.12 million and remove any incentives from the contract. This would lower his salary cap charge from $20.27 million to $9.12 million. They would still have to carry him until June and at that point the $8 million/$24 million salary cap split would occur.

The benefit of this strategy is that it immediately opens up around $11.2 million in cap space that can be used to help acquire a quarterback in a trade immediately at the start of the new league year. There should be names available this year such as Aaron Rodgers, Deshaun Watson, Jimmy Garoppolo, Kirk Cousins, and Derek Carr and the cap space would be very beneficial in acquiring one of those players. If they opt to turn to 2nd round pick Kyle Trask to run the show then the added money can be used to keep as much talent as possible around him.

There is another consideration with Brady’s retirement and that deals with bonus forfeiture. For those unfamiliar with forfeiture in the NFL basically what it means is if a player walks away from his contractual obligation the team can recover bonus money which counts on the salary cap. In the case of retirement any future bonus prorations are subject to forfeiture.

When Brady signed his new contract in 2021 the Buccaneers used a structure that may have sent a signal about a potential Brady retirement. The Buccaneers effectively used a $40 million signing bonus as part of the contract for cap purposes but the on paper mechanisms were different. In this case the team paid Brady $20 million as a roster bonus and $20 million as a signing bonus. Both would be prorated over five seasons.

The roster bonus is effectively shielded from retirement forfeiture since you can only forfeit that salary if the breach (in this case the retirement) occurs in the season the roster bonus is earned. That only would be triggered if Brady walked away in 2021. The signing bonus, however, is fair game for a retirement in 2022. That might make some sense as to why the two sides used two very different methods of payment even though the impact was 100% the same.

Per a league source with knowledge of Brady’s contract there is standard forfeiture language in the contract. That means the Bucs would have the right (but not the obligation) to recover up to $16 million in bonus prorations if he does retire. In addition Brady’s signing bonus carried a deferral of $15 million to early February. If Brady retired before that date the Buccaneers would probably no longer be under obligation to pay him that money.

Quickly working out the math in the contract this may have been something agreed upon by both sides long ago. Brady was originally set to earn $25 million in 2021 on his prior contract. That contract was problematic for the Bucs salary cap as it carried over $28 million in cap charges which is what led to the one year extension which on paper paid him over $40 million. However once we pull out the deferral his salary only increased by $2.5 million for the season (they added a 17th game bonus to his contract) and if the team went after a full bonus recovery increased by just $1.5 million, which was essentially the bonus for playing a 17th game and having a slightly harder path to earn incentives. By using all the bonuses in the contract the Buccaneers brought Brady’s cap number down to $10.5 million.

In the event of a retirement I am not 100% sure as to how that immediately impacts the salary cap if the team recovers the full amount by never having the money change hands in the first place. Usually a team will get a year for year credit when a player retires so it would mainly offset the future costs of Brady’s dead money. Brady has almost never been a money guy at any point in his career so having the possibility of giving up money if he retired was something I can certainly see him agreeing to.

We will get more clarity on Brady’s future in the coming days but don’t be surprised if we hear about the Buccaneers getting some relief on the salary cap charges in the near future.