The Salary Cap Impact of Aaron Donald’s Retirement

The football world was shocked today when future Hall of Famer Aaron Donald decided to retire from the NFL after 10 seasons. His legendary career featured 8 All Pro nods and 10 selections to the Pro Bowl. Donald also set multiple contract standards for the interior defensive line, becoming the first defensive tackle in NFL history to earn over $20 million a year in 2018 and then the first defensive player to get over $30 million a year in 2022. Now that he is leaving the Rams it does leave some questions as to how his contract will play out for the team.

Prior to the news of his retirement, I had mentioned that Donald recently had his contract restructured to free up around $9.2 million in cap room for the team. Per a source with knowledge of the contract this was not a typical restructure where salary was just converted to a signing bonus. In this case the Rams converted his $5 million roster bonus, which was already guaranteed, to a signing bonus. They took $8.79 million of his salary, which was going to become guaranteed in a few days, and added it to his $20 million option bonus.  The option for Donald was originally due by mid June, I would guess, but do not know for certain, that date remains.

The restructured contract, in light of Donald’s retirement, reads a bit more like salary cap maneuvering by the Rams to keep the door open to Donald possibly coming back to the team. If both sides were 100% on the retirement they would have simply bought his salary this year down to $1.21 million and taken out the option and roster bonuses, unless the Rams were just totally blindsided with the retirement announcement and had no idea this was coming. So my guess is they want to leave the door wide open for him to come back.

The $5 million bonus may or may not be his to keep. Under the terms of his prior contract the Rams apparently did not have the right to go after his roster bonus if Donald breached his contract, such as by retiring.  The signing bonus language could be different giving the Rams the ability to simply recover anything had any money exchanged hand. Or it could be a nice parting gift for all his years of service. The option bonus is a clear deferral of salary.

By doing the restructure, the Rams brought Donald’s salary cap number down to $24.97 million. Placing Donald on the retirement list would have caused the Rams to take on a $28.5 million cap charge at a minimum so this gives the Rams a little more room to work with. By deferring his salary into the option it also gives the Rams a chance to keep Donald on the roster through June, if they want, and place him on the retired list at that point. It also gives Donald months to consider if he wants to return since the contract is simply waiting for him if he returns to the NFL this year or any year in the future.

If the team waits until June they should be able to split the salary cap charges across two years, though the cap charges are contingent on the way his signing bonus works. If the signing bonus is a legit bonus then the money should count towards dead money in 2024 and 2025. If it is earned but no money ever changes hands prior to the retirement the NFL will likely just disregard the bonus. If there is money paid and the team is later paid back the Rams will take a charge in 2024 with an offsetting credit coming in 2025.

The accounting of the option is also a bit tricky. In my experience the NFL will typically include the option prorations as dead money in the year the player is released even if the option is not exercised. The team then receives a credit the following year.

Here is how I believe the cap charges would play out in a June 1 retirement scenario (credit is the adjustment the Rams would receive for cap charges in 2024 not actually earned so it reduces the impact of the dead money in 2025).

Scenario202420252025 credit
Keeps Bonus$23,763,332$19,333,334$9,596,666
Bonus unpaid$22,096,666$16,000,000$9,596,666
Bonus recovered$23,763,332$16,000,000$11,263,332

I would expect the Rams to carry Donald on the roster through whatever the option date may be and then place him on the retired list. It should be easier for them from a salary cap perspective than just putting him on the list right now.

The Rams and Donald could also restructure his contract one final time to remove some of the charges that I am mentioning here. If the retirement is firm it would make sense for the Rams to simply remove the option from the contract in which case you do not get into these issues with treatment of option prorations in 2024. That would reduce the 2024 charges to $14.166M with 2025 looking similar to the chart above.

Ultimately I would not be surprised if the Rams are not done tinkering with the contract, either as a way to entice him to play again in 2024 or to make things a little simpler with the salary cap. I would be surprised if they do immediately place him on the reserve list and absorb all of the cap charges this season.