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The 5 O’Clock Club: Salary Cap Potpourri

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It’s 5 o’clock somewhere…

Washington Redskins v San Francisco 49ers Photo by Ezra Shaw/Getty Images

The 5 o’clock club is published Wednesday to Saturday during the season, and aims to provide a forum for reader-driven discussion at a time of day when there isn’t much NFL news being published. Feel free to introduce topics that interest you in the comments below.

The Redskins roster for salary cap purposes

The Redskins, at the time of writing (a couple of days prior to the Cardinals game), had 53 regular roster players + 9 practice squad players, for a total of 62 known active contracts.

Salary cap also includes reserve players on lists like IR, PUP, and (sometimes) NRI.

Reported Cap Space

The NFLPA public site says that the Redskins have $17.0m in cap space with 60 players

OverTheCap says that the Redskins have $11.16m in cap space with 70 players [active roster (53), practice squad (9), IR (6), PUP (1), NFI (1) ]

Spotrac says that the Redskins have $11.47m in cap space and the summary page says 53 players, but they actually list 69 players when you check the details [active roster (53), practice squad (8), IR (6), PUP (1), NFI (1) ]

  • The difference between OTC and Spotrac player count is that the latter doesn’t have Nic Shimonek listed on the Practice Squad.
  • NFLPA doesn’t provide a detailed list (that I could find, anyway), so it’s a bit harder to compare.

NFLPA and OTC both say the Redskins have the 12th most cap space in the league for 2018

Spotrac says the Redskins have the 10th most cap space for 2018.

Note: OTC reports Redskin current cap space available at $10.34m (11th best in the league) on 15 September.

Picking a primary source

My experience over the years has led me to feel that — of these three sources — OverTheCap is the one with the best information. The numbers usually seem reliable, and the processes seem pretty transparent. The writers at OTC go to some trouble to regularly point to evidence that Spotrac copies its NFL cap information from OTC, and the evidence is often compelling.

The differences between OTC and Spotrac are typically pretty insignificant anyway, and I find OTC to be a bit more user-friendly for the way I use the info, so I typically rely on OTC as my primary source, but back it up with Spotrac on the occasions where it is needed. (One example of that is that OTC, for whatever reason, still has not updated Colt McCoy’s salary cap details with his 2018 offseason extension, while Spotrac has numbers posted for the extension).

So, expect any numbers I offer to come from OTC.

2019 Cap Space

OverTheCap tells us that the Redskins cap space for 2019 isn’t really all that healthy, as it is 6th worst in the league behind the Eagles ($26.4m over the cap), Jaguars ($12m over), Vikings ($8.3m available), Steelers ($9.49m avail) and Dolphins ($13.9m).

The Redskins 2019 cap space right now stands at $15.8m.

That number is a bit deceiving, though. For 2019, OTC is counting 46 contracts for the Redskins. Only three teams in the league have more contracts counted [Vikings (47), 49ers (47), and Ravens (50) ]. Sixteen teams have less than 40 contracts counted for 2019.

There’s a very good chance that the Redskins will finish the ‘18 season in the top third of the league in unused cap space, all of which can be rolled over to 2019, improving the team’s position, but of course, most NFL teams will be rolling over at least a few million.

All things considered, the Redskins will likely end up somewhere close to the league average when free agency starts in March ‘19. With a likely 10 draft picks in the April draft, the ‘Skins should be able to bring an above-average number of drafted rookies to camp again next offseason.

Current Dead Cap hits

I don’t have the same view of Dead Cap that many people have.

Dead Cap (in large measure because of the name) is viewed as something particularly unpalatable, but it’s largely just a measure of front office and coaching efficiency. Typically, a larger dead cap number indicates a less efficient organization or poorly constructed contracts, but at times, dead cap is planned for, and used as a tool to allow teams to massage their rosters within the confines of the salary cap.

Let me give my ideas on the three situations (two bad; one not) that I think can lead to dead cap:

1. The team incorrectly evaluates a player’s talent or value

I’d point to two recent ex-Cowboy defensive linemen that the Redskins signed as Unrestricted Free Agents — Terrell McClain and Jason Hatcher.

Hatcher was signed to a 4-year contract (the one that ‘blew his doors off’), but played only two seasons for the Redskins, leaving a $4.5m dead cap charge behind. I don’t think that the Redskins expected to lose Hatcher after the ‘15 season; I believe that the team expected him to play at least three years, and wrote the contract accordingly.

Likewise, McClain was signed to a 4 year deal. His contract was constructed to be acceptable value if he played two seasons with the Redskins, and better value if he played at least three. McClain was cut after just one season, leaving behind a $3.75m dead cap charge.

The dead cap hits for these two players reflect poor talent evaluation, and are a measure of inefficiency in roster building. In short, they are mistakes by the scouting and personnel part of the front office.

This is what a bad player evaluation looks like in terms of dead cap:

Here’s another, more extreme example. Remember, Suh left the Dolphins last year. They ate a $22m total dead cap hit on his contract:

2. A team structures a player contract poorly, eventually resulting in a large dead cap hit

The best example I can think of for this type of poor contract management is the Cowboys and Tony Romo. Romo was a talented quarterback and the face of the franchise. But as he got further and further past his 30th birthday, Jerry Jones treated Tony’s contract like a bottomless treasure chest, annually converting Tony’s base salary into bonus in order to “create” cap room to sign other players.

It all caught up with GM Jerruh three years ago (in 2016) when Tony was injured and didn’t play at all, giving Dak Prescott the opening he needed to take over as the Cowboy’s starter. Tony retired at the end of the season, leaving behind a $19.6m pile of dead cap poop in the middle of the Cowboys’ living room carpet. It may be hard to believe, but THIS season (2018) the Cowboys are still carrying an $8.9m cap hit for Tony as he enters his second year in the broadcast booth.

This is what giving badly written contracts to good players looks like:

3. Dead cap that is planned for and forms a part of the contract

Sometimes the team knowingly signs a contract with a player that will either certainly result in a dead cap hit, or will probably result in dead cap, but the team does it knowingly, in order to align cap hits with the overall roster and salary cap plan.

A certain hit

A good example of a contract certain to result in a dead cap hit was the DeSean Jackson contract with the Redskins, signed in 2014, when the Redskins were reeling from the $36m cap penalty. I wrote about the contract in great detail in February last year. Jackson signed a 4-year contract in which the 4th year automatically voided. The result was (for every imaginable practical purpose) a 3-year contract, but the 4th year allowed the Redskins to spread the signing bonus thinner, resulting in a lower cap hit in ‘14 and ‘15 when the Redskins needed it, but a $1.25m dead cap hit in ‘16, when Jackson’s contract voided and he became a free agent.

This cap hit was always gonna hit the books for the Redskins. It wasn’t a mistake or a miscalculation — it was a cap management tool.

A probable hit

My example of a contract that will probably result in dead cap is one that will press a “hot button” with a number of people, and my reasoning won’t go down well. In other words, a lot of people will say I’m wrong. Maybe so, but here’s my view:

When the Redskins signed the 4 year extension with Alex Smith, they did so hoping he would play the full five years (2018-2022), but not expecting him to play the full five years. The structure of the Alex Smith contract is designed to give Alex market rates as a starting NFL QB for the first 3 years in DC (until 2020), then, enjoy two years of discounted play if Alex can continue to play at a high level in ‘21 and ‘22. I wrote about this in detail back in March.

Alex Smith’s cap hits for his first three seasons add up to $60.2m, or almost exactly $20m per year. If Alex Smith doesn’t return to play in his 4th year as a Redskin (2021) then he leaves behind a $10.8m dead cap charge. That’s where the magic $71m guaranteed money comes from that we always hear about, and it gives Smith an APY of $23.7m per year to play QB for 3 years.

Basically, Smith’s contract is structured as a 3-year deal for $71m (that number includes the dead cap hit), with two ‘bonus’ years that are completely non-guaranteed. Those two years (‘21 and ‘22) would pay Alex Smith $19m and $21m over and above the $71m guaranteed.

In this case, if Smith is cut, traded, or retires after the 2020 season, the Redskins will have to absorb a $10.8m cap hit, but the fact is, that’s what they should be budgeting for from the day the contract was signed, and the $23.7m that they pay Alex Smith (including the dead cap) for those 3 years is basically his fair market value.

The Redskins will probably eat some dead cap on Alex Smith in ‘21 or ‘22. It will be a pleasant surprise if they don’t have to. When it happens, fans will complain that it was a bad contract, but I feel confident that Eric Schaffer will be smiling, since he will have squeezed Smith’s $71m contract into his budget with the following cap hits:

  • ‘18 = $18.4m
  • ‘19 = $20.4m
  • ‘20 = $32.2m

This structure accomplishes the same thing that the DJax contract achieved on a smaller scale — it lowers the cap hit in ‘18 and ‘19 when the Redskins are tighter on cap space, and moves the cap hit to 2020, when the team has much more flexibility and time to plan.

Right now, the Redskins are projected to have $125m or more in available cap space in 2020, meaning that by planning for Alex Smith’s dead cap hit, the Redskins were able to give him the deal he wanted with $71m guaranteed while reducing his ‘18 and ‘19 cap hits by about $3m per season, when they needed the breathing room.

They have three seasons to prepare their salary cap position to deal with the cut, trade or retirement of Smith at the end of 2020, if it happens. One of the advantages of having the large number of rookies this season, and a high number of draft picks in ‘19 is that the Redskins have the potential to be carrying an above-average number of rookie contracts into the 2021 season when they may need the cap room, and — by making use of a post-June 1st designation — can split the dead cap hit over 2 years.

2019 Salary Cap ‘space eaters’ -

Who are targets to become cap casualties?

The opportunities to create new cap space by cutting or trading a player, or by re-structuring a contract, are limited to a few highly paid players.

The problem with frequent restructuring of contracts is that you end up with the Tony Romo situation.

The difficulty with cutting a highly paid player is that he is usually highly paid because he is a star on your team.

If he is under-performing, you might want to trade him, but his underperformance makes him an unattractive trade prospect.

When you put all the constraints in place, most teams have a half-dozen players or less who are good targets to be cut or traded in order to reduce the salary cap hit.

Looking ahead to 2019, here are a few Redskins players that might qualify:

Josh Norman

  • 2019 salary & bonus: $11.5m
  • 2019 cap savings: $8.5m
  • Total savings to end of contract: $21.0m

(I haven’t included dead cap numbers because dead cap is irrelevant to the question of whether to keep a player on the roster or cut him. Dead cap money is made up of pro-rated signing bonus and guaranteed money. The player has already got that money whether he is cut or retained on the team. At this point, dead money is only an indicator of front office efficiency; it is not a factor in whether to keep, cut or trade a player)

Trade target: With a cost of ‘only’ $11.5m in ‘20, and $12.5m in ‘21, Josh Norman would be a reasonable candidate to trade if the Redskins felt that they had sufficient skill at CB and wanted to reduce salary cap. Of course, if he is still playing very well or the Redskins don’t have a capable replacement, it may be best to simply retain him.

Ryan Kerrigan

  • 2019 salary & bonus: $10.75m
  • 2019 cap savings: $10.75m
  • Total savings to end of contract: $22.5m

Trade target: With no guaranteed money left, the 31 year old Kerrigan could be an attractive trade candidate if the Redskins can find a replacement in the ‘19 draft. A home-grown player and leader, Kerrigan is the kind of guy that you’d like to see finish his career with the team, but trading him would open up a lot of cap room.

Jordan Reed

  • 2019 salary & bonus: $7.92m
  • 2019 cap savings: $6.12m
  • Total savings to end of contract: $25.4m

Cut/renegotiate: With Reed’s injury history and $8m per year in salary, I don’t think the Redskins are likely to get a ham sandwich in trade for Reed. His 2018 salary is guaranteed, so there was no advantage to cutting him this offseason; however, if he isn’t extremely productive this year, then the potential $25m in cap savings might be just too tempting. Of course, Reed and his agent can do the math as well, so the Redskin front office might be able to use their leverage to force a renegotiation of Reed’s deal to either pay him less, or be highly incentive-driven.

Zach Brown

  • 2019 salary & bonus: $7.25m
  • 2019 cap savings: $5.75m
  • Total savings to end of contract: $13.75m

Trade/cut: Brown is only 28 this season, and will be 30 when his contract ends. While he would likely be a decent trade candidate, with the Redskins lack of depth at ILB, I don’t see a high probability of the Redskins saying goodbye to him before the end of his contract.

Vernon Davis

  • 2019 salary & bonus: $5.0m
  • 2019 cap savings: $5.0m
  • Total savings to end of contract: $5.0m

Cut: Davis is currently 34 years old; next season he’ll be 35. He’ll have just one year left on the contract and it isn’t guaranteed. The math is easy — keep him for $5m or cut him to save the money.

D.J. Swearinger

  • 2019 salary & bonus: $4.5m
  • 2019 cap savings: $4.5m
  • Total savings to end of contract: $4.5m

Cut/Trade: The difference between Vernon Davis and D.J. Swearinger is age. Swearinger is now 27 and will be 28 years old going into the final year of his contract in 2019. With the Redskins obvious lack of depth at safety, it’s hard to imagine a scenario where the potential $4.5m savings would motivate the Redskins to say goodbye to their current starting strong safety.

Stacey McGee

  • 2019 salary & bonus: $4.0m
  • 2019 cap savings: $2.4m
  • Total savings to end of contract: $13.5m

Cut: The 28-year old McGee is currently on the PUP list and could still be brought back to play in 2018. McGee’s cap hit goes up by a million dollars per year from ‘19 to ‘21, limiting his trade appeal. He has no guaranteed money left. With the sudden depth the Redskins have on the defensive line, the Redskins could decide to part ways with the veteran in 2019. Of course, they could also make that decision when he comes off the PUP list in 2018.

Other players that offer some cap savings if cut or traded

There are a few other players on the roster who could offer more than a million dollars in cap savings if they were cut prior to the ‘19 season. For various reasons, I have not included them above:

  • Trent Williams - ‘19 savings = $9.3m
  • Quinton Dunbar - ‘19 savings = $2.25m
  • Chris Thompson - ‘19 savings = $3.0m
  • Dustin Hopkins - ‘19 savings = $2.12m
  • Mason Foster - ‘19 savings = $2.0m

Poll

If you were the decision maker and you had to cut one player prior to the 2019 season to find some cap space, which player would you most likely pull the trigger on?

This poll is closed

  • 0%
    D.J. Swearinger ($4.5m total saved)
    (4 votes)
  • 4%
    Vernon Davis ($5m total saved)
    (22 votes)
  • 74%
    Stacey McGee ($13.5m total saved)
    (383 votes)
  • 0%
    Zach Brown ($13.75m total saved)
    (0 votes)
  • 11%
    Josh Norman ($21m total saved)
    (59 votes)
  • 0%
    Trent Williams ($24m total saved)
    (2 votes)
  • 8%
    Jordan Reed ($25.4m total saved)
    (46 votes)
516 votes total Vote Now