With no training camp today, I’ve been catching up on some reading. There were a number of articles published on OverTheCap in June and July that I either simply skimmed or missed altogether, and they were on my morning reading list today.
These articles prompted me to think about three players, and how the CBA situation complicates things for the Redskins front office.
The current CBA will expire at the end of the 2020 season, and there have been multiple reports that the league is keen to finalize a new agreement soon. Some reports indicate that the league hopes to finalize the new agreement before the start of the regular season, while others suggest that 1 March 2020 might be a more realistic deadline.
But why does it matter at all to football fans who don’t really care about the labor agreement?
There are three specific issues I think are worth mentioning that the Redskins front office will face with contracts beyond the end of next season if there is no new CBA in place prior to the start of the 2020 league year next March:
- Lack of any real certainty about salary cap
- the 30% rule
- Post June 1st designations
Let’s look at three Redskins players to see how those three issues could affect our team and its roster-building going forward.
Many fans have taken the lack of announcements on the Brandon Scherff contract, and a recent report indicating that the two sides were not close to an agreement to mean that the Redskins front office is in the midst of screwing the pooch on this contract.
Brandon Scherff himself spoke on the record this week, saying that he had no concerns about his contract situation and that he is focused totally on the 2019 season. Comments from at least one teammate at yesterday afternoon's press conferences have reinforced that idea.
However, there are a lot of good reasons why Scherff’s agent might want to wait as much as a full year before signing an extension with the Redskins, and most of those reasons have to do with uncertainty about the CBA, and, in particular, the salary cap.
Remember that the market for players’ salaries is set by the CBA. Every team will spend basically the same amount of money over the life of the labor agreement. Individual contracts are simply the means for allocating those dollars among the players on the team. Signing a bigger deal doesn’t take money out of the owner’s pocket; quite literally, it takes money out of the pockets of one’s teammates.
So, the “market price” for a position is a moving target, and generally that target moves up from year to year. Talented players can ‘bet on themselves’ and maximize their earning potential by waiting until the last year of their deal to sign, taking advantage of the rising salary cap. The argument against this is the risk of injury. A player who is injured while in the final year of his contract could lose a lot of money. Just think how different Alex Smith’s situation would have been if he’d come to DC in trade from Kansas City without the 4-year extension. His injury in his final contract year would have meant that he’d have collected only his 2018 salary, leaving him more than $50m poorer.
So, for players, deciding when to sign a new deal is a balancing act. You can see Zeke Elliott trying to force the Cowboys to extend him earlier, because he feels that his market value is greatest at the moment.
Why would Scherff risk injury to wait? Why wouldn’t he think of his situation similarly to Zeke Elliott, and want to force an early extension? After all, the market for guards has seen a dramatic increase in value over the past two seasons. From that standpoint it looks like an ideal time for Brandon to ink a new deal while his position is being highly rewarded across the league.
Of course, Scherff is coming off an injury, which might be a reason to get on the field in 2019 and show he is healthy, but the bigger issue is the uncertainty surrounding the CBA and the resulting salary cap.
Look at what OverTheCap says about the salary cap and its relationship to new CBA agreements:
The cap has grown around $10 million a season so the ballpark cap figure for next year should be $199 million, assuming no new CBA is ratified between now and next March.... Last time this happened the cap grew by about $5 million from the estimated number. So I would work under the assumption of $204 million as the unadjusted cap.
History suggests that the salary cap in 2021 will get an added ‘bump’. OTC estimates an extra $5m or so.
Until that happens, the Redskins don’t have the money to spend, and they would need to work with more conservative numbers in any negotiations with players. Scherff and his agent will be aware that, if they wait until the new CBA is signed, the Redskins should have a bigger pot of money to work with. Scherff can make that argument now, but the easier thing to do is play out his 5th year option, and then sign a new deal once the league or CBA provides more certainty about the future of the salary cap.
The Redskins have shown with players like Trent Williams, Ryan Kerrigan and Jordan Reed in the past that they aren’t shy about extending top tier players with top-tier salaries when they reach the end of their rookie deals. The apparent delay in getting an extension done for Brandon Scherff is more likely driven by his agent and the expectation of a new CBA in the coming months when he can take his slice of a bigger pie.
There’s a salary cap rule that I was unaware of until recently. That’s because it only comes into effect in the final year of the CBA agreement.
Here’s an explanation of the 30% rule from OverTheCap:
The 30% rule kicks in at the end of the NFL CBA which limits the amount of salary that a player’s contract can increase by in the uncapped years that extend beyond the terms of the CBA. The rule is in place to prevent a team from taking an incredibly low salary cap charge during a capped NFL season with the hope that a future year may be uncapped.
To calculate the 30% raise limit you basically are going to add all the salary contracted to a player in 2020, plus any option bonus proration, and multiply that by 0.3. That gives you the raise allowed year by year for a player.
This provision makes me think of Quinton Dunbar, who is currently under contract through 2020. Dunbar appears to have earned the role of starting boundary corner, and I think most fans expect that he will only improve in the ‘19 and ‘20 seasons. I think we would all agree that we hope he plays well enough to earn a big extension at the end of his contract.
The 30% rule may have unfortunate consequences for Dunbar if the new CBA is not ratified prior to the expiration of the current deal.
Dunbar’s contract calls for him to earn a total of $4.5m in 2020, made up of base salary, roster bonuses and signing bonus proration. Today, that $4.5m wouldn’t put Dunbar in the top-40 for cornerback salaries. At the time the Redskins signed Dunbar to his current contract, they did it instead of offering him a Restricted Free Agent tender, seeing that he had the potential to become an important player for the team.
Let’s say that Dunbar plays well enough to be considered a top-20 corner in the league over the next two seasons. Right now, the 20th highest paid CB contract pays around $9m to $10m per season; by 2021, one would expect that number to be a bit higher.
But, if the current CBA expires without a new deal being agreed to, Dunbar’s 2021 salary would be limited to $5.85m, which would represent a 30% raise above his 2020 salary.
Interestingly, based on what I’ve read about how this rule was applied in 2010, when the league last operated without a CBA in place, it is not just the Redskins who would be limited in how much they could pay Dunbar. The rule applies to veterans who change teams as well as those who stay put.
Click to read about how the 30% rule affected players in 2010
There may be creative ways to structure around it — the recently signed deal between Carson Wentz and the Eagles is twisted and tortured in an attempt to circumvent as many CBA obstacles as possible, including the 30% restriction, but the simplest solution for Quinton Dunbar and the Redskins would be for the new CBA to be in place before the current one expires - ideally before the new league year begins in March 2020.
A player like Quinton Dunbar, if he has an agent who is keeping him informed, will likely be hoping for the new CBA to be agreed by March.
The final situation also has to do with the timing of the CBA and a Redskins player contract - in this case, the contract with quarterback Alex Smith.
I realize that there is a chance that Smith will come back from his injury, but for the sake of this discussion, let’s assume that Smith either can’t fully recover, or — even if he does — the Redskins, with Dwayne Haskins on the roster, see Alex Smith’s $18.75m base salary for 2021 as just too expensive.
The front office, going into the 2020 season, knows that Alex has no future with the team. If they cut him prior to next year’s training camp, his entire dead cap hit of $32.2m accelerates into the 2020 salary cap calculation, making it unaffordable.
However, a certain level of relief is available. the CBA allows for teams to spread the dead cap hit over two seasons as long as the player is cut after 1 June.
In fact, to prevent teams from needlessly holding onto a player for months when he has no practical future with the team, the league allows a limited number of cuts to veteran players to be done earlier in the off-season, but designated to happen post-June 1st, thus providing the same salary cap relief.
In the case of Alex Smith, post-June 1st salary cap relief would normally spread the dead cap hit over two seasons, leading to a cap savings of $5.4m in 2020, while shifting the balance of the dead cap to the following season. This is a common salary cap management device used by all teams.
The problem is that there can be no post-June 1st designations in the final year of the CBA.
That means that, while the Redskins are free to release Alex Smith ahead of the 2020 season if they wish, there would be no salary cap benefit. Instead of increasing available cap space by $5.4m, they would actually see a $10.8m reduction in cap space for 2020.
Without a new CBA in place by, say, March, the Redskins would basically be forced to keep Alex Smith on the roster for another year, whether he could play or not, simply to avoid the adverse consequences of releasing him.
On the assumption that Alex and the team will know by this time next year whether he has a future with the team, one would think that — if the Redskins were finished with him — Alex would be as anxious as the team to sever the contractual tie and move on with this life. Absent a new CBA, however, he may be forced to stand around smiling for the camera and holding a clipboard for Dwayne Haskins.
You have to think that Alex Smith is hoping for the new CBA to be finalized in the coming months so the Redskins can release him at the end of this season and let him move on with his life.
Some news reports on the league’s efforts to sort out the new CBA in the coming months have focused on the benefits for negotiating new TV and broadcast rights, but, as you can see, team front offices rely on the continuity of having the next agreement signed before the current one expires so that roster planning and contract execution can be carried out seamlessly.
Hopefully, the NFLPA and the owners will be able to make substantial and sufficient progress in the coming days, weeks and months.