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Old 01-14-2019, 03:15 PM
Clawdio Clawdio is offline
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NFL Salary Cap question - Dead money vs Cap Hit (Antonio Brown)

Regarding the saga of an apparently disgruntled Antonio Brown, more than once I've seen a sentence like this:
Quote:
The Steelers would absorb $21.12 million in 2019 dead money on the salary cap by trading Brown... but taking his $22.165 million cap charge off the books would offset that cost.
ESPN Story

What does this mean? Does it mean the Steelers pay Brown the $21M, but it doesn't impact their salary cap (meaning they could pay other players $21M and remain under the cap)? Or something else?

Last edited by Clawdio; 01-14-2019 at 03:16 PM.
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Old 01-14-2019, 03:53 PM
Clawdio Clawdio is offline
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OK, I now understand that dead money is essentially the difference between what he was actually paid for 2017 & 2018 (without prorating signing bonuses, roster bonuses.. etc) and what cap hits the Steelers actually took in those years. $21.12M

BUT, under the current structure of Brown's contract the Steelers were scheduled to take a cap hit of $21.16M in 2019 anyway, so its kind of a wash.

But it still means the Steelers have $21M less to pay players in 2019 because its tied up with Brown's dead money so using the word "offset" in the linked story is kind of misleading. Do I have this right? or am I still missing something.

Last edited by Clawdio; 01-14-2019 at 03:55 PM.
  #3  
Old 01-14-2019, 04:14 PM
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Atamasama Atamasama is offline
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Originally Posted by Clawdio View Post
OK, I now understand that dead money is essentially the difference between what he was actually paid for 2017 & 2018 (without prorating signing bonuses, roster bonuses.. etc) and what cap hits the Steelers actually took in those years. $21.12M

BUT, under the current structure of Brown's contract the Steelers were scheduled to take a cap hit of $21.16M in 2019 anyway, so its kind of a wash.

But it still means the Steelers have $21M less to pay players in 2019 because its tied up with Brown's dead money so using the word "offset" in the linked story is kind of misleading. Do I have this right? or am I still missing something.
I don’t know all the real numbers in Brown’s deal so I’m going to use made up numbers for a fake player. Let’s say the Steelers have a receiver named John Guy. Guy has a three year contract that pays $12 million. Only $3 million of that money is guaranteed, the rest is paid based on various incentives.

Since Guy’s full salary per year totals $4 million ($12 million divided by three years) he takes up that much cap space in 2019. But Guy and the team don’t see eye-to-eye and they agree to let him go. They have to pay out his full contract before he leaves, but only the guaranteed part. So they’re only paying him $3 million. That $3 million would be what counts against the cap this year, not the $4 million he’d normally take up. So yes, that’s $3 million that they can’t pay another player but it still gives them an extra million dollars of cap space.

Let’s say he instead had $6 million guaranteed. Now they lose $2 million in cap space by parting with him that they’d otherwise have if he stayed.

So as I understand it, that’s what is meant by “offset”. Again, this is based on my understanding, there might be complexities I’m leaving out.
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Old 01-14-2019, 04:51 PM
Clawdio Clawdio is offline
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So to make your example exactly like Brown's (I think): John Guy has $4 million guaranteed. Therefore the dead money = the scheduled cap hit (for a player no longer on the roster).

So I still don't understand what is "offset". Is it just awkward wording in the article, or am I completely missing something?

To me, the only way anything is "offset" is like your first example where the dead money is less than the cap hit they were scheduled to take, because ultimately the Steelers are losing $21.1 Million of cap space for a player that is no longer on the roster.

Last edited by Clawdio; 01-14-2019 at 04:52 PM.
  #5  
Old 01-14-2019, 06:38 PM
Chisquirrel Chisquirrel is offline
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Whoooo! I love salary cap questions. If I could find Vic Ketchman's original explanation of how the salary cap works, I would link it, because he goes through everything. The first thing to understand is that "if you pay it, you cap it". Plain and simple, any money that goes to a player will hit your salary cap at some point, whether immediately or down the road.

When a contract is signed, there's basically the salary and the signing bonus. Other bonuses, like for workouts, roster, and incentives, work just like salary, which is counted against the cap in the league year that it's paid. Only this year matters, for the purpose of league rules. Signing bonuses, however, tend to be rather large and would annihilate your salary cap in a year that, say, Aaron Rodgers signed a new contract. Thus, signing bonuses can be amortized over up to five years.

Combine all the salaries and bonuses for a season, add it to the amortized signing bonus, and you have the cap hit for the year. This is Brown's "cap hit" of $22.6m.

As NFL contracts, usually, are not fully guaranteed, teams can cut or trade a player if they're not playing at a level they feel is worth what they're making. Doing so, again usually, relieves the team of any future salary costs. HOWEVER, that giant signing bonus ($19m in Brown's case), still has to hit your cap. When trading or cutting a player, whatever is remaining from that hits your cap NOW. That's $12m of cap space taken out, that the Steelers have to "pay" for, because the player is no longer on their roster. Add in another $9m from his "restructure bonus" (re-named signing bonus for signing a new contract while still on one), and you have ~$21m of cap that the Steelers have to account for, BECAUSE Brown didn't finish his contract in Pittsburgh. Since Brown isn't there, it's considered "dead money".

Brown is slated to make ~$15 million this year in salary and roster bonus if he stays with the Steelers. Add the $4m from the amortized signing bonus and $3m from the restructure bonus, and you have his $22m "cap hit". If he is traded, he'll get that $15m from his new team, barring any new contract.

"Offset" is a poor word choice, as it's actually a term used in NFL contracts regarding guaranteed salaries and bonuses. Essentially, the author is saying that the Steelers are going to have to cap roughly the same amount for Brown this year, whether he's there or not, so the question is whether they can get sufficient capital in return for him in a trade. The dead money capped is offset by not capping the cap hit.

There are a significant number of nuances, especially regarding incentives and guaranteed salaries (a la Kirk Cousins in Minnesota), but that's the basic idea.

Spotrac does a great job of breaking down contracts, and gives the numbers for each year so you can do your own math to find out figure out what's what. For the 2019 year, just add all the signing and restructure bonuses up from that year on, and you have the "dead money". Add up all the bonuses and salary from the current year, and that's the "cap hit".

Cap hit is what you have to account for in the salary cap if the player is on your team. Dead money is what you have to account for in the salary cap if the player ISN'T on your team.

Sorry everything isn't as pretty as I'd like it to be.
  #6  
Old 01-14-2019, 06:58 PM
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Atamasama Atamasama is offline
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Quote:
Originally Posted by Clawdio View Post
So to make your example exactly like Brown's (I think): John Guy has $4 million guaranteed. Therefore the dead money = the scheduled cap hit (for a player no longer on the roster).

So I still don't understand what is "offset". Is it just awkward wording in the article, or am I completely missing something?

To me, the only way anything is "offset" is like your first example where the dead money is less than the cap hit they were scheduled to take, because ultimately the Steelers are losing $21.1 Million of cap space for a player that is no longer on the roster.
I’m sure it’s not uncommon for a player to have more guaranteed money left on their contract (the so-called “dead money”) than their cap hit. So let’s go with 3 different hypothetical players...

* John Guy, 3 year contract for $12 million, $3 million guaranteed

* Randy Person, 2 year contract for $10 million, $5 million guaranteed

* Fred Human, 4 year contract for $24 million, $8 million guaranteed

Guy uses up $4 million of cap room this year. Person uses up $5 million of cap space this year. Human uses up $6 million of cap space.

If Guy is cut, his $3 million of dead money is less than the $4 million of cap space so they come out $1 million ahead if he’s cut.

If Person is cut, his $5 million of dead money is the same as his $5 million of cap space so they don’t gain or lose any of their cap by cutting him; the two things “offset” exactly.

On the other hand, if they cut Human, he has $8 million of dead money and he is only using up $6 of cap space, so they’d lose $2 million.

I think what’s tripping you up with Brown’s situation is that you’re looking at it as the team losing a player and getting nothing in return. They’re not getting back that cap space, it’s used up either way. So why does the article use language that implies that letting him go isn’t a big deal?

I think that in many cases, cutting a player is like the Fred Human example and you lose even more cap space cutting them than keeping them. A chance to “break even” and not lose even more cap space is seen as a positive. Plus, you don’t have the bad public image a disgruntled player brings, you don’t have the locker room morale problems, you don’t have any cap hit in later years, and you free up a roster spot that might let you add a promising practice squad player. I think that’s where this language is coming from.
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Old 01-14-2019, 07:47 PM
Chisquirrel Chisquirrel is offline
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Quote:
Originally Posted by Atamasama View Post
I’m sure it’s not uncommon for a player to have more guaranteed money left on their contract (the so-called “dead money”) than their cap hit. So let’s go with 3 different hypothetical players...

* John Guy, 3 year contract for $12 million, $3 million guaranteed

* Randy Person, 2 year contract for $10 million, $5 million guaranteed

* Fred Human, 4 year contract for $24 million, $8 million guaranteed

Guy uses up $4 million of cap room this year. Person uses up $5 million of cap space this year. Human uses up $6 million of cap space.

If Guy is cut, his $3 million of dead money is less than the $4 million of cap space so they come out $1 million ahead if he’s cut.

If Person is cut, his $5 million of dead money is the same as his $5 million of cap space so they don’t gain or lose any of their cap by cutting him; the two things “offset” exactly.

On the other hand, if they cut Human, he has $8 million of dead money and he is only using up $6 of cap space, so they’d lose $2 million.

I think what’s tripping you up with Brown’s situation is that you’re looking at it as the team losing a player and getting nothing in return. They’re not getting back that cap space, it’s used up either way. So why does the article use language that implies that letting him go isn’t a big deal?

I think that in many cases, cutting a player is like the Fred Human example and you lose even more cap space cutting them than keeping them. A chance to “break even” and not lose even more cap space is seen as a positive. Plus, you don’t have the bad public image a disgruntled player brings, you don’t have the locker room morale problems, you don’t have any cap hit in later years, and you free up a roster spot that might let you add a promising practice squad player. I think that’s where this language is coming from.
Your examples lack the important pieces of information regarding when Guy, Person, and Human are cut in their contracts and where the guaranteed money is located. That's confusing the hell out of me, because you can't know what kind of dead money you're looking at if you don't know where the money is coming from.

Last edited by Chisquirrel; 01-14-2019 at 07:48 PM. Reason: Missed a nut
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Old 01-14-2019, 07:49 PM
Clawdio Clawdio is offline
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Thanks Atamasama & Chisquirrel!! It makes a lot more sense to me now. And i'm not so hung up on the word "offset" any more.

So it seems like to trade Brown the following would likely have to happen:

1. Brown's new team would have to restructure his contract unless they have $12 million of cap space available to pay him in the base (unguaranteed) salary in 2019.
2. Steelers would need to get creative and restructure their own players deals to make room to pay for whoever they get in return for Brown (unless there is some way to get the trade partner to restructure the traded player's salary to somehow take the cap hit in 2019)
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Old 01-14-2019, 08:11 PM
Chisquirrel Chisquirrel is offline
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Originally Posted by Clawdio View Post
Thanks Atamasama & Chisquirrel!! It makes a lot more sense to me now. And i'm not so hung up on the word "offset" any more.

So it seems like to trade Brown the following would likely have to happen:

1. Brown's new team would have to restructure his contract unless they have $12 million of cap space available to pay him in the base (unguaranteed) salary in 2019.
2. Steelers would need to get creative and restructure their own players deals to make room to pay for whoever they get in return for Brown (unless there is some way to get the trade partner to restructure the traded player's salary to somehow take the cap hit in 2019)
1. Correct-ish. Roughly 26 teams have the space right now to take on Brown for next season with minimal disruption. The 2018 cap is already sorted out, nothing that happens with this will change it. The new team would simply need (actually about $15m) for Brown NEXT year, which starts on March 13th. THAT is when the cap hits matter. So the Packers, with their $32m in cap space next year, as it stands now, can easily absorb that amount. Should they choose to release someone and free up cap space, like Tramon Williams, who would save a net of $4.5m in cap space. Restructuring is entirely possible, but unlikely given that top wide receivers are making about $6m more than Brown would under his new team. Any team trading for Brown already has a plan on how to accommodate the new cap hit, but he can essentially be treated like a free agent acquisition regarding the salary cap.

2. The Steelers have ~$12m in cap space for next season, but AFAIK have zero big contracts to renegotiate. If any incoming players fit under the cap as it stands, they might not have to do anything. Given that most players in the NFL are traded for draft picks, they might not have to even worry about it. Rookies are cheap.

Last edited by Chisquirrel; 01-14-2019 at 08:11 PM. Reason: Added a nut
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Old 01-15-2019, 07:31 AM
Clawdio Clawdio is offline
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Awesome, thanks for the analysis!

I think I understand everything now (enough to be dangerous anyway), but it's an interesting concept to wrap my head around that the Steelers wouldn't necessarily be crippled (salary cap wise, at least) by absorbing a $21 million hit for ONE player not even on the roster.

Would have been fun to see Brown play at least one more season as a Steeler, barring injury he likely would have broken all of Hines Ward's team receiving records in 2019, not to mention how it's fun to watch him climb the NFL all time lists.
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Old 01-22-2019, 07:03 PM
Ancient Erudite Ancient Erudite is offline
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Quote:
Originally Posted by Chisquirrel View Post
1. Correct-ish. Roughly 26 teams have the space right now to take on Brown for next season with minimal disruption. The 2018 cap is already sorted out, nothing that happens with this will change it. The new team would simply need (actually about $15m) for Brown NEXT year, which starts on March 13th. THAT is when the cap hits matter. So the Packers, with their $32m in cap space next year, as it stands now, can easily absorb that amount. Should they choose to release someone and free up cap space, like Tramon Williams, who would save a net of $4.5m in cap space. Restructuring is entirely possible, but unlikely given that top wide receivers are making about $6m more than Brown would under his new team. Any team trading for Brown already has a plan on how to accommodate the new cap hit, but he can essentially be treated like a free agent acquisition regarding the salary cap.

2. The Steelers have ~$12m in cap space for next season, but AFAIK have zero big contracts to renegotiate. If any incoming players fit under the cap as it stands, they might not have to do anything. Given that most players in the NFL are traded for draft picks, they might not have to even worry about it. Rookies are cheap.
The Steelers get back 14.5 million in caps space for Le"von Bell. So they will have more than 12 million to sign players.

The question of the hour is do teams with diva wide receivers win super bowls? I can't think of one in recent history.
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