Monday Field Gulls briefly noted that the NFLPA is expecting the salary cap to come in around the $180M level according to sources. In addition the post looked at how teams can use a signing bonus in lieu of base salary in conjunction with void years to defer the cap hit for a player signed to what is effectively a one year deal.
Fans seemed to enjoy and appreciate the discussion on how void years can be used in order to defer cap hits into the future and create cap space in the present year. In addition, at least one commenter had questions regarding whether other techniques would be developed in the future for managing the cap in aggressive ways, and the fact of the matter is that there are several other methods already in use by teams across the league that allow for the cap to be managed in an aggressive manner.
The post Monday looked solely at void years, but there are other mechanisms as well, including option bonuses, deferred roster bonuses and even the use of the post-June 1 designation that can be available.
Fully Guaranteed Deferred Roster Bonus
For illustrative purposes, we’ll again use the example of a hypothetical free agent who has agreed to play for the Seattle Seahawks for the 2021 season for $11M. Some fans seemed bothered by the hypothetical free agent names I threw out in the post yesterday, so today I will simply make up a name at random and use this fictional player as the free agent in the example. So, randomly choosing some male first name and a last name, my random name generator has spit out Luke Joeckel as the free agent the Seahawks will pay $11M to for 2021.
Anyway, just as in the Monday post, say for example the Seahawks are nearly flush out of cap space with just $2M in cap availalbe, so they don’t have the $11M in cap space necessary to sign this Joeckel guy. In addition, they’d prefer not to use a signing bonus and void years because that strategy would require having $3M in cap space and they don’t want to take the time necessary to file the paperwork to create the requisite space. Another option they could opt to utilize is a fully guaranteed deferred roster bonus.
So, in this case Joeckel signs a two year contract with base salaries of $1M in each of 2021 and 2022 and a fully guaranteed $10M roster bonus deferred until on the Friday prior to the start of free agency in 2022.
Roster bonuses are different from signing bonuses, as roster bonuses count against the cap in the season in which they are paid. So, by putting the roster bonus after the conclusion of the 2021 season, it would go on the 2022 salary cap. Teams will then also typically use some sort of structure, whether it’s another roster bonus payable if the player remains on the roster or a large base salary that forces the team to cut the player for cap purposes.
In this instance, the cap hits for the contract for Mr. Joeckel, assuming he is released at the start of free agency would be as follows:
- 2021: $1M
- 2022: $10M
Fully Guaranteed Deferred Option Bonus
Using the same scenario from above of a one-year, $11M contract for Mr. Joeckel, say for example that a team wasn’t confident they’d have the cap space to absorb the $10M roster bonus in 2022, then in that instance they could use a fully guaranteed $10M option bonus in conjunction with a post-June 1 release designation to push a good amount of the cap hit even further into the future than 2022.
Option bonuses may be set up to be treated as signing bonuses, so in this example it will be assumed that Joeckel’s one year contract carries a $1M base salary in 2021 and a $10M fully guaranteed option bonus payable on the second day of the 2022 league year. Then, to ensure that Joeckel is released during the first week of free agency, a non-guaranteed roster bonus of $20M is payable if he is on the roster on the third day of the league year.
Now, for cap purposes, the contract that Joeckel executes will actually be for six years, with base salaries of $1M in 2022 and $25M in each of 2023 through 2026. These amounts are placeholders, and both sides understand that Joeckel will never play in any of these seasons. The difference between an option bonus and a roster bonus is that the roster bonus is recognized in the year it is paid, while the option bonus is broken up over the remainder of the contract, up to a maximum of five years. .
So, just as from above the first year cap hit is just the 2021 base salary of $1M, however the later years of the deal carry different cap hits at signing. Those cap hits are:
- 2021: $1M (base salary)
- 2022: $23M ($1M base salary, $2M for the 2022 portion of the option bonus and the $20M non-guaranteed roster bonus)
- 2023: $27M ($25M base salary and $2M for the 2023 portion of the option bonus)
- 2024: $27M ($25M base salary and $2M for the 2023 portion of the option bonus)
- 2025: $27M ($25M base salary and $2M for the 2023 portion of the option bonus)
- 2026: $27M ($25M base salary and $2M for the 2023 portion of the option bonus)
The big question here typically surrounds the $20M non-guaranteed roster bonus due if the player is not released prior to the third day of the 2022 league year. This roster bonus is never intended to be paid, as it is simply a placeholder designed to force the team to release the player before it becomes due. However, because it is not due until the third day of the league year, the team has the ability to release the player on the second day of the league year with a post-June 1 designation.
The post-June 1 designation means nothing for the player in terms of their ability to hit free agency, but for the team it is significant. The reason for this is because when a player is released on or before the first of June, the entirety of any remaining dead money goes into the cap of the current league year. A player released after June 1 only has the current year portion of their dead money stay on the current year’s cap, with the remainder going onto the cap in the subsequent season.
So, what that means for Mr. Joeckel is that the actual cap hits for the one year, $11M contract will be recognized as follows:
- 2021: $1M (base salary)
- 2022: $2M (2022 portion of option bonus)
- 2023: $8M (remainder of option bonus)
This is obviously a significant use of future cap resources for a team to invest into paying a player for the 2021 seasons. However, if it’s a team such as the Green Bay Packers or the Tampa Bay Buccaneers who believe their Super Bowl window is open and want to do everything they can to try and take advantage of that while they can, it’s somewhat understandable. Obviously, the bill for this aggressiveness becomes due eventually, but if a GM is desperate to field a competitive team to keep his job or a quarterback situations lends itself to the team’s best shot at a Lombardi being in the next year or two, it’s certainly easy to understand why a team could so aggressively dip into future cap space.