The death of perfectly good salary cap space may not have the same dramatic flair, but adding up the amount of cap room being used by players no longer on the team can be a good measure of how efficiently that team is managing its finances.
Take, for example, the San Francisco 49ers, who are reportedly using over $20,000,000 on players they’ve let go this off-season (!!!). By comparison, the Seahawks are in pretty good shape, with a little over $4,000,000 being spent on players previously released by the team.
The largest culprit is retired DT John Randle. Randle signed a five-year deal in 2001 that included a $5,000,000 signing bonus. By pro-rating the bonus over the length of the deal, it counted $1M each season from 2001 through 2005. However, since he was released this off-season, the 2005 portion of the bonus “accelerates” into 2004, creating a $2M cap hit for this season.
If Randle had been released after June 1, the remaining bonus would have stayed in 2005, but the team chose to cut him earlier rather than wait until later. Why, you ask? Because of a device slipped into the contract called a roster bonus, which Randle would have been due if he was still with the club in March. When Randle “retired”, what he really did was to inform the club that he wouldn’t reduce his $4M base salary. Even though the Seahawks could have still saved the base by waiting until June to cut him, they would have paid him a $1M roster bonus, negating any benefit from cutting him later on.
Hold on a second...is it a coincidence that the $1M roster bonus is the same amount the Seahawks would have saved by cutting him in June instead of March? Those clever agents! Deals for veteran player like this often force teams to make decisions early on in free agency whether or not they’ll keep the player. The much ballyhooed “June 1 second free-agency period” is usually just a few washed-up players who weren’t smart enough to have contracts with March roster bonuses.
The other significant “dead cap” on our books right now comes from Chad Eaton ($875,000), Reggie Tongue ($700,000), Chris McIntosh ($355,000) and Doug Evans ($250,000). Eaton and Tongue were entering the last years of their deals. McIntosh and Evans were cut last summer, so they would fall under the “post June 1” rules, meaning they were on our dead cap in 2003 and 2004. All of there players will be off the books heading into 2005 but a certain amount of dead cap space is just the normal course of doing business.
Who are some of the players be who might trigger dead cap later this year or next year? A few names to consider are:
Antonio Cochran: Received a $3M bonus in 2003 and will be fighting to earn his $1.5M base salary this summer. If he fails to make the squad, his $750K pro-rated bonus will still count this year with a $1.5M charge in 2005. Since his original deal is through 2006, his remaining bonus would accelerate into next season.
Chad Brown: Received a $5.5M bonus in 2002 spread over six years. Every year we hear speculation that he may retire. It looks like he’ll play in ’04, but if he’s released or retires next off-season he’ll still have $2.75M remaining that the club will have to absorb. We’ve heard stories about players who have to pay bonus money back to the club when they retire, but in reality that scenario is very rare Most likely, Brown will keep his money.
Trent Dilfer: Rumors persist that he could be traded or cut, although none of those reports appear credible. He signed a 4-year deal in 2002 with a $4M bonus, so his contract counts at least $1M each year through 2005. If a player is traded, the entire bonus accelerates into the current season even if it’s after June 1, so our cap savings from trading him would be negligible.
Anton Palepoi: The rookie contract he signed as a second round draft pick in 2002 was for 4 years with a $975K bonus. Any player with 4 or fewer seasons is subject to waiver claims, and waiver claims are treated like trades as far as the cap is concerned. If he’s cut this summer and is claimed off waivers, he’ll still count $487,500 in 2004, or if he clears waivers he’ll count $243,750 in ’04 and ’05.
The Seahawks right now are still sitting on close to $5M in cap space, or about $3.8M more than they’ll need to sign their draft picks. One of the benefits of having a cap cushion is it makes trades more possible because there isn’t a big concern about taking a cap hit from trading a player.
So, that’s dead cap and why June 1st isn’t really the big deal some make it out to be. I’m trying really hard not to be to technical about this stuff, but I must confess I’m an accountant by trade. At least Matt “Absolutplayer” Lathrop draws pretty pictures!
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