April 20, 2024

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Costing Accounting Everyday

Agent’s Take: Carson Wentz tops NFL’s biggest individual dead money cap charges of 2021

Dead money is a salary cap charge for a player that is no longer on a team’s roster. It exists because of how salary cap accounting rules operate.

Signing bonuses, option bonuses and certain roster bonuses are prorated or spread out evenly over the life of a contract for a maximum of five years. When a player is released, traded or retires, the remaining proration of these salary components immediately accelerate onto his team’s current salary cap.

There are two major exceptions to this general rule of bonus proration accelerating. Only the current year’s proration counts toward the cap with players released, traded or retiring after June 1. The bonus proration in future contract years is delayed until the following league year, which typically begins in early to mid-March.

A team can also release two players each league year prior to June 1 (known as a post-June 1 designation) who will be treated under the cap as if released after June 1. With a post-June 1 designation, a team is required to carry the player’s full cap number until June 2, even though he is no longer a part of the roster. The player’s salary comes off the books at that time unless it is guaranteed.

This means dead money is typically a sunk cost where money isn’t owed to a player. A payment is associated with dead money when there are salary guarantees at the time of release or departure comes after the player has already begun receiving a portion of his compensation in that particular league year.

Excessive dead money can inhibit a team’s ability to field a competitive team. The salary cap room needed to be active in free agency or give contract extensions to important players on the team shrinks.

Here’s a look at the players responsible for the largest amounts of dead money (with their former team listed). There are nine players with at least $10 million in dead money.

Potential dead money subject to a grievance is not included in the calculations. Neither are potential expenses from termination pay, since a player must submit paperwork during a small timeframe right after the regular season ends in order to collect, even though there’s cap charge for it when a qualifying player is released. The NFL collective bargaining agreement’s $275 daily amount for participating in a team’s voluntary offseason workout program has also been excluded.

Wentz leaving Philadelphia in 2021 seemed unthinkable prior to his stunning regression last season. He was considered a fixture at quarterback when he signed a four-year, $128 million extension in June 2019. The deal contained a then-NFL record $107,870,683 of guarantees, which included a $16,367,683 signing bonus and $30 million option bonus.

An option bonus is essentially an additional signing bonus that’s usually paid in the second or third year of a contract to exercise later years in the deal. Since an option bonus is given the same treatment on the salary cap as a signing bonus, it is also prorated or evenly spread out over the life of a contract for a maximum of five years.

Conventional wisdom suggested Wentz would remain with the Eagles because the record for dead money related to an individual player in one league year would be shattered in a trade. The previous record was Brandin Cooks’ $21.8 million for the Rams last year in connection with his April 2020 trade to the Texans.

The record dead money didn’t stop the Eagles from dealing Wentz to the Colts for a 2021 third-round pick and conditional 2022 second-round pick, although the salary cap has dropped $15.7 million from $198.2 million in 2020 to $182.5 million. The 2022 second-rounder becomes a 2022 first-round pick if Wentz takes at least 75 percent of Indianapolis’ offensive snaps or 70 percent and the Colts make the playoffs this season.

Wentz’s dead money is a whopping 18.53 percent of the 2021 league wide salary cap of $182.5 million. Philadelphia’s cap savings in 2021 are minimal because Wentz’s cap number was $34,673,536 prior to the trade. Wentz is off Philadelphia’s books after 2021, where $31,274,536, $34,273,539 and $32 million of cap room is gained, respectively, in 2022, 2023 and 2024.

Jared Goff, QB, Rams: $24.7 million

Rams head coach Sean McVay wanted an upgrade at quarterback despite Goff signing a four-year extension averaging $33.5 million per year with the Rams shortly before the 2019 regular season started. Goff was included in the trade that brought Lions quarterback Matthew Stafford to Los Angeles.

A record-setting $110,042,682 of guarantees, which included a $25 million signing bonus, were part of Goff’s four-year, $134 million extension. Nine million of Goff’s 2020 base salary was converted into a signing bonus to give the Rams $7.2 million of cap relief last year. Since Goff wasn’t traded on the first day of the 2021 league year (March 17), the Rams are responsible for his $2.5 million second day of the league year roster bonus (March 18). The 2020 salary conversion and the timing of the trade account for $9.7 million of Goff’s dead money. The other $15 million is the original signing bonus proration associated with his 2021 through 2023 contract years.

Matthew Stafford, QB, Lions: $19 million

The 12-year veteran requested a trade after the 2020 season. The Lions dealt Stafford to the Rams for Goff, a 2022 first-round pick, a 2023 first-round pick and a 2021 third-round pick in March. The $19 million in dead money is because of the bonus proration in his 2021 contract year and voiding 2022 and 2023 contract years inserted in a 2020 contract restructure. Ten million of the $19 million comes from the $50 million signing bonus in the five-year, $135 million extension Stafford signed in 2017, which made him the NFL’s highest-paid player at $27 million per year. The signing bonus was an NFL record at the time.

Bridgewater became expendable when the Panthers acquired 2018 third overall pick Sam Darnold from the Jets in April despite him signing a three-year, $63 million contract containing $33 million fully guaranteed last year as an unrestricted free agent. Fifteen million of the $33 million was a signing bonus. Bridgewater was promptly traded to the Broncos for a 2021 sixth-round pick to compete with 2019 second-round pick Drew Lock to start in Denver. To facilitate the trade, Bridgewater took a pay cut from $18 million to $11.5 million, of which $7,062,500 is being paid by the Panthers, and his 2022 contract year was deleted. Bridgewater won the quarterback job over Lock.

Hudson is the first non-quarterback to appear on the list. The Raiders dealt Hudson and a 2021 seventh-round pick to the Cardinals for a 2021 third-round pick in March after he requested his release. The Raiders certainly didn’t anticipate Hudson wanting a change of scenery a year later when converting $11.6 million of his $12.65 million 2020 base salary into a fully guaranteed roster bonus for salary cap purposes. Roster bonuses that are fully guaranteed at signing are treated like a signing bonus and prorated.

Drew Brees, QB, Saints: $11.15 million

The Saints’ liberal use of fake or voiding/dummy years to stretch out bonus proration over a longer time frame in Brees’ most recent contracts finally caught up with them. As expected, Brees announced his retirement in March. Prior to the announcement, Brees and the Saints agreed to reduce his $25 million 2021 base salary to $1.075 million, his 2021 league minimum salary, in February so $23.925 million much needed cap relief could be gained instantly. The Saints easily had the NFL’s worst salary cap situation for 2021 when the offseason began. Approximately $110 million in cap commitments had to be shed in order for the Saints to be compliant when the new league year started on March 17. Brees was carried on the Saints’ roster until June 11 to prevent the $11.5 million in bonus proration relating to his voiding 2022 and 2023 contract years from becoming a 2021 cap charge. This $11.5 million is 2022 dead money.

Kawann Short, DT, Panthers: $11.017 million

Injury-plagued 2019 and 2020 seasons led to Short’s release. Shoulder injuries limited Short to just five games over those seasons. Short was entering the final year of a five-year, $80.5 million contract he signed in 2017 after being designated as a franchise player. His $19,620,250 2021 cap number was Carolina’s second largest. The Panthers freed up $8,603,250 of 2021 cap space by terminating Short’s contract.

Gilmore’s contract dispute with the Patriots came to a stunning end with his trade to the Panthers on Wednesday. He hasn’t played this season because he is on the physically unable to perform list for the first six weeks due to a partially torn quad that required offseason surgery. Gilmore’s financial unhappiness dates to last season when the Patriots raised his 2020 salary since he was clearly outperforming his contract after being named 2019’s NFL Defensive Player of the Year. In turn, Gilmore’s 2021 base salary was reduced from $11.5 million to $7 million. Playing with the Patriots for reduced compensation was always going to be problematic since Gilmore thought he was underpaid. Satisfactory progress was never made on upgrading Gilmore’s contract for this season. Gilmore earned 4/18ths of the $7 million base salary ($1,555,556) while with the Patriots. Gilmore’s 2018 and 2019 contract restructures for salary cap purposes as well as part of the 2020 salary increase being prorated are largely responsible for his dead money. Gilmore had the NFL’s biggest 2021 cap number for a cornerback at $16,265,503 when the Patriots dealt him away.

Thomas’ tenure in Baltimore came to an abrupt end during the 2020 preseason after an on-field physical altercation with fellow safety Chuck Clark. The seven-time Pro Bowler signed a four-year, $55 million contract containing $32 million of guarantees, which included a $20 million signing bonus, with the Ravens in 2019 free agency. Thomas hasn’t signed another NFL contract since the Ravens released him.

The Cowboys releasing Smith ahead of a Week 5 contest against the Giants is a shocker and on Wednesday Smith reportedly landed in Green Bay. The expectation was his roster spot wouldn’t be in serious jeopardy until the offseason. Smith had been a disappointment since signing an extension in 2019 where he gave up five unrestricted free agent years valued at $12.8 million per year. His playing time had taken a steep drop with the addition of 2021’s 12th overall pick Micah Parsons and Keanu Neal making a seamless transition from safety to linebacker in joining his former Falcons head coach Dan Quinn, who is Dallas’ new defensive coordinator. Smith was on the field for 97.8 percent of Dallas’ defensive snaps in 2020. It was 56.1 percent through Dallas’ first four games. Most of Smith’s dead money comes from his fully guaranteed $7.2 million 2021 base salary.