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NFL Cap Management: Some trades donít make dollars or sense
It’s easy to throw out the notion of a trade; the idea to get equal or greater value, putting your club in a better CAP situation and or with a prime pick in the coming draft. If only it were that easy.
Real time example
Player finds himself on a team entering 2013 League Year (LY) almost $24.0M over projected CAP. His individual charge as a Top 51 on his roster is $9.0M calculated; $3.0M in 1 year proration of past guarantees, $3.0M in Paragraph 5 (Base Salary for 2013), and $3.0 in a series of three $1.0M bonuses over the course the time leading up to the 2013 regular season.
Any and all prorated portions are the responsibility of current Club. Transactions such as outright release or trades transpiring prior to June 1st accelerate all proration to the current LY. Keep that in the back of your mind.
Base Salary is responsibility of the current Club Player is under contract with at the time. Any bonuses are responsibility of the Club Player is under contract with at the time the bonus is earned.
Current Club can attempt to trade Player at the start of the LY to October 29th, but there will be financial ramifications. What the Club is willing to incur is up to them as the “cost of doing business”, when they choose to do it should be analyzed regarding CAP/contract management.
Trade scenarios & ramifications
Scenario 1 – Club initiates trade prior to 5th day of new LY, significant because it’s the date of $1.0M Roster Bonus (RB). If trade were initiated, Club would be hit with immediate $12.0M CAP charge (current $3.0 in proration + $9.0 in ensuing years). New Club is responsible for all of existing three $1.0M bonuses, starting with the 5th day RB & base salary.
Scenario 2 – Club can’t initiate trade before 5th day deadline and is responsible for $1.0M in RB earned. Trade is initiated after the earned RB and Player now accounts for $3.0M in current year proration, $9.0M in acceleration and $1.0M for earned bonus. Total of $13.0M in the 2013.
Scenario 3 – Club can’t trade Player prior to earning Offseason Workout Bonus ($1.0M around mid June). We’re now past June 1st. Current Club pays Player $2.0M to account for RB and Workout Bonus. CAP charge for ensuing years is alleviated in 2013 as result of post June 1st transaction. Remaining $9.0M is accounted for in 2014. Club is responsible for $3.0M in current year proration and $2.0M in Bonuses.
Scenario 4 - Club can’t trade Player until after start of Training Camp. $1.0M
Reporting Bonus is earned by Player. Club has paid $3.0M in cash for bonuses and incurred $6.0M in Cap charges for 2013 LY. Trading Club is responsible only for the $3.0M in base.
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