Questions for the Salary Cap Gurus

[Hottoddie]

I posted this in another thread & I'm afraid it is just going to get buried before I can get an answer. So, I thought I'd put it in it's own thread. It involves the cap impact of releasing:

Carr
Payne
Greenwood
DD/DW
Wiegert

Anyone know what the cap implications would be, if we just outright cut these players? If I understand correctly, by cutting them after the July 1 date, we can spread their bonus's over 2 years, rather than just 1.

HPF did an article about Carr, in which they indicated that cutting him would net us ~$5.25 million in cap relief this year. But, that wouldn't occur until July 1. Of course, we'd have to get a replacement QB. Now, if the Texans planned on taking a QB in the draft (Kolb?) & grooming him behind Sage, I could live with that.

I guess my question is, if we cut all 5 of those players, how much extra cap space would that give us, both before & after July 1st?

http://www.houstonprofootball.com./cap2007.html

By using HPF's numbers & assuming that we could spread all of their signing bonuses over a 2 year period, I came up with these savings. Please correct me if I'm wrong.

Carr: $5.25 million
Payne: $3.20 million
Greenwood: $2.56 million
DD/DW: $2.686 million
Wiegert: $918K

For an approximate total savings of $14.614 million off the 2007 salary cap. By adding that to the existing cap space of ~$14.42 million (according to HPF), the Texans could have ~$29 million in available cap space this year. That would definitely put us in the Asante Samuel chase.

I know that this is probably not right, but if it is, could the Texans spend the anticipated cap space prior to the July 1st date, knowing that they'll drop back below the NFL mandated cap? Help me pull my head out, cap gurus.

[keyser]

I don't know that I'm an expert, but the salary cap should work like this:

• The salary part is easy - if they're on the roster it gets paid and charged to this year's cap. If off the roster, it doesn't.
• The bonus part is from their signing bonus. It is spread over the length of the contract. So, to pick someone, say Greenwood, he has 3 years remaining on his contract, and a total of $4.2 million in signing bonus that has not yet been charged against the cap. Assuming he played out his contract, $1.4 million of that would get charged each of the 3 years. However, if he's released early, that money gets charged sooner.
  • If cut before June 1, then the remaining bonus pay is accelerated into this year (2007) - i.e. Greenwood would have cost $4.2 million on this year's cap, even though not on the team.
  • If cut after June 1, you pay this year's bonus pay this year (i.e. $1.4 million against the cap for Greenwood in 2007), and the rest in 2008 (i.e. $2.8 million of "dead" money).

So, for the players you mention, using the numbers from the website you give, it should be:

• Carr: (signed for 2 more years)
  Release before June 1

  
  Accelerated bonus pay: $4,000,000
  Salary Savings: $5,250,000
  Net Savings: $1,250,000
  

  Release after June 1

  
  Bonus Pay: $2,000,000
  Salary Savings: $5,250,000
  Net Savings in 2007: $3,250,000
  Dead Money in 2008: $2,000,000
  

• Payne: (signed for 2 more years)
  Release before June 1

  
  Accelerated bonus pay: $2,250,000
  Salary Savings: $3,200,000
  Net Savings: $950,000
  

  Release after June 1

  
  Bonus Pay: $1,125,000
  Salary Savings: $3,200,000
  Net Savings in 2007: $2,075,000
  Dead Money in 2008: $1,125,000
  

• Greenwood: (signed for 3 more years)
  Release before June 1

  
  Accelerated bonus pay: $4,200,000
  Salary Savings: $3,264,000
  Net Savings: -$936,000
  

  Release after June 1

  
  Bonus Pay: $1,400,000
  Salary Savings: $3,264,000
  Net Savings in 2007: $1,864,000
  Dead Money in 2008: $2,800,000
  

• DW/DD: (signed for 3 more years)
  Release before June 1

  
  Accelerated bonus pay: $3,900,000
  Salary Savings: $3,340,000
  Net Savings: -$560,000
  

  Release after June 1

  
  Bonus Pay: $1,300,000
  Salary Savings: $3,340,000
  Net Savings in 2007: $2,040,000
  Dead Money in 2008: $2,600,000
  

• Wiegert: (signed for 4 more years)
  Release before June 1

  
  Accelerated bonus pay: $2,500,000
  Salary Savings: $2,500,000
  Net Savings: $0
  

  Release after June 1

  
  Bonus Pay: $625,000
  Salary Savings: $2,500,000
  Net Savings in 2007: $1,875,000
  Dead Money in 2008: $1,875,000
  

So, releasing DW/DD and Greenwood before June 1 would actually cost us money this year, and Wiegert would give no savings this year.

If we released all 5 before June 1, the net savings this year would be $704,000. If we released all 5 after June 1, the savings would be $11,104,000 this year (i.e. that much more we can spend). But, we would also have $10,400,000 of dead money (i.e. that much less salary cap) in 2008. For comparison, we have $14,675,000 in dead money being charged against our cap this year for three players we cut last year after June 1.

There are some other details that could change things. For example, I believe some players earn workout bonuses and there are some other charges that could be fixed in one year or another, but these numbers ought to be pretty close, assuming that website is correct.

[Dunta_23]

After this season will any of the "old dead money" still be on the cap? As in are we on the hook anymore for Walker, Wade, Smith etc etc? Or after this season are we completely free of those guys?

[Scooter]

Originally Posted by keyser

If we released all 5 before June 1, the net savings this year would be $704,000. If we released all 5 after June 1, the savings would be $11,104,000 this year (i.e. that much more we can spend). But, we would also have $10,400,000 of dead money (i.e. that much less salary cap) in 2008. For comparison, we have $14,675,000 in dead money being charged against our cap this year for three players we cut last year after June 1.

that sounds very workable IMO, especially compared with the house cleaning we did last year. payne & DD might be worth keeping, but with their injury history, it wouldnt hurt my feelings to remove all 5 of the players mentioned. what would be nice is if we can take as many hits this season as possible so that we can minimize our dead money for 2008. that 5-10mil we could save for 08 would go a long way to signing future FA's and keeping this building process going. dead money's always present, but teams like jacksonville and philidelphia are able to have so much cap room and winning teams because of minimizing dead cap space.

[run-david-run]

Also, the cap increases every year, so having $10M in dead cap next year as opposed to $14M this year would be a very big improvment.

[Dime]

Ok... what about if they were traded instead of cut?

[keyser]

Originally Posted by Dunta_23

After this season will any of the "old dead money" still be on the cap? As in are we on the hook anymore for Walker, Wade, Smith etc etc? Or after this season are we completely free of those guys?

Walker, Wade, and Smith are completely gone (assuming we don't re-sign one of them!) after this year. They are the 3 collectively counting for over $14 million of this year's cap. The only dead money in 2008 will be from people we cut after June 1 of this year.

[keyser]

Originally Posted by Dime

Ok... what about if they were traded instead of cut?

I believe the whole signing bonus accelerates as soon as a player is traded. I'm not clear on whether some can be deferred to the next year (i.e. like the after June 1 cuts) or if it all has to go in the current year. Players who retire also have their bonuses accelerate, but this can be temporary if the club gets the player to return the prorated portion of the bonus (and the club should be able to do this).

There are also some rules that can allow a deferral to after June 1 even if cut beforehand (though it "temporarily" counts against the current year until June 1 has passed).

There are lots of other wrinkles, including things like when the sigining bonuses actually get paid. There's a full article dealing just with Carr's situation at:
http://www.houstonprofootball.com/scout/scout143.html

Plus, a lot of this ignores things like roster bonuses (not sure if any of these players have them - I'm just going off of that one website), that would make cutting them later more expensive...

[gtexan02]

Why would anyone want to cut Greenwood? Yes his contract is higher than his value, but we are SUPER thin at OLB, and Greenwood played well this year.

[threetoedpete]

http://story.scout.com/a.z?s=211&p=2&c=617475

[feebleminded]

Originally Posted by keyser

I don't know that I'm an expert, but the salary cap should work like this:

• The salary part is easy - if they're on the roster it gets paid and charged to this year's cap. If off the roster, it doesn't.
• The bonus part is from their signing bonus. It is spread over the length of the contract. So, to pick someone, say Greenwood, he has 3 years remaining on his contract, and a total of $4.2 million in signing bonus that has not yet been charged against the cap. Assuming he played out his contract, $1.4 million of that would get charged each of the 3 years. However, if he's released early, that money gets charged sooner.
  • If cut before June 1, then the remaining bonus pay is accelerated into this year (2007) - i.e. Greenwood would have cost $4.2 million on this year's cap, even though not on the team.
  • If cut after June 1, you pay this year's bonus pay this year (i.e. $1.4 million against the cap for Greenwood in 2007), and the rest in 2008 (i.e. $2.8 million of "dead" money).

So, for the players you mention, using the numbers from the website you give, it should be:

• Carr: (signed for 2 more years)
  Release before June 1

  
  Accelerated bonus pay: $4,000,000
  Salary Savings: $5,250,000
  Net Savings: $1,250,000
  

  Release after June 1

  
  Bonus Pay: $2,000,000
  Salary Savings: $5,250,000
  Net Savings in 2007: $3,250,000
  Dead Money in 2008: $2,000,000
  

• Payne: (signed for 2 more years)
  Release before June 1

  
  Accelerated bonus pay: $2,250,000
  Salary Savings: $3,200,000
  Net Savings: $950,000
  

  Release after June 1

  
  Bonus Pay: $1,125,000
  Salary Savings: $3,200,000
  Net Savings in 2007: $2,075,000
  Dead Money in 2008: $1,125,000
  

• Greenwood: (signed for 3 more years)
  Release before June 1

  
  Accelerated bonus pay: $4,200,000
  Salary Savings: $3,264,000
  Net Savings: -$936,000
  

  Release after June 1

  
  Bonus Pay: $1,400,000
  Salary Savings: $3,264,000
  Net Savings in 2007: $1,864,000
  Dead Money in 2008: $2,800,000
  

• DW/DD: (signed for 3 more years)
  Release before June 1

  
  Accelerated bonus pay: $3,900,000
  Salary Savings: $3,340,000
  Net Savings: -$560,000
  

  Release after June 1

  
  Bonus Pay: $1,300,000
  Salary Savings: $3,340,000
  Net Savings in 2007: $2,040,000
  Dead Money in 2008: $2,600,000
  

• Wiegert: (signed for 4 more years)
  Release before June 1

  
  Accelerated bonus pay: $2,500,000
  Salary Savings: $2,500,000
  Net Savings: $0
  

  Release after June 1

  
  Bonus Pay: $625,000
  Salary Savings: $2,500,000
  Net Savings in 2007: $1,875,000
  Dead Money in 2008: $1,875,000
  

So, releasing DW/DD and Greenwood before June 1 would actually cost us money this year, and Wiegert would give no savings this year.

If we released all 5 before June 1, the net savings this year would be $704,000. If we released all 5 after June 1, the savings would be $11,104,000 this year (i.e. that much more we can spend). But, we would also have $10,400,000 of dead money (i.e. that much less salary cap) in 2008. For comparison, we have $14,675,000 in dead money being charged against our cap this year for three players we cut last year after June 1.

There are some other details that could change things. For example, I believe some players earn workout bonuses and there are some other charges that could be fixed in one year or another, but these numbers ought to be pretty close, assuming that website is correct.

Good post, but I think you are not looking at the savings relative to the 2007 cap quite right.

For example if DC's current cap charge for 2007 equals $7.25MM with $2MM ammortized bonus and $5.25 base pay, then an outright release would provide a $3.25MM cap savings in 2007. ($7.25MM minus accelerated bonus proration $4MM) Post June 1 the savings would be $5.25 for 2007 and $2MM in 08.

Great post though.