Dead Money In The NFL

Headlines this morning at several sports websites say something like this:

    Saints cut CJ Spiller
    Saints carrying $40M of dead money

Perhaps a short tutorial on “dead money” as it pertains to the NFL Salary Cap would be in order. Let me say from the outset, that I am not a “capologist” but I think I understand this one sufficiently to explain it.

Suppose a team signs a player – the ever-present Joe Flabeetz – to a deal that is announced as a 5-year contract worth $30M. That would be simple if indeed that contract called for the player to get $6M every year – – but none of them do that. To make my example simple, let us say that this contract breaks down this way:

    5 years of annual salary at $4M each year = $20M
    1 signing bonus paid immediately = $10M

To calculate the salary cap impact for Joe Flabeetz, the signing bonus is pro-rated over the life of the contract meaning he costs the team only $6M in the first year ($4m in annual salary + $2M in prorated signing bonus money) even though the team has shelled out $14M in that first year. Not to worry, in the final year of the contract, the team will shell out only $4M in salary, but the “cap hit” will still be $6M ($4M in annual salary + $2M in prorated signing bonus money). Not very complicated, right?

Well, what happens if the team cuts good old Joe Flabeetz just after the second year of the contract.

    Flabeetz keeps the $10M signing bonus and the $8M he earned for the first two seasons ($18M)

    The team does not owe him anything once he is cut because the contract is not guaranteed.

However, all of that prorated bonus money in Years 3,4 and 5 need to be accounted for. Those pro-rated bonus numbers total $6M and that “cost” all goes against the team’s salary cap for Year 3. Therefore, the team has cap money on their books in Year 3 but they will get no benefit from that money because Joe Flabeetz is not on the squad. Hence the term “dead money”.

CJ Spiller looked like a potential star coming out of college at Clemson; in his third year with the Bills, he gained over 1200 yards rushing. However, an injury in 2014 seems to have had a major impact on his performance. The Saints owe him a total of $9M beyond what he has been paid plus they just paid him a “roster bonus” of $1M which gets pro-rated over the life of his contract. By cutting him, all that money is counted against the Saints’ cap for 2016 and when you add Spiller’s “dead money” to other “dead money” the Saints have on their books, the total comes to $40M.

If you wonder why the Saints did not sign any top-shelf defensive free agents during the off-season, this could well be the explanation. It is not clear how the team got into this mess, but it surely seems as if someone has been asleep at the switch. Or perhaps there has been confusing oversight from a financial standpoint given the legal entanglements between factions within the family of Saints’ owner, Tom Benson. In any case, it is a mess…

Here is an item I ran across in Dwight Perry’s column, Sideline Chatter, in the Seattle Times:

“Sales of Colin Kaepernick No. 7 jerseys have skyrocketed since the 49ers QB started sitting in protest during the national anthem.

“In an odd twist, suppliers complain they’re getting inundated with standing orders.”

I mention that here because I think Kaepernick’s protest has hit a plateau. Let me restate my position on the protest for clarity purposes:

    I have no problem at all with the issue that he has identified as problematic to him.

    I acknowledge and defend his right to do what he is doing.

    On a personal level, I would have preferred that he choose a different method to manifest his protest; but that is my opinion and he is the one doing the protesting, not I.

The story started out as a big deal. It was the talk of sports radio and TV punditry in the world of sports and politics. Heck, even President Obama commented on his protest. Then a few other athletes joined in symbolic support of his protest. And that seems to be where things have stalled. Colin Kaepernick started something that is important to him – and certainly to other folks in the US. I think his challenge now is to find some way to move the discussion forward to something beyond “Which teammate and/or other athlete will join in his protest this week?” The answers to that question are interesting but not germane to resolving the core issue that Kaepernick raised in the first place.

I am not going to presume to tell Colin Kaepernick what to do next or how to take the next step in this protest. However, I do think that it has come to the point where he needs to take a next step in a positive direction.

Finally, let me go back to the Dwight Perry well one more time here:

“The hamlet of Endwell NY is all agog after its band of 12-year olds delivered the U.S. its first Little League World Series championship since 2011 with a 2-1 win over South Korea on Sunday.

“In other words, all’s well in … nah, too easy.”

But don’t get me wrong, I love sports………