Dead Cap

7:55 EDT

Tom Kowalski of Mlive.com wrote an article about the Lions 2008 "Dead Cap". The article is well written and accurate.

What is Dead Cap? - Dead Cap is having salary cap space used by players who are no longer under contract.

How does that happen? - Most NFL player contracts are not guaranteed and therefore a team can cut a player at any time and not pay the remaining terms of the contract.

If you don't have to pay the remaining contract, how does a team acquire dead cap? - It is attributable to signing bonuses and other items treated as signing bonus, that, for salary cap purposes are prorated over the life of a players contract. For more information on these bonuses, refer to my blog entry, that explains these items. If a player is cut in the 4th year of a five year contract, there is "dead cap" for the unamortized portion of the signing bonus.

Why do the Lions have so much Dead Cap? - When Rod Marinelli took over the Lions in January of 2006, there were about 70 players under contract, the 53 active members of the roster, some players that were on IR and some players signed in early January. Of those 70 or so players, only 14 remain under contract and it's expensive to revamp an entire roster like the Lions have done over the past two years.

Kowalski's list of the Lions 2008 Dead Cap totals $15,192,000 (Plus another $2M of Dead Cap in 2009 for Kalimba Edwards) and based on history, we'll have another $1,100,000 from the normal course of business (injury settlements, workout bonuses, etc):

• 4,271,000 Shaun Rogers
• 3,000,000 Damien Woody
• 2,333,000 Fernando Bryant
• 1,360,000 Kenoy Kennedy
• 1,000,000 Kalimba Edwards (Plus another $2M to be recognized in 2009)
• 1,000,000 Eddie Drummond
• 741,000 Kevin Jones
• 500,000 Shawn Bryson
• 333,000 Rex Tucker
• 240,000 AJ Davis
• 180,000 Barry Stokes
• 150,000 Blaine Saipaia
• 84,000 Johnny Baldwin

Here's a list of the Lions 2007 Dead Cap that totaled $20,056,000:

• 5,448,000 Mike Williams
• 3,275,000 Charles Rogers
• 1,760,000 Ross Verba
• 1,600,000 James Hall
• 1,500,000 Corey Bradford
• 1,300,000 Dre Bly
• 1,000,000 Josh McCown
• 767,000 Marcus Pollard
• 530,000 Eddie Drummond
• 500,000 Shawn Bryson
• 383,000 Rex Tucker
• 333,000 Marcus Bell
• 275,000 Donte Curry
• 185,000 Barry Stokes
• 120,000 AJ Davis
• 1,080,000 Miscellaneous others (Injury settlements and workout bonuses)

In 2006, the Lions had almost $13,889,000 in Dead Cap:

• 7,088,000 Joey Harrington
• 3,340,000 Charles Rogers
• 1,350,000 Cory Bradford
• 469,000 LeVar Woods
• 375,000 Dan Wilkinson
• 167,000 David Loverne
• 1,100,000 Miscellaneous others (Injury Settlements and workout bonuses)

Since Rod Marinelli has been here, he's cleaned up the roster, but that cleaning has had consequences, to the tune of over $52M of Dead Cap, almost 16% of the salary cap space for that time period. The salary cap for the time frame has been a total of $327,727,000 (102M in 2006, 109M in 2007 and 116,727,000 in 2008).

Failed first round draft picks have accounted for $19,151,000, pre-Rod Marinelli:

• 7,088,000 Joey Harrington
• 6,615,000 Charles Rogers
• 5,448,000 Mike Williams

We've gotten some value for some of the players:

• $4,271,000 Shaun Rogers (for L. Bodden and a 3rd rounder in 2008)
• $1,600,000 James Hall (5th round draft pick in 2007)
• $1,300,000 Dre Bly (acquired G. Foster, T. Bell and a 5th rounder)
• $1,000,000 Josh McCown (for a 4th rounder in 2007 from Oak, along with M. Williams)

As I posted in an earlier blog entry, 2009 Cap Outlook, we are in good shape for 2009 with realistic cap commitments of $78M with a projected salary cap in the neighborhood of $120M (42M under). Dead Cap should be less of an issue going forward, this is Marinelli's roster now and there shouldn't be much of turnover in 2009.

June 1st Designation

6:20pm EST

June 1st is an important date in the NFL. Players cut before this date, must have any unamortized signing bonus accelerated to the current year. Players cut after this date, have any unamortized signing bonus money accelerated to the next season. Several years ago, before teams got the hang of the salary cap, June 1st cuts were a big deal and there would be several quality veterans that would be cut on this date. With the large salary cap increases (42% increase in the last three years) and the fact that teams have learned to manage their cap much better, there isn't as great of a need to wait until June 1st to cut players.

With the most recent CBA extension, there was a new rule implemented. It allowed teams to designate up to two players as June 1 cuts, release them immediately and have the cap implications treated as if the player(s) were cut on June 1st. Both the owners and the players wanted this designation. The owners because they could release players now, free up a roster spot to sign veteran free agents. The NFLPA wanted this rule, because it allowed the players to be free to negotiate a contract earlier in free agency instead of having to wait until being officially cut on June 1 to look for a new team. In the past, most teams had used most of their current year cap space by June 1st and had little cap space to sign these players. Players released after June 1st often times had very limited options.

I see two potential candidates for possible June 1st designation

Kalimba Edwards

Edwards was a healthy inactive for the final two games of the 2007 season, he's due a base salary of $3.9M and $100,000 workout bonus. The Lions are not going to pay that kind of cash to a player that they didn't even think could help their team late in the 2007 season. In 2006, Edwards signed a 5 year contract and received an $5M signing bonus. $1M is allocated to each year ($5M/5 years) and $1M is already accounted for in the Lions cap costs for 2008, while another $1M is allocated to 2009 and 2010. If Edwards is released outright or traded, the Lions will save $2M against the cap ($4M in compensation less the $2M allocated to 2009 and 2010). If he's designated as a June 1st cut, the Lions will save $4M against the current year cap on June 1st and have $2M of dead cap in 2009. Dead cap is having a cap cost for a player without having the player on the team.

Kenoy Kennedy

The Lions have recently drafted two 2nd round safeties, one in each of the past two years, Gerald Alexander in 2007 and Daniel Bullocks in 2006. They recently signed former Tampa Bay Buccaneers safety, Dwight Smith to a two year contract and signed Tampa Bay Restricted Free Agent, Kalvin Pearson to an offer sheet (The Bucs have until mid next week to decide to match or not). The Lions have never carried more than four safeties and Kennedy looks to be the odd man out. In 2005, the Lions signed Kennedy to a 5 year contract and gave him a $3.4M signing bonus, $680K allocated to each season ($3.4M/5 years). He's due $2.7M in base salary for the current season. The base salary of $2.7M and the 2008 portion of the signing bonus is included in the Lions current year cap figure. If Kennedy is traded or released outright, the Lions will save $2.02M against the 2008 cap ($2.7M less the $680K allocated to 2009). If they release Kennedy and designate him as a June 1 cut, they'll save $2.7M against the current year cap and have $680K of dead cap space in 2009.

Based on what the Lions have done thus far in free agency, leads me to believe that they probably designated Fernando Bryant as a June 1st cut.

Fernando Bryant

When Bryant was cut on 02/25/08, he had two years remaining on his contract. Back in 2004, Bryant signed a 6 year contract with the Lions, he received a signing bonus of $7M, which was prorated proportionately over the entire 6 years of his contract ($1,166,667 per year). In 2008, Bryant was due to receive a base salary of $3.35M, a roster bonus in early March of $500K and his current year cap cost was scheduled to be $5.017M (3.35M+500K+1.167M). When he was released (assuming the Lions didn't use the June 1 designation on him), they saved his current year compensation of $3.85M less the unamortized portion of his signing bonus allocated to 2009, for a net savings of $2.683M. If Bryant was treated as a June 1 cut, the Lions would save an additional $1,167M.

Travis Fisher, Chuck Darby and Brian Kelly have all recently signed three year contracts and George Foster signed a one year deal. Cap costs for the recent signings will be calculated when more details become available.

Estimated Cap Status $8M Under

Free Agency Begins

1:35pm EST

As of February 29th at 12:01am, the Lions have officially entered their playoffs (free agency), that will culminate with our SuperBowl appearance late April (NFL draft).

As with any sport, there is a business aspect to football. There are rules and regulations that all NFL teams must comply to. If there weren't, we'd have the disparity that exists in baseball (although with recent changes, that disparity is less today than it has been in the past). Those rules are an agreement between the owners and the players that are outlined in the Collective Bargaining Agreement, commonly referred to as the CBA. The Salary Cap is one of the rules that greatly limits and effects what a team can and can not do. The CBA is a 400 plus page document that is basically the rule book for the NFL. If you're interested in reading it (get a life!!), it can be found at the NFLPA.Org's website at the following address http://www.nflpa.org/CBA/CBA_Complete.aspx. It does have some interesting information if you want to scan it.

For players that were only signed through the 2007 season, their contracts officially expired at midnight on February 28th. These players are now free agents and according to the rules of the CBA, they are lumped into one of several different classes of free agents, based on the number of accrued seasons they have. A player gains an accrued season anytime he's on the roster (active, inactive, injured reserve) for six regular season games.

Exclusive Rights Free Agents (ERFA) – These players are players that have less than 3 accrued seasons. They are not allowed to negotiate a contract with any other teams, other than their current team and if they want to play, they must sign a contract for the league minimum based on their years of service in the NFL. The Lions had four such players. DeVale Ellis has already signed his contract for 445K. I would assume that the others have been offered a contract, but have yet to sign it. Sean McHugh (535K), Greg Blue (370K) and LaMarcus Hicks (370K).

Restricted Free Agents (RFA) – These players have 3 accrued seasons and can be tendered a contract of 4 different amounts. For 2008, the amounts are General Tender ($927,000), a 2nd Round tender ($1,417,000), a 1st round tender ($2,017,000) or a 1st and 3rd round tender ($2,562,000). The Lions had four players qualify:

• Langston Moore (6th Round)
• Dan Orlovsky (5th Round)
• Stephen Peterman (3rd Round)
• Stanley Wilson (3rd Round)

The Lions elected to give them all a general tender. What that means is the Lions have offered to sign them for the 2008 season and pay them $927,000, provided they make the team. These players can either sign the tender and join the Lions or they can sign a contract with another team. If they elect to sign with another team, the Lions would have the option of either matching that contract and retain the player or receive draft choice compensation from the acquiring team equal to the round in which they were originally drafted.

Unrestricted Free Agents (UFA) – These players have at least four accrued seasons and are free to negotiate with the Lions or any other team. Players released by other teams are allowed to sign a player contract before the start of free agency. If a player is not released, he may only negotiate with his current team before the start of free agency. The Lions signed two free agents before free agency began.

• Dwight Smith (cut by the Vikings) – Reportedly a two-year, $5M contract that will pay him a signing bonus of $350K, a roster bonus of $300K and a base salary of 1.35M in 2008 and a roster bonus of $750K and a base salary of $2.25M in 2009. The current year cap charge will be $1,825,000.
• Keith Smith – Reportedly signed a two-year, $5M contract with the Lions. Although there are currently no details of his contract available, his current year cap hit will likely be about the same as Dwight Smith's.

The Lions also cut one player before the start of free agency.

• Fernando Bryant – He was due to make a base salary of $3.35M and had a roster bonus of $500K due in early March. Since he was cut, the Lions will saved his current year compensation of $3.85M less the unamortized portion of his signing bonus $1.167M or about $2.683M.

The Lions also had three players that elected to void the final year(s) of their contract. Damien Woody, George Foster and Tatum Bell. When a player voids his contract, the salary cap effect of the voided contract works the same way as when a player is cut.

• Damien Woody – In 2007, Woody agreed to take a $2.25M pay cut and in return, the Lions gave him the option to void his contract at the end of the 2007 league year. He was due to make a base salary of $4.5M this year. Since he voided his contract, the Lions will save his base salary of $4.5M less the unamortized portion of his signing bonus of $1.5M or about $3M savings.
• George Foster – The Lions acquired Foster in a trade at the start of the 2006 season and Foster was due a base salary of $871, 250 plus a workout bonus of $35,000. Since he elected to void his contract, the Lions will save $906,250 against the current years cap. Since he was acquired in a trade, there was no unamortized signing bonus, Denver had originally paid his signing bonus.
• Tatum Bell – In the trade for Foster, the Lions also acquired Bell. His base salary for the 2008 season was $545,000 and since he elected to void his contract, the Lions saved $545,000.

In summary, Adam Schefter of NFL.com had the Lions at $6.8M under the cap on February 21st. Since that time, the Lions had cap charges from three ERFA's $1.275M, four RFA's $3.7M, signed two free agents $3.65M. And had cap savings of about $7.125M from four players that were either cut or voided their contracts which would put them about 5.3M under the cap (6.8M + 7.125M - 1.275M - 3.7M - 3.65M).

Keep in mind that player contracts are several pages long and include base salaries, signing bonuses, option bonuses, roster bonuses, report bonuses, workout bonuses, salary advances, likely to be earned bonuses, non-likely to be earned bonuses, escalators and voiding provisions. All of these amounts are and can be treated differently depending on the wording of the contract and how it relates to the CBA. As a result, the numbers that I've posted and how they effect the Lions salary cap are only reasonable estimates and shouldn't be interpreted as exact.