Dennis Agapito of Let’s Talk Jets radio, guest posts with a great explanation of a topic that can be very difficult to fully understand, outside of an NFL front office.
There is often talk about post-June 1 cuts regarding NFL rosters, but what is the significance of a player released before or after June 1? Answer: The player’s salary cap hit, which the releasing team is responsible for, will be accounted for differently.
It is necessary to understand how certain salary is a accounted for under NFL salary cap rules before one can understand the benefits of a post June 1 release.
Specific types of payments are prorated or spread out evenly throughout a player’s contract, up to a maximum of five years.
The most well known one is the signing bonus.
If a player receives a $5 million signing bonus for a five-year contract, the player gets a $5 million check upon signing, but the money is prorated for salary cap purposes—counting $1 million per year for each year of the contract, including the year it is signed. This is a way of giving players a bigger payment with less of a cap hit, but there is a potential downside called acceleration.
If the above player is released after year-one of his five-year deal (4yrs remaining), the $1 million yearly signing bonus payment—spread out in the contract—now accelerates, or is added altogether, onto the current year’s cap. It becomes dead money or a cap charge for a player no longer with the team.
Under this scenario, if the player was released before June 1, assuming the contract was signed in 2014, the team would lose $4 million in cap space for 2015. But if the player is released after June 1, the team has a dead money cap charge of $1 million in 2015 and $3 million in 2016. The team still has a dead money hit of $4 million, but the acceleration (adding together of the prorated bonus) now takes place in the following season.
So a post-June 1 release gives a team more resources in the current year, which they may need, and pushes portions of the charge to the next year.
This is why some veteran players might become available after June 1. Teams have had their draft and gotten a look at younger players who could push out a high priced veteran. This isn’t to say the released veteran player isn’t good, but finances might cause a team to go with the cheaper player.
According to NFLPA records, the Kansas City Chiefs are about $2.5 million under their cap, and are in need of creating some space. They are likely to cut cornerback Brandon Flowers, but after June 1, because it will create $7.5 million in 2014 cap space, pushing $4 million in dead money to the 2015 cap. If Flowers were released before June 1, it would only create $3.5 million on the 2014 cap, but no charge for him in 2015.
Under the NFL’s Collective Bargaining Agreement (CBA), each team can designate two players as a post-June 1 release, even if they are actually released before that date. The team’s salary cap stays the same, as if the player is still on the team, until June 2—when they get their cap relief.
Former Dallas Cowboys receiver Miles Austin was given this designation since the Cowboys knew they were going to release Austin after the 2013 season, but wanted to get the post-June 1 2014 cap benefit. By giving him the designation, it allowed Austin to look for a new team—which he now has found with the Cleveland Browns—without having to wait until June 2, and the Cowboys get the cap relief they seek.
