Monday Money Matters

Today’s date, June 1, used to truly mean something in the NFL, a snapshot date for roster management and Cap planning from year to year. Specifically, anything happening on the transaction front after this date would be treated, for Cap purposes, as if it happened the following year -- kind a of a Salary Cap time-warp date in the NFL.

To explain, many NFL player contracts have guarantees in the form of signing bonuses that, for Cap purposes, are prorated throughout the life of the contract. Thus, a five-year deal with a $10 million bonus is treated as $10M for cash purposes in the year negotiated, but only as $2M for Cap purposes in the year negotiated. That’s all well and good unless and until the team decides – for whatever reason -- it has had enough of that player on its team. 

If and when teams were to release or trade a player prior to June 1 of, say, year three of his contract, the remaining years of prorated bonus would immediately accelerate into the team’s Cap. For example, if that player were released in March of year three, $6M of unamortized bonus would immediately accelerate into the current year. But if that same player were released in that same offseason after June 1, the current year would carry the $2M of proration for that year and the remaining $4M of acceleration would hit the Cap the following year.

At the Packers, we dealt with a few players we carried on the roster through the major part of the offseason before a more attractive Cap option for their release – post-June 1 – became available. I vividly remember putting in the transaction for us to get out from under the contract of Antonio Freeman on June 3, 2002 – a contract that had hampered us for a while – the same day my son was born. I called the move in from the delivery room at the hospital. I will never forget that as a day I cut two cords.

Similarly, we also targeted and signed players who were finally set free after June 1, with mixed results. Two of those were Hardy Nickerson and Tim Couch; Hardy lasted a season, Couch a couple of months.

This credit-card method of delaying Cap medicine has become less common in recent years. At the Packers, and at many other teams such as the Eagles (for whom I presently consult), Vikings, Bears, Chargers, Bucs and others, Cap numbers are being frontloaded early in contracts to avoid future acceleration issues that have caused teams much danger in the past.

Now that I’ve explained that scenario for June 1, you don’t have to worry about the rule anymore. It’s over, at least for the time being. Due to the fact that – as we sit here today – 2010 is an uncapped year and 2009 is the last capped year, the June 1 rule is out the window. Anticipating the possibility of no Cap in 2010, the NFL and NFLPA set rigid rules preventing the possibility of “Cap dumping” into that year and disallowed many maneuvers that have been part and parcel of Cap planning since its inception in 1993.  Pushing Cap acceleration into the subsequent year by waiting until after June 1 is no longer allowed. Thus, all players cut or traded after June 1 are treated exactly the same as players cut or traded before June 1 in 2009. The remaining Cap hit/acceleration/unamortized bonus accelerates completely into 2009, the last year of the Salary Cap (for now).

Although this would be potentially difficult news were this happening a few years ago, most teams have managed the Cap well, and, along with the infusion of the CAM adjustment of almost $5M into 2009, this will not be a big problem for teams (although there are a couple teams that would take every bit of Cap room they could right now).

The abolition of the June 1 rule is one of several that have and will continue to be discussed in this space that will change the way the NFL operates unless a deal is forged between the NFL and NFLPA. Negotiations between the two sides begin this week as teams, players and fans wait to see if we retain the system we have or face the business of football as we have not known it before.

So welcome to June, a new and different one in the NFL.  Enjoy your Monday.

Follow me on Twitter: andrew brandt.

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