How does McNair’s retirement impact the Ravens Salary Cap?

Salary Cap How does McNair’s retirement impact the Ravens Salary Cap?

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With today’s announcement that Steve McNair has decided to retire, the Ravens are faced with several important decisions. 
 
First, there is an obvious need to bring in a veteran quarterback or go with Kyle Boller, Troy Smith and a rookie.  It’s no secret that the Ravens intend to draft a quarterback early, so McNair’s decision shouldn’t greatly impact that.  Prior to today’s announcement, many speculated that if the Ravens did draft a quarterback on Day 1, either McNair or Boller would be released (or possibly traded in Boller’s case).  McNair’s retirement announcement technically makes that decision for Ozzie Newsome and John Harbaugh.
 
If the Ravens do go outside the organization for help at quarterback, they will be choosing from a less than impressive collection of discarded signal callers.  Moreover, trading for another quarterback would cost draft picks and/or money at a time when the Ravens have little Cap maneuverability.  Given these factors, it appears likely that they will just stick with what they have since any Day 1 quarterback drafted this year is likely to be a starter at some point in 2009 anyway.
 
So how does today’s announcement affect the Cap?
 
Currently the team is $4.239M under the Cap.  They can take the McNair Cap hit now by treating this as an immediate retirement or they can spread it out over this year and next by processing his release before he files his retirement papers (just a formality since everyone knows that he is retiring).
 
McNair presently counts $6.45M against the 2008 Salary Cap.  This number includes $4M in base salary and the 2008 pro-rata share of his bonus money, which is $2.45M.  Without McNair on the team, the team will be relieved of having to pay his base salary of $4M, but will have to account for the final three (2008, 2009 and 2010) portions of his pro-rata bonus money ($11M bonus in 2006, $1M bonus in 2007).  These three installments of $2.45M total $7.35M in dead money (money counting against the Cap for players no longer on the team).   
 
If the team processes his retirement immediately, then the entire $7.35M will accelerate and count against this year’s Cap, in which case, an additional $900K over and above his current figure of $6.45M, thus reducing the amount under the Cap to $3.339M.
 
On the other hand, if the team processes his release before McNair files his retirement papers, the team can treat him as a June 1 release.  If they decide to handle it that way, the team will save $4M against this year’s Cap, with only $2.45M in dead money counting against the ’08 figure.  They will however be charged with $4.9M in dead money against the 2009 Cap. 
 
From this vantage point, the guess – and hope – is that they will take the entire Cap hit now and add the $900K to this year’s Cap.  By doing so, there will be no lasting Cap implications going into the future.  The blow of having to do so will likely be softened by two upcoming events.  Assuming Jon Ogden retires, the team will get another $2.515M in Cap space after June 1.  Also, assuming they feel confident that they will eventually get Terrell Suggs signed to a new contract, they will see an additional $3-5M in Cap savings when he is re-signed since he is presently counting over $8M against the Cap.  That should leave them with plenty of Cap space to get their rookies signed and do whatever else is necessary from here on out in 2008.
 
Photo by Sabina Moran

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Brian McFarland

About Brian McFarland

Known on Ravens Message Boards as "B-more Ravor", Brian is a life-long Baltimorean and an avid fan of the Ravens and all Baltimore sports.  A PSL holder since 1998, Brian has garnered a reputation as a cap-guru because of his strange (actually warped) desire to wade through the intricacies of the NFL's salary cap and actually make sense of it for those of us who view it as inviting as IRS Tax Code.      Brian, who hails from Catonsville, MD and still resides there, is married and has two children. More from Brian McFarland

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