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The Ravens have a decision to make, one that could have lasting Salary Cap implications. And, they have to make it now!
Do they want to take all of Steve McNairâ€™s Cap hit in 2008 or do they want to take some in 2008 and the remainder in 2009?
Today is decision day and if they donâ€™t decide by the day’s end then as of Monday, June 2nd, the choice will be made for them.
Currently, McNair is still counting $6.45M against the 2008 Salary Cap because the team has yet to remove him from their roster. His Cap Number includes his base salary of $4M and the 2008 pro-rata share of his bonus money, which is $2.45M. Now that McNair has retired, 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 â€œdead moneyâ€ (money counting against a teamâ€™s Salary Cap for players no longer on the team). How that $7.35M will be accounted for will depend on which why the team decides to handle McNairâ€™s retirement.
If the team moves him to the Retired list by the end of today, then the entire $7.35M will accelerate and count against this yearâ€™s Cap, in which case, an additional $900K, over and above the $6.45M that he is presently counting, will be added to the Cap.
On the other hand, if the team does not transact him today, then the June 1 rules will apply. The CBA dictates that any player â€œremoved from the rosterâ€¦. after June 1â€ (by whatever means), shall only have that yearâ€™s pro-rata bonus share count for that year â€“ in McNairâ€™s case, $2.45M â€“ and the balance of any unaccounted-for pro-rata bonus shares shall accelerate and count in the following year â€“ in McNairâ€™s case, $4.9M. What this means is that the Ravens will receive an additional $4M in Cap space as of the date that McNair is moved to the Retired list, but will get hit with $4.9M in â€œdead moneyâ€ against the 2009 Cap.
Almost immediately after McNair retired it was reported that the team prefers to take the entire hit this year, thereby removing any lingering 2009 Cap charges for McNair. Now, given the wait, it appears that that might not be the case.
One reason for this could be the lingering issue of Jonathan Ogdenâ€™s retirement. While most reports indicate that he is still expected to retire, it does appear that the team is leaving the door open as long as possible if he changes his mind (or, perhaps, more accurately, his toe responds to treatment and allows him to change his mind). If Ogden retires as expected, the team would get an additional $2.5M in Cap space, which they will need to get their draft picks signed. The team is presently around $3.3M under the Cap.
Obviously, if Ogden were to change his mind, then the team would not have enough Cap space to sign their draft picks and have enough working Cap space going into the season to sign in-season injury replacements, fit in players on the Practice Squad and cover players on Injured Reserve. As such, it appears that the team is now planning on transacting McNair after June 1.
Another reason that this has become necessary is because the Ravens have yet to reach a long-term agreement with Terrell Suggs. Suggs is currently counting around $8.5M against the Cap as the teamâ€™s Franchise player. The first year Cap hit on any long-term deal for Suggs would likely be in the $3-5M range, which would create an additional $3.5-5.5M in Cap space. However, to date, it appears that contract talks are stalled, so the Ravens will have to create the necessary Cap space from McNair.
So, while the team would probably prefer to take all of McNairâ€™s Cap hit this year and simply get it over with, other circumstances appear to be aligned to make that unlikely.
However, the team would still have an option to offset any carryover from McNair and/or Ogden. If the team still has excess Cap space in December, the team can â€“ as it has the last couple of year â€“ write in some â€œphonyâ€ incentives for a player or two, which would allow them to move a bulk of that excess into 2009. Basically, the incentives are written in to never be met, but since they are added during the season, they count immediately, thereby using up the excess Cap space. Once the season ends and the incentives arenâ€™t met (since they werenâ€™t expected to be), the team is then credited that amount against the next yearâ€™s Cap.
So, for instance, if the Ravens had $4.9M in excess Cap space in December (which is possible if Ogden also retires and would be likely if Suggs is signed to a long-term deal), the team could end up getting that $4.9M back as a credit next year – essentially creating a wash with the $4.9M carryover because they had to transact McNair after June 1. So, while the team would probably prefer to take all of McNairâ€™s hit in 2008, they are likely to be able to recoup at least part of that amount â€“ and hopefully, the entire amount â€“ at a later time, lessening any impact of any â€œdead moneyâ€ being carried over into 2009.