2011 SALARY CAP UPDATE: Why the Ravens aren’t active in free agency

1.       Impact of “Black Money” Releases:

It’s been reported that the “Black Monday” releases of WR Derrick Mason, TE Todd Heap, RB Willis McGahee and DT Kelly Gregg has created $18.6M in Salary Cap space for the team. But that number isn’t entirely accurate.  The release of those players does remove $18.6M of what was attributable to those players (leaving $4.857M in “dead money” still counting against the 2011 Cap), but the overall impact on the Cap is a little less. 

Why?

Well at this time of the year, the Rule of 51 applies, which means that only the highest 51 base salaries and all bonus money attributable to 2011 count against the Cap.  So, when you remove 4 players who counted amongst the top 51, you have to add 4 players back in to replace them.  The net result then – since 3 of those players are making $450K and one is making $375K – is an actual Cap savings of just under $17M ($16.875M).

In addition, because of the releases of McGahee and Gregg, the team will have to carry $4.539M in dead money against the 2012 Cap.  There are no future Cap implications for Heap or Mason because they were in the final years of their deals.

2.       Teams Can Borrow Against Future Caps:

One new wrinkle added into the new CBA as part of the Transition Rules is a provision that allows teams to borrow up to $3M against future Salary Caps.  Basically, teams can designated up to 3 veterans, who have at least 5 seasons of accrued service time, and receive a $1M rebate on each of those players’ salaries for 2011.  If a team exercises this option, the amount borrowed will be deducted $1M each from the 2014-2016 Salary Caps. 

Given their tight Cap situation, look for the Ravens to take advantage of this option.

Teams will also have the option to borrow an additional $1.5M in 2012.

3.      Prohibition Against Renegotiating Rookie Deal:

One of the criticisms often leveled at Ozzie Newsome is that he waits too long to renegotiate and extend player’s contracts.  Now, the new CBA has pretty much removed that as a future criticism of the Ravens’ GM (joking).  One of the terms that the NFL owners fought for during the CBA negotiations was a provision to keep players still under their rookie contract from holding out or seeking a new deal.  The new provision prohibits players from seeking a renegotiation of their contracts until after they have completed their 3rd season.    

4.       Rookie Cap 

Various media reports indicate that the Ravens have a rookie Cap number (now called the “Year-One Rookie Allocation”) of $4.578M.  This is the maximum amount the team can allocate to the team’s rookies, including the undrafted free agents.  Since the Ravens have 8 draft picks, this means the 2011 Cap numbers for the 8 draft picks and any signing bonus prorations for the undrafted rookies signed by the team, must fit in under that number. 

However, the rookie Cap does not have a dollar-for-dollar impact on the team’s overall Salary Cap.  This is because of the Rule of 51 (as explained above) and the fact that most rookie contracts will contain a first year salary of the rookie minimum of $375K.  Presently (after the releases of the aforementioned 4 veterans), the bottom 8 salaries under the Rule of 51 all are making either $375K or more.  That means the $375K base salaries of the 8 rookies – a total of $3M – will not have any impact on the team’s overall Cap.  Because of this, only the bonus prorations for the draft picks and UDFAs will actually count against the team’s overall Cap.  So, of the $4.578M, the team will actually only need $1.578M in overall Cap space to sign its rookies.

Once the season starts, the full Cap number of all of the rookies who make the team will count against the Cap, but since those Cap numbers are lower than that of most veterans, the rookies will essentially be replacing a higher Cap number with their lower one.

5.      Present Cap space:

When many fans heard that the Ravens had created $18.6M by releasing the 4 veterans on Monday, visions of a huge Free Agent signing immediately started to abound.  However, much of that $18.6M was needed just to cover the players still on the team’s roster.  About a week ago, ESPN’s John Clayton reported that the Ravens were $1.8M over the Cap, but that number did not include the tenders for the team’s 8 RFAs (Jameel McClain, Oniel Cousins, Tavares Gooden, Haruki Nakamura, Jalen Parmele, Marcus Smith, Kelly Talavou and Tom Zibikowski).  Those RFA tenders amount to over $10M. 

In addition, the new CBA increased the minimum salaries at all levels by $55K.  About three-quarters of the players on the team have a base salary that is the league minimum for that player’s term of service.  While all of those don’t count amongst the top 51 Cap numbers, it still took away another $1.4M or so of the team’s Cap space.

So, based on the numbers Ravens24x7 has compiled detailed in this spreadsheet, the Ravens are approximately $7.5M under the 2011 Salary Cap of $120.375M for the moment.

This number does not yet include the contract of Marshal Yanda, since the exact details of his deal have yet to be disclosed.  His first year Cap number will likely be relatively low – in the $3-4M range – but that is still going to eat up a large amount of the available Cap space.

Also, as explained above, the team will also need to maintain a cushion of $1.578M for their rookie allocation.

In order to create some additional Cap space, the team will likely take advantage of the $3M “advance”, which will help, but the team is still pretty much tapped out at this point.

So, when people question why the Ravens have appeared to be so inactive, it’s pretty much because they have to be at this time. 

And as has been said in this space several times recently, getting DT Haloti Ngata signed to a contract extension and reducing his $12.476M Cap number (or restructuring some other deals) is imperative to allowing them some very needed Salary Cap flexibility.