What is the June 1 release deadline and how does it affect the Salary Cap?
If a player is released after the CBA mandated deadline of June 1st, the team gets the benefit of being able to spread the Salary Cap hit – or dead money – over two years. When a player is released after June 1, the team is again relieved of paying that player’s base salary for the year in which he is released (and all future years) and the only amount that counts against the team’s Cap in that year is the player’s bonus proration for that year. The remaining unaccounted-for bonus pro-rations accelerate against the Cap in the following year.
So, for example, when a player receives a 5-year contract, with a $10M Signing Bonus, that Bonus is prorated over the 5 years and counts $2M in each year. That $2M, plus the player’s base salary (and any roster bonus) counts in that year as the player’s Cap number.
If a player is released prior to June 1st, then all the bonus prorations that have yet to count against the Cap accelerate and count as “dead money” against the Cap. So, if the player is released prior to June 1st of the 3rd year of the contract, the team will take on $6M in dead money (the $2M bonus prorations for the 3rd, 4th and 5th years of the contract).
With a post-June 1 release, the team will only have to account for that year’s Bonus proration and all future prorations will end up counting in the following year. So, in the above example, instead of having to eat $6M in dead money in the 3rd year of the contract, the team would only have to carry $2M in dead money against the Cap for that year (which is that year’s bonus proration), but would have to account for the other $4M in dead money against the Salary Cap in the following year.
In the simplest terms, when a player is released after June 1, the team’s Cap savings for that year is the player’s Base Salary (P5), while the player’s bonus proration for that year is all that remains to count against the Salary Cap. The balance of the player’s bonus pro-rations will count in the following year.
Post-June 1 retirements and trades are treated the same way as a Post-June 1 releases.
Can teams release players prior to June 1 and still get post-June 1 Cap treatment?
Yes, teams are allowed to designate two (2) pre-June 1 releases for post-June 1 Salary Cap treatment. However, for the team, there really is no great advantage to using this designation because the player still fully counts against the team’s Salary Cap until after June 1st, at which point the player’s Cap number is treated as a post-June 1 release.
This provision was put in place to allow players to be released earlier than June 1 and hit the free agent market before teams have spent all of their free agent money and while teams are still looking to sign veterans to fill out their rosters. It’s essentially just an accommodation for the players and of little benefit to the team.
So, what is the significance of June 1st and 2nd on the NFL’s calendar?
June 1st has three (3) potential impacts for teams:
1. Because of the Cap relief involved, June 2nd can bring about a new crop of free agents hitting the market as teams will use post-June 1st releases to spread out the Cap impact of releasing players. However, the use of the Post-June 1 release exemptions has greatly lessened the impact of June 1 on NFL free agency. Prior to the advent of the Post-June 1 release exemption rule, June 1 was sometimes like the start of a second free agent period because teams had to wait until June 1 to release the player. That often meant a new influx of quality players into the free agent marketplace.
Now, since most of those players have likely already been released using the Post-June 1 exemption, there are now often very few quality additions to the free agent market.
2. On the other hand, for teams that are very tight against the Cap and have been waiting for the post-June 1st Cap relief, the dawning of June 2nd means the team is once again open for business. At that point, the Cap relief is realized and the team can go about its business of signing some free agents, or more importantly, finally getting its draft picks signed to contracts. This is why there are presently some teams that have signed very few of their draft picks – they don’t have the Cap space, but will as of June 2nd.
3. The last area where June 1 impacts free agency has to do with the role that Compensatory drafts picks play in roster building. Teams now appear to be catching on to the importance of Comp picks and are paying more attention to how to maximize their Comp picks prospects (something the Ravens have clearly understood for years).
June 1 comes into play because it is essentially the deadline for counting free agents as gains or losses for the Comp pick formula. For free agents who have yet to sign with other teams, their prior team must offer them a June 1 tender in order to retain their rights. This rarely happens, so after June 1st, teams are free to sign those free agents without worrying that such an acquisition is going to cost them a Comp pick.
This would explain Wednesday’s FoxSports report that players like OT Eric Winston and CB Drayton Florence – players who might be of interest to the Ravens – will be talking to interested teams next week.
Clearly, teams have been waiting to talk to and sign players like Winston and Florence because they don’t want to give up the possibility of receiving a Comp pick next year for guys that are now marginal players.
So, while there may be a small flurry of free agent signings next week, the players being signed will likely be players who have been waiting on the free agent market for months, instead of newly minted free agents who have just be released for Salary Cap reasons.