Cap Ramifications Of Ray Rice’s Legal Issues

As more and more details come out about the “altercation” between Ray Rice and his fiancée in Atlantic City, it starts looking worse and worse for Rice.

Clearly, whatever happened has damaged his “good guy” reputation in the court of public opinion – perhaps forever – and has caught the eye of the NFL offices in New York. It’s a situation that can’t make the Ravens Front Office very happy either and they are probably in major damage control mode at this point.

It has also driven fans to question whether the Ravens should release Rice and what the implications of such a move would cause.

So first, the numbers:

Rice has 3 years left on the 5-year, $35M contract he signed in 2012. His Cap number for 2014 is $8.75M, which includes his $4M base salary and the $4.75M proration from his 2012 Signing Bonus and his 2013 Option Bonus.

The key number for this discussion, though, is the $14.25M in bonus prorations for those final 3 years of his contract. When a player is no longer on the team, this amount that still counts against the team’s Cap is what is known as “dead money”.

So, let’s run those numbers out.

If the Ravens decided to release Rice, they would be relieved of having to pay his base salaries, which would also no longer count against the Cap. However the team WOULD have to account for that $14.25M in dead money – money that has already been paid to Rice, but has yet to count against the Cap.

If Rice is released prior to June 1st, all of that $14.25M will count immediately against the 2014 Cap. Since Rice is presently set to count $8.75M against the Cap, his release would cause an additional $5.5M to count against the Cap. That’s $5.5M more than he presently counts. To put that into perspective, the $4.6M in Cap space that was just created by the contract extension for Terrell Suggs would be gone.

On the other hand, in order to lessen the impact of the entire $14.25M hitting all at once in 2014, the Ravens could instead release Rice after June 1st (or prior, by using one of their two June 1 exemptions). However, a post-June 1 release will cause dead money – a lot of it – to hit in 2015. With a post-June 1 release, the Ravens only have to count this year’s bonus proration of $4.75M against the Cap in 2014, but the remaining $9.5M would then hit against the 2015 Cap.

Needless to say, neither option is particularly palatable.

So far, the Ravens have been very clear that Rice is going to be a Raven next season. Perhaps, if more and more negative information comes out, they may be forced to reevaluate that stance, but as of now, it appears that Rice will not be released.

Still, another issue of great discussion – most notably on the radio and message boards – is the possibility of voiding Rice’s contract and recouping the bonus money already paid to Rice. Given that Rice looked like a shell of his former self in 2013, some wonder if this incident could give the team a chance to get out from underneath of the contract that Rice isn’t exactly earning.

The term “morality clause” has become a major talking point – but without any real context.

The morality clause, contained in Paragraph 11 of the standard NFL contract, simply allows teams to release players for “skill, performance and conduct”. The morality clause, however, does not allow a team to recoup any Bonus money paid (much less his entire bonus).

Of course, the team and, more importantly, the Commissioner do have the ability to suspend a player. If a player is suspended, the team does get a rebate – in cash and Cap – in the amount of the total of the game checks lost by the player during the suspension. Obviously, assuming any suspension for Rice would only be for a couple of games at most, that’s not likely to be a major amount in this situation.

What the CBA does allow is for the team to recoup a portion (notice – a “portion”) of a player’s bonus money when the player commits a “forfeitable breach” by being unavailable to play for his team. Under Article 4, Section 9 of the CBA, unavailability basically comes down to a player retiring early, a holdout, a suspension or incarceration.

However, simply being released by his team before being arrested for a crime does not make a player “unavailable” pursuant to the terms of the CBA. So, the player must be on the team’s roster if and when the player is actually unable to perform due to a “forfeitable breach”.

That obviously shoots down the theory of using the “morality clause”.

At this point, missing time due to incarceration seems unlikely, but a suspension by the league would appear much more likely. In that case, a forfeitable breach would occur.

So, not only would the team receive a Cap rebate of the salary lost by the player, but would also receive a credit for the bonus forfeiture.

If a forfeitable breach occurs, the team can only recover a proportionate amount of bonus money, based on the amount of time the player is actually unavailable.

In Rice’s case, a suspension would cost him $235,294 per game from his base salary of $4M and the team would get a Cap credit in that amount. The amount of any corresponding bonus forfeiture would depend on the length of the suspension.

If the suspension is for 1-4 games, the CBA says “the player may be required to forfeit up to twenty-five percent (25%) of his Forfeitable Salary Allocations upon missing his first regular season game”. Pursuant to the CBA, the “Forfeitable Salary Allocation” applies only to Signing Bonus prorations, and not Option Bonus prorations.

So how does this pertain to Rice?

In the event of such a suspension, the Ravens could receive a bonus forfeiture of $750K (25% of his $3M 2014 Signing Bonus proration) assuming Rice is forced to miss 4 games or less.

It is important to note that bonus forfeiture is completely at the discretion of the team and not automatic. So, whether the Ravens were to pursue recouping some of Rice’s bonus would entirely be up to them, but they have done so with lesser players and lesser offenses in the past.

Regardless, any hopes of voiding Rice’s contract in an effort to escape his contract and recoup millions of dollars is totally misplaced.

As of now, though, it’s wait and see for the Ravens.

They appear unlikely to release Rice, so they will have to wait and let the judicial system and the Commissioner’s office decide Rice’s fate before the team can decide if it wants to take more money away from Rice.