Could a Ravens’ loss on Sunday actually be better for the team’s future?
1. THE FINAL EIGHT
When considering what an “uncapped” season might look like and the potential damage that it could do to the league’s competitive balance (i.e. parity), the NFL Players Association and the league owners decided to create a specific set of rules that would act as a safeguard against teams going hog wild when no longer constrained by a salary cap. Those rules, set out throughout the league’s Collective Bargaining Agreement (“CBA”), aim to limit free spending clubs and allow the lower revenue teams to remain competitive.
One of those measures is the “Final Eight Plan”, which sets out to limit what the best 8 teams can spend, and when they can spend, on Unrestricted Free Agents (“UFAs”). Contained in Article XXI of the CBA, the Final Eight Plan places limits on those teams advancing to the Divisional Round of this year’s playoffs and then further restrictions on the 4 teams that advance to the Conference Championship games.
The 4 teams that advance to the Conference Championship games are subject to the following restrictions with regard to the signing of UFAs:
· They may re-sign an unlimited number of their own UFAs;
· Any UFA who has been released by his prior club. These UFAs are often commonly referred to as “Street Free Agents”; and
· Any UFA to replace each UFA that has been lost by the team, so long as (1) the first year’s salary of the player signed (base salary, roster bonus, signing bonus proration) does not exceed that called for in the new contract of the player lost, (2) all future years’ salaries of the newly signed UFA do not annually increase by more than 30% of the player’s first year salary and (3) the contract cannot be renegotiated to raise the player’s compensation until at least one year after it’s signed.
The 4 teams that lose in the Divisional round are also subject to the same restrictions, but those 4 teams are also allowed to sign one UFA, whose first year salary is in the $5-6M range, and an unlimited number of UFAs as they can whose first year salary is in the $3-4M range. Those ranges are approximate and will be indexed based on the increases in league’s total revenue since 2006.
The final prohibition for the final 8 teams is that they will not be allowed to trade for a player who these rules would otherwise prohibit them from signing as a free agent.
So, while no Ravens fan wants to see the Ravens lose in New England this weekend, it wouldn’t necessarily be the worst outcome for the team’s long term goal of being a consistent Super Bowl contender – especially if you think the Ravens are a few key players away from that goal. Losing would free the team from the restrictions of the Final Eight Plan and the limitations that would be placed on the team’s efforts to improving their receiver corps, pass rush and defensive backfield, and ideally allow them to strengthen their roster for a more lasting run of success.
2. NO BONUS ACCELERATION IN 2010?
What is “bonus acceleration”?
Bonus acceleration is part of the NFL’s extensive accounting procedures that govern how signing (and option) bonuses are accounted for under the league’s Salary Cap. Basically, when a player receives a signing or option bonus, the amount of the bonus is prorated over the length of the contract (up to a designated maximum, presently 5 years) and, even though the bonus is paid all at once, the prorated amount counts against each year’s Salary Cap. If the player is traded or released, any of the unaccounted-for prorated bonus amounts will accelerate and count immediately against the team’s Salary Cap.
For example, if a team signs a player to a 5-year contract and the player receives a $5M signing bonus, then that $5M bonus is prorated over the 5 years of the deal and will count $1M against the Salary Cap in each year of the contract. If the player is traded or released prior to the 3rd year of the contract, then that year’s $1M proration continues to count against the Salary Cap and the proration amounts for years 4 and 5 – those that have yet to count against the Cap – will accelerate, so that a total of $3M will immediately count against the team’s Salary Cap. In that way, the entire $5M of the bonus that was paid to the player will count against the team’s Cap at some point, regardless of whether the player is still with the team or not.
The league’s Collective Bargaining Agreement (“CBA”) also has extensive provisions that address how the league is to operate in a “capped” year, the “final capped” year (which is how 2009 was governed) and an “uncapped” year. If no agreement on an extension of the CBA is reached by the NFLPA and the league owners is reached by March 5, 2010, then the NFL will experience its first regulated “uncapped” year.
As the prospects of an uncapped year has become more and more of a possibility, many in the media have portrayed an “uncapped” year as an opportunity for teams to jettison the bloated contracts of underperforming veterans. The reasoning for this seems solid – without a Salary Cap, the acceleration of bonus money caused by the trade or release of the player would be of no consequence, because there would be no Salary Cap to impact.
However, a closer reading of the league’s CBA indicates that that may not actually be the case. The language of Article XXIV Section 7(b) (ii) of the CBA specifically says that when a player is released or traded in a “capped” year (prior to June 1) and at any time during the “final capped” year, the remaining unaccounted-for prorata shares of bonus money will accelerate and count against the Cap. However, while the rules specifically direct acceleration in “capped” year and the “final capped” year, there is no such reference to acceleration in an “uncapped” year. In fact, there is no reference whatsoever to acceleration in an “uncapped” year. As such, based on the language of the CBA, it would appear that no bonus acceleration is authorized in an “uncapped” year and, therefore, the “uncapped” year will not act as a “get out of jail free” for team’s that want to get rid of the contracts of expensive players who are no longer worth their contracts.
The exact terms of the pertinent section of the CBA are as follows:
(ii) Acceleration
(1) For any player removed from the Team’s roster, or whose Contract is assigned to another Club via waivers or trade, on or before June 1 in any League Year prior to the Final Capped Year, or at any time during the Final Capped Year, any unamortized signing bonus amounts will be included in Team Salary for such League Year……..
(2) For any player removed from the Team’s roster or whose Contract is assigned via waivers or trade after June 1, expect in the Final Capped Year, any unamortized signing bonus amounts for future years will be included fully in Team Salary at the start of the next League Year.
Note that there is specific reference to the “Final Capped Year” and “any League Year prior to the Final Capped Year” (i.e. a “Capped Year”), but no reference to the “uncapped” year.
If this reading is correct, then the trade or release of a player (prior to June 1) would mean that there would be no bonus acceleration and teams would still have to carry the unamortized signing bonus amounts in future years, as they would have otherwise hit the Cap, just as if the player was still on the team.
This would mean that a lot of players who have been speculated to be released as part of a free dumping of contracts into the “uncapped” year may remain with their teams or may have to wait until June 1 to get some Cap relief (although not the full relief as hoped).
This is particularly of interest to the Ravens, who will likely have to determine the status of RB Willis McGahee. If 2010 was to be a totally unfettered, “uncapped” year, then it is likely that McGahee would be released, with no cap consequences. On the other hand, if, as it seems, there is no Bonus acceleration, the team may decide to stick with the veteran a year longer, in order to further reduce the amount of dead money that will count against the Cap if/when the player is released.
If the team still decided to release him, then he would count $2.5M against the 2010, 2011 and 2012 Caps and $1.25M against the 2013 Cap. Or, the team could use the post-June 1 release option, but that would still leave the team with $6.25M in dead money against the 2011 Cap (assuming the Cap has returned by then).
Now, all of this may well have just been an oversight that was missed within the 345 page CBA (and, since there’s never been an “uncapped” year under these rules, this provision has never been an issue before) and the league will (or already has) addressed this issue with the teams and NFLPA or it could be intended to be just one more of the provisions that was put in place to lessen the impact of a season without a Salary Cap. If it was an oversight, the league and NLFPA could agree to a change to the rule or they could possibly address the issue in the new CBA by retroactively freeing teams from this obligation.
Either way, though, it does appear that the reports that the “uncapped” year would allow teams to dump expensive, outdated contracts into the “uncapped” year, with no Salary Cap consequences, may not have been accurate.
