Q. Do the Ravens get an offset against Justin Forsett’s termination pay now that he’s signed with Detroit? And, what exactly is termination pay?
ANSWER: No, there are no offsets for termination pay. Forsett is entitled to be fully paid by Detroit and to claim the full amount of termination pay also.
Termination pay is available to “vested veterans” (players with four or more accrued seasons of service time) who are released by their team. The player can only elect to receive termination pay once during his career and the player has until after the season to make the decision to take the termination pay or not. Until that time, the termination pay counts on the team’s Cap. If the player elects to take the termination pay, there are not future consequences from the termination pay. If the player declines to take the termination pay, the team gets a credit in that amount against the following year’s Cap.
There are two types of termination pay available – (1) full season and (2) partial season.
If a vested veteran is on the team’s roster for the first game of the season, he is entitled to receive termination pay in the full amount of the balance of his base salary. This is often what is referred to when it is mentioned that a vested veteran’s salary becomes guaranteed if he’s on the Week 1 roster. Technically, that characterization isn’t entirely accurate, but termination pay essentially does amount to that – assuming the player follows through and elects to take it.
The “partial” termination pay is available to vested veterans who are signed to the roster after the first week of the season. This termination pay entitles the player who is thereafter released to receive 25% of what he would have earned if he had remained on the roster for the balance of the season. So, for example, if a player signed with 12 weeks left to go in the season, but is released the following week, the player is paid for the week on the roster and then entitled to receive termination pay for two additional weeks to total three total weeks of pay (3/12ths = 25%). If the player is released at any time after he’s passed the 25% threshold, he in not entitled to any additional amounts via termination pay.
As far as Forsett goes, he is eligible to receive termination pay because he has not yet taken it during his career. So, by rule, the balance of his $3M salary will continue to count against the Cap. Given that this amount is just a little less than $2.3M and given that Forsett, at age 31, isn’t likely to see a salary close to that in the future, it is highly likely that he is going to elect to take the termination pay.
Q. I saw that you posted that the Ravens only have around $2.4M in Cap space – what happened to the $12M+ in Cap space they had prior to the season?
ANSWER: The difference between those numbers is that the operation of the Rule of 51 ends before the first game of the season. During the offseason, from the beginning of the league year in early March until the Wednesday before the first game, the Rule of 51 applies and only includes the top 51 Cap numbers, all other bonus prorations and all dead money. Once the season starts, though, all players on the 53-man roster, all players on “reserve” lists – IR, Suspensions, PUP – and all players on the Practice Squad start counting.
All of them.
So, that means that the number of players counting on the Cap essentially goes from 51, to at least 63 players (53 to 10 on Practice Squad). It goes up from there, though, when players go on IR and other players are signed to take their spot on the 53-man roster.
Unfortunately, in the Ravens’ case, while they really haven’t had any players of great significance (save Ben Watson) go on IR, they do now have 14 players on IR. Add Nick Boyle on the suspended list and Lorenzo Taliaferro on PUP and the Ravens are now carrying 79 players on their Cap.
And, with that, their Cap space went from over $12M all the way down to under $2.4M.
For comparison’s sake, only the Chargers, with 80, have more players counting against the Cap. There are 24 teams that have 72 or fewer players counting against their Cap and fourteen teams have less than 70.
So, for the Ravens, that means that a lot of excess Cap space – much of which they would have otherwise hoped to carry into 2017 – is now gone.
Now, there is the possibility that the Ravens will release a player or two from IR, once the player is healthy enough to pass a team physical. That would allow them to create a couple $100K here or there, however, they are only likely to do so with players in the final year of their contract or players they aren’t interested in retaining for next year. Otherwise, by releasing the player, the Ravens are essentially giving up their rights to automatically retain that player for 2017.
As such, a release from IR would likely only happen with fringe players or players on the last year of their deals.