When it was announced last December that CB Jimmy Smith was going to be suspended for the last 4 games of the season, the news was generally met with a shrug since Smith was already on Injured Reserve (IR) and his suspension wasn’t going to have an on-the-field impact.
As was reported at the time, Smith lost 4 game checks worth $182,363 due to the suspension and the Ravens received that back as a credit against the 2017 Cap.
That loss of 4/17ths of his base salary really didn’t hurt Smith too much, but his suspension has much bigger implications – it’s going to cost Smith further and will also provide the team with a decent chunk of 2018 Cap space.
Pursuant to Section 9 of Article 4 of the NFL’s CBA, a suspension under the league’s PED policy (or the Substance Abuse policy) triggers a mandatory forfeiture of salary, based on the amount of Signing Bonus money received by the player.
This becomes really costly in Smith’s case because not only did he receive an initial $13M Signing Bonus when he agreed to the new 5-year contract in 2015, but he also received Signing Bonuses in 2016 ($6M) and 2017 ($7.725M) when he restructured his deal to help the Ravens create additional Cap space. At the time, those restructures didn’t cost Smith any money, but now, because the restructure is accomplished by turning base salary into Signing Bonus, those new bonuses are subject to salary forfeiture due to the suspension.
The total forfeited amount will be $1,570,588, which will be deducted from Smith’s 2018 base salary. Most of that amount will affect the team’s 2018 Cap, as either a Cap credit or a reduction in salary. The remaining portion will be credited against the team’s 2019 Cap.
For the initial 2015 $13M Signing Bonus, the credit amount is calculated by taking the $13M and dividing it by the 5 years of the contract, then by the 17 games of the season ($13M ÷ 5 ÷ 17 = $152,941). That amount is then multiplied by the number of games suspended ($152,941 x 4 = 611,764). This total of $611,764 is the total amount of forfeiture from the 2015 Signing Bonus that will be deducted from Smith’s 2018 salary.
That amount is credited against the Cap by dividing that amount by the number of years remaining on the contract when the bonus was given (5, in this case) to give the annual prorated portion of the forfeited amount ($611,764 ÷ 5 = $122,353).
Those amounts are credited against the Ravens’ Cap in 3 parts:
- 2018 Cap Adjustment credit for the 2015, 2016 and 2017 portions = $122,353 x 3 = $367,059.
- Salary Reduction of Smith’s 2018 base salary = $122,353.
- A 2019 Cap Adjustment credit of the 2019 portion = $122,353.
The forfeiture amounts of the 2 subsequent Signing Bonus are calculated in the same manner (though the 2016 bonus is divisible by 4 years and the 2017 bonus by 3 years) and once calculated, the total amount of salary forfeitures of $1,570,587 is credited against the Cap as follows:
- A 2018 Cap Adjustment credit for the 2015, 2016 and 2017 portions = $745,490
- Salary Reduction of Smith’s 2018 base salary = $412,549.
- A 2019 Cap Adjustment credit of the 2019 portion = $412,549.
As such, between the Cap credit and the salary reduction charge, the Ravens will receive $1,158,039 in much needed Cap space in 2018 by virtue of Smith’s PED suspension. While that’s not necessarily a huge amount, for a team that is tight against the Cap, every little bit counts.