Understanding cap charges and dead money.

[panther4life]

Only posting this as a PSA for fellow panther fans, as to make it easier for everyone to understand, as it appears some on here don't fully grasp it. This isn't criticizing anyone or anything like that, just want to share some knowledge that I have, after researching the topic several years back.

First I'd like to recommend  using this page to reference any salary details. The interface is clean and easy to understand. 

https://www.spotrac.com/nfl/carolina-panthers/cap/

If you want a quick reference for how much money would be saved by cutting a player, just go to the link. Look at the cap hit and the dead money. Then subtract the dead money from the scheduled cap hit. 

For example, lets use Cam's contract. He has a scheduled cap hit of 21.1 Million. Under the dead money section it says 2 million. 

21.1 Million(cap hit), minus 2 million( dead money) equals a savings of 19.1 million if he were to be released or traded. 

So how does dead money even happen? 

Well as a way to circumvent the salary cap, teams are allowed to give signing bonus money (guaranteed on the day the contract is signed). This bonus money can be spread over the cap over a 5 year period. 

Lets look a Shaq Thompsons contract to understand it better. https://www.spotrac.com/nfl/carolina-panthers/shaq-thompson-16749/

(Look at the top of the page to see "contract details to find the guaranteed money" portion of the contract)

He signed a 4 year 54 million dollar deal. With a 16 million dollar signing bonus. The signing bonus is typically the only thing guaranteed to the player. Sometimes, especially on  a higher end players, they can also get some years of their base salary guaranteed as well. 

Because we extended him in 19, we were allowed so start spreading his bonus money across 5 years, including 2019. 

So each of those 5 years, that 16 million, is spread evenly over 5 years (3.2 million per season with 4 years left of it). We also guaranteed his 2019 and 2020 salaries. So since we guaranteed his 2020 salary ( 4 million) and have 4 years of his signing bonus  left 3.2 million x 4, equals 12.8 million. Take the guaranteed salary of 4 million in 2020 and the remaining prorated bonus money, 12.8 million and you end up with 16.8 million. 

The 16.8 million would be his dead money charge if we cut him today. But because of the way we structured his contract, his cap hit is only 7.2 million. 

With that in mind, there's no way we cut him this year. We'd be paying him more to be gone, than to be on the team (16.8 million vs 7.2 million).

We could cut him as soon as next year to see an immediate savings. Next year his base salary (not guaranteed) is 10.18 million, plus a roster bonus and workout bonus totaling 800k. So if you add the salary, 10.18 million, plus the prorated 3.2 million signing bonus and the 800K he would receive if on the roster and earns the workout bonus you'd get a total cap hit of 14.1 million. However the dead money would only be the signing bonus portion not accounted against the cap yet (3.2 x 3 remaining years or 9.6 million) for a total of 9.6 million in dead money. If he were cut next year, we'd save the 14.1 million (scheduled cap hit) minus the dead money of 9.6 million(remaining prorated signing bonus) for a total savings of 4.5 million. Again 14.1( cap hit) minus 9.6 (remaining bonus proration) = 4.5 million saved.

The cap hit is a combination of the years salary + the prorated signing bonus. Again that means his cap hit for 2020 is only the 7.2 million, vs taking 54 million and dividing it evenly by 4 years which would have made for a cap hit of 13.5 each year. 

This type of structuring is done league wide, every year. It benefits the player, as it makes it harder to cut them early and benefits the team as they can manipulate the cap hit's per year.

As for the post June 1st designation, that can be applied at any time after cutting a player. That just allows you to spread the remaining dead money over 2 years, vs taking the hit all at once. However that clause does not apply this year, as this is the final year of the current CBA and all dead money has to be accounted for this year. In other words all 32 teams will carry 0 dead money onto their books in 2021, regardless of how many players they cut or trade. 

 

 

 

 

[davos]

Edited for accuracy:

The Okung contract incurs $9 mil transfer of dead cap with Turner traded.  So with $3 mil in savings via bases, we're basically taking an additional $10 mil 2020 cap dent for a stop gap LT.  

[davos]

So..(corrected per below response)

Trai's value in this trade = Losing $10 million more dollars for 2020 spending and getting Russell Okung for 1 season  

 

[panther4life]

2 minutes ago, davos said:

The Okung contract incurs $9 mil transfer of dead cap if traded on top of the base.  So with $3 mil in savings via bases, we're basically taking a $6 mil 2020 cap dent for a stop gap LT. 

Actually more than that, if I understand correctly. He had a cap hit of 12.9. By trading him the cap hit for the dead money is 9.5 million. Thats a net savings of 3.4 million.

Okung's salary is 13 Million. 13 minus the 3.4 = 9.6 million. 

So we shedded Turners contract, saved 3.4 in the process, then picked up a 13 million dollar one right after. 

[davos]

6 minutes ago, panther4life said:

Actually more than that, if I understand correctly. He had a cap hit of 12.9. By trading him the cap hit for the dead money is 9.5 million. Thats a net savings of 3.4 million.

Okung's salary is 13 Million. 13 minus the 3.4 = 9.6 million. 

So we shedded Turners contract, saved 3.4 in the process, then picked up a 13 million dollar one right after. 

Yeah you're right...

We get: Okung, 12.9 million in 2020 + $9 million dead cap

Get rid of: Turner, 9 mil contract in 2020 and he's off the books for 2021. 

F*ck.  So a net 10 mil. added on the books for 2020. 

 

[panther4life]

Just now, davos said:

Yeah you're right...

We get: Okung, 12.9 million in 2020 + $9 million dead cap

Get rid of: Turner, 9 mil contract in 2020 and he's off the books for 2021. 

F*ck.  This is a huge dent in our 2020 spending money.  And if we cut Okung, that basically confirms Trai was absolutely worthless.

 

If the coaches like him enough to make this trade, I think its possible we extend him and lower the cap number. Seems very odd to pay him that much on 1 year deal, for a team that's supposedly rebuilding.

[pdub0702]

We should consider the possibility that Trai Turner simply didn’t want to be here during a rebuild..however,, this is merely speculative both worth a thought 

[SgtJoo]

Okung for Turner $ Details

OG Trai Turner
#Chargers acquire caps of $8.9M, & $11.5M. #Panthers take on a $9.6M dead cap charge, clearing $3.2M

OT Russell Okung
#Panthers acquire a $13M cap on an expiring contract. #Chargers take on $2.5M of dead cap, clearing $13M.

-spotrac

[panther4life]

6 minutes ago, pdub0702 said:

We should consider the possibility that Trai Turner simply didn’t want to be here during a rebuild..however,, this is merely speculative both worth a thought 

That’s plausible but there’s more to this story to come in sure. I feel like an extension for Okung has already been worked out. No way a rebuilding team commits that kind of money to a 1 year rental. 

[pdub0702]

9 minutes ago, panther4life said:

That’s plausible but there’s more to this story to come in sure. I feel like an extension for Okung has already been worked out. No way a rebuilding team commits that kind of money to a 1 year rental. 

One thing is for sure..this has been the most interesting off season I can remember. Every week has been interesting for better or worse. 

[Basbear]

in a way panthers are paying 33 million for LT this season and the guy may or may not be able to play.

13 million 2020 Okung salary

10 million dead cap for trading Turner

10 Kalil dead money

[SmokinwithWilly]

How much in cap space to cut Hurney.

[davos]

12 minutes ago, Basbear said:

in a way panthers are paying 33 million for LT this season and the guy may or may not be able to play.

13 million 2020 Okung salary

10 million dead cap for trading Turner

10 Kalil dead money

Just over 16% of our 2020 cap and all we get is a maybe in Russell Okung for 1 season.  This is bad in so many ways.  

[AU-panther]

When you trade for a player you don't take on his dead money, that has already been paid by the original team and they are just having to account.

All that really matters at this point:

Okung will cost us 13.5m (13m base salary + 500k per game roster bonus) for one of play in 2020

Turner would have cost $9m (8.5 base + 500k roster bonus) in 2020.

and $11.5m (11m + 500k roster bonus) in 2021

Basically we are paying an extra 4.5m for a LT instead of a RG and we have him under contract for one year less which can be good or bad depending on how you look at it.