Sunday, March 22, 2009

When contracts go bad: Dead Money

Now that most of the big money free agent deals have been done, lets take a look at the flipside of these contracts. When an Albert Haynesworth signs a historic free agency contract, or a Terrell Owens signs a big money extension, the club and fanbase are excited by the possibilities of the respective player's future with the team. However, when things don't quite work out as planned there are salary cap consequences with these heralded deals.

Below is a list of the top 10 dead money amounts currently counting on teams' 2009 salary caps. The list is headed by the prototypical WR diva himself, Terrell Owens, who is counting for $9.65M against the Cowboys salary cap on a contract extension that he signed prior to the 2008 season. Following T.O. is Dre' Bly, who in 2007 was traded to Denver and then signed an extension with the Broncos that would've paid him $6.8M/year. After 2 seasons, the Broncos decided to cut the cord, which has resulted in the Broncos carrying a dead money amount of $9.45M. Also, on the list are Oakland's high-priced free agent busts from the 2008 off-season, Gibril Wilson & DeAngelo Hall.

  1. Terrell Owens WR DAL $9,675,000

  2. Dre' Bly CB DEN $9,450,000

  3. Ken Lucas CB CAR $8,330,000

  4. Cory Redding DT DET $7,333,334

  5. Gibril Wilson S OAK $7,000,000

  6. Marvin Harrison WR IND $6,400,000

  7. DeAngelo Hall CB OAK $5,833,334

  8. Derrick Dockery OG BUF $5,400,000

  9. Anthony Weaver DE HST $5,400,000

  10. Brandon Lloyd WR WAS $5,333,334

And yes that's right, Brandon Lloyd is still accounting for $5.3M against the Redskins cap, despite not being on their roster since the 2007 season. This results from the salary cap rule that applied the signing bonus acceleration from a termination to the next year's cap, if that termination occurred after June 1 or was designated as a post-June 1 termination despite occuring prior to that date. For example, if a player had $4M in total signing bonus proration left on the remaining 4 years of a contract (meaning $1M of proration in each year), and that player was released after June 1st, then $1M of proration would remain as dead money in that year and then the remaining $3M would accelerate into the next year.

Due to 2009 being the final capped year, this post June 1 rule is no longer in effect; therefore, when a player is released this year all of their proration in future years accelerates into the current year.

The obvious downside to significant dead money from a salary cap standpoint is that you have players who aren't contributing to your efforts on the field, who are taking up cap space and handcuffing you from acquiring players who can help you. In the instance of say a T.O., you'd rather have that $9M cap figure helping you on the field in the form of a T.O. or some other player instead of just taking up space on your books.

So lets see this time next year who the 2009 Gibril Wilsons & DeAngelo Halls are going to be; that is, of this year's free agent class, which players are going to account for significant dead money next year after a season of not living up to the expectations that they're currently saddled with.

1 comment:

  1. Great post! Jerry Jones(JJ) said he abhorred dead money, then Stephen and the Boys convenience him it's TO or else. Boy, if it was my money it would be sure hard to get rid of $9M, boy can't wait for 2010 season. Keep it up and look out for the Panthers as the next pushing daisies victim (w/J. Peppers).