PFR Glossary News & Rumors

NFL teams will often use contract bonuses as a way to spread out a cap hit that might otherwise be exorbitant. For example, if a player’s four-year deal includes a $8MM signing bonus, that money can be paid immediately but spread out over four years for cap purposes. This way, the cap charge for the bonus amounts to $2MM per year for cap purposes, rather than $8MM in year one.

There’s an obvious benefit to kicking the can down the road, but it can also hurt teams if they want to terminate that deal. If the club in the above scenario wanted to release the player in the second year of his contract, it would still have to account for that remaining prorated bonus money. Rather than counting on the cap as $2MM per year for two seasons, that dead money “accelerates,” and applies to the cap for the league year in which the player is released. In other words, the remaining $4MM in prorated bonus money immediately counts against the cap.

Although these rules apply to many cuts, a different set of rules is in place for players released after June 1. In that case, a team can spread the cap hit across two seasons rather than one — for the current season, the prorated bonus figure stays at its original amount, with the remaining bonus balance accelerating onto the following season. Referring again to the above scenario, that means the player would count against the cap for $2MM in the league year in which he was cut, with the remaining $4MM applying to the following league year.

The guidelines for pre-June 1 and post-June 1 cuts are fairly straightforward, but things become a little more complicated when we take into account that teams are allowed to designate up to two players as post-June 1 cuts even if those players are released before June.

Take the Saints and star Michael Thomas for example. The Saints are currently slated to have him at a 2022 cap number of $24.7MM. If they were to release or trade him, they’d be left with $22.7MM in dead money. But, with a post-June 1 designation, they’d have a milder $15.8MM dead money charge. The same applies to defensive end Cameron Jordan and more of their high-paid stars, so it’s safe to say that the Saints will take full advantage of the rule as they dig themselves out of a major salary cap hole.

Of course, teams won’t always opt for the dead money deferral. For example, when the Panthers dropped Kawann Short’s contract last year, they swallowed a $11MM cap hit, rather than having it linger into 2022. That gave them a cleaner long-term slate, propelling them to ~$24MM in cap room for this offseason.

Here at Pro Football Rumors, you’ll see a number of stories posted on players being cut, waived, or released by their NFL teams. While these terms are often used interchangeably, they’re not quite synonymous. A player who is “cut” has been removed from his team’s roster, but whether he is “waived” or “released” generally depends on his NFL experience.

Between the day after the Super Bowl and the following season’s trade deadline, players with less than four years of service time – or “accrued seasons” – have to pass through waivers after they’re cut by an NFL team. The other 31 clubs around the league have a day to place a waiver claim on that player, adding him to their roster and taking on his contract. That’s why we refer to these players as having been waived, rather than released.

If a player with more than four years of service time is cut between the Super Bowl and the trade deadline, he is not subjected to the waiver process, meaning he becomes a free agent immediately, able to sign with a new team right away if he so chooses.

This isn’t the case all year round, however. Once the trade deadline passes, any player who is cut by his team must pass through waivers, regardless of how many accrued seasons are on his resume. So if a team drops a 12-year veteran in Week 10 of the season, that player must pass through waivers unclaimed before he’d be free to sign with a team of his choice.

Here are a few more details on the waiver process:

• If two teams place a waiver claim on the same player, he is awarded to the team with the higher priority. Waiver priority is determined by the previous season’s standings — this year, for example, the Jaguars have first dibs, while the Super Bowl champion Bucs have 32nd priority.
• However, the waiver priority order will change starting in Week 4. At that point, waiver priority is determined by records of the current season.
• The window to claim a player closes at the end of the NFL’s business day, which is at 4pm central. So if a player is waived by one team on Monday, the other 31 clubs have until Tuesday afternoon to submit a claim. Players cut on Friday clear waivers (or are awarded to a new team) on the following Monday.
• Prior to the first cutdown date in training camp, injured players with fewer than four years of service time cannot be placed on injured reserve until they pass through waivers. Teams will cut this sort of player with a waived-injured designation, allowing other teams to place a claim if they so choose. If the player goes unclaimed, his team can place him on IR or agree to an injury settlement, then fully release him from the roster.

Note: This is a PFR Glossary entry. Our glossary posts explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement.

Tuesday, February 23rd marks first day that teams can apply the franchise tag to free-agents-to-be for 2021. While no clubs have designated franchise players yet, there will likely at least a handful of players receiving the tag before the March 9 deadline, so it’s worth taking an in-depth look at what exactly it means to be designated as a franchise player.

Essentially, the franchise tag is a tool that a team can use to keep one of its free agents from freely negotiating with rival suitors on the open market. Designating a franchise player means tendering that player a one-year contract offer. The amount of that offer changes every year and varies from position to position. The number will also differ lightly depending on what sort of specific tag the team employs. Here’s a breakdown of the three types of franchise/transition tags:

Exclusive franchise tag:

• The amount of the one-year offer is either the average of the top five highest-paid players at the player’s position in the current league year or 120% of the player’s previous salary, whichever is greater. The top five highest-paid players at the position are determined once the free agent signing period ends, so the exact amount isn’t known until then.
• The player isn’t allowed to negotiate with other teams.
• The player and his team have until mid-July to work out a multiyear agreement. After that date, the player can only sign a one-year contract.
• The exclusive tag is typically only used for extremely valuable free agents, such as franchise quarterbacks.

Non-exclusive franchise tag:

• The amount of the one-year offer is determined by a formula that includes the salary cap figures and the non-exclusive franchise salaries at the player’s position for the previous five years. Alternately, the amount of the one-year offer can be 120% of the player’s previous salary, if that amount is greater.
• The player is free to negotiate with other teams. If he signs an offer sheet with another team, his current team has five days to match the offer.
• If the offer is not matched, the player’s previous team will receive two first-round draft picks as compensation from the signing team.
• As is the case with the exclusive franchise tag, the deadline will also come in mid-July.
• Due to the attached compensatory picks, the non-exclusive franchise tag is generally sufficient for free agents. Few rival suitors are willing to sacrifice multiple first-rounders in order to sign a free agent to a lucrative deal, so there’s not much risk for a team to give up exclusive negotiating rights.

Transition tag:

• The amount of the one-year offer is either the average of the top 10 highest-paid players at the player’s position in the previous league year or 120% of the player’s previous salary, whichever is greater.
• The player is free to negotiate with other teams. If he signs an offer sheet with another team, his current team has five days to match the offer.
• If the offer is not matched, the player’s previous team does not receive any compensatory draft picks.
• Because it does not include any draft compensation or exclusive negotiation rights, and is only slightly more affordable, the transition tag is rarely used. However, it can be an effective placeholder for teams.

The exact amounts of these tags won’t be known until sometime after the salary cap number for 2021 is announced. Of course, this year’s cap is expected to drop from last year’s figure, though it will be no lower than $180MM, the agreed upon floor for the coming year.

This year’s candidates for the franchise tag include Cowboys quarterback Dak Prescott, Bears wide receiver Allen Robinson, and Buccaneers wide receiver Chris Godwin. Here are a few other notes to keep in mind as the franchise tag period gets underway:

• A team can withdraw a franchise or transition tag at any time once when the free agent period begins, but it would immediately make the player an unrestricted free agent, allowing him to sign with any team.
• If a player is designated a franchise player for a third time, the amount of his one-year offer is equal to the exclusive franchise salary for the highest-paid position (QB), 120% of the five largest prior-year salaries at his position, or 144% of his previous salary. That’s generally a non-starter, but there are no 3x-tag candidates in this year’s class anyway.
• Teams are allowed to designate one franchise player and one transition player per offseason. A team can also designate two transition players if it doesn’t designate a franchise player, but can’t designate two franchise players.
• Restricted free agents can be designated as franchise players.
• If a player chooses to sign the one-year franchise tender, his salary is essentially guaranteed. The CBA notes that if a team releases the player due to a failure “to establish or maintain his excellent physical condition,” the team may recoup his salary. However, a franchise player released due to poor performance, injury, or cap maneuvering will receive his full salary.

Note: Information from OverTheCap.com was used in the creation of this post.