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Denver Broncos Cap Confusion and a Road Map to Clarity

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A recent article by Jeff Legwold of the Denver Post got MHR talking about the Broncos cap situation, and just how much actual spending money we can look forward to having. It just so happens that I have been putting the final touches on a comprehensive Salary Spreadsheet for the Broncos, which is designed to track Salary Cap information. While I am currently waiting for the new CBA rules to fully extrapolate the current data, I can confirm that Legwold's numbers are roughly accurate. We both came up with a current salary obligation for the Broncos of around $125million.

Now, Rodney A recently dug a little deeper into the issue and received confirmation of a number of issues with that number that I can also confirm from my own database. These include:

  • A total current roster of well over the traditional 53 man roster (78 specifically)
  • Unsigned rookies and RFAs
  • Players likely to be cut who would amount to significant savings (both Rodney and Nick Cast had suggestions here)
  • Expected contract restructures were not included, though Legwold did note the high earners, and Klis later obtained a soundbite from Dawkins on his willingness to restructure

So with those provisions in mind, lets look a little closer at the path to plenty that the Broncos can follow to assure themselves of both cap compliance and free agency freedom...

Setting the 53 as the true baseline

To start with, let's start paring down the roster number.

The Broncos are currently obligated in some fashion or another to 78 players and the total salary obligations that I show are $109.396mil. Out of this group of 78 we can remove 5 players off the top that currently have no effect on salaries: Prater, Woodyard, McBean, Ryan Harris and Marcus Thomas. Pending a new CBA these players are either restricted or unrestricted FAs, with no set salary amount for 2011 yet.

So now we are at 73 players, and still at $109.396mil. Next we can remove Ben Garland ($405,000[unless noted, these numbers represent cap hit, not actual salary]) since reserve players do not count towards the cap. At this point we can begin with our projections. Rodney subtracted 19 players immediately at an average salary of $500k for total savings of $10mil. However, despite the fact that we end up with similar numbers, I will break down the subtractions a little bit more specifically. First off I'll remove the 10 reserve future contracts. There isn't a concrete stipulation for these amounts but they are routinely at or near the league minimum, which is $340k in 2011 (as always, some of the specifics could change with a new CBA). Along with Garland this gets us a total cut of $3.805mil and removes 11 players from the list.

So now we are at 63 players and $105.591mil. At this point we should probably work on removing 10 additional players in order to get to our 53 man baseline. Now, immediately the suggestion to trade Orton comes to mind, but to me that is getting the cart before the horse. We still want to add free agents, and resign some of the RFAs that we have removed (Prater and Woodyard especially), so we can assume that later cuts will offset these free agency additions. We will also assume that the incoming CFA class replaces similar paygrades at the bottom of the roster. We'll call these next subtractions our "likely bubble players." You can select your own in the comments and we can run numbers on them, but for now I will add my 10. (Note that these 10 are not carefully studied out...just sort of a gut guess.) My 10: Hauschka, Robinson, Kelley, Byers, C.Jackson, Leonard, Daniels, Clark, Davis and Willis. Total cuts here are $4.36mil.

Time to sign the rookies

So now we are at 53 players and $101.231mil. the next order of business is to estimate the 2011 cap hit of our rookies. For the sake of these numbers, we will take the 5% increase in base salary that 2009 to 2010 saw for the broncos and apply it here. (Note that this holds true for the Broncos across all rounds in most cases, with differences in the rounds being accounted for in signing bonuses and guaranteed money).$320,000 2010 base salary plus 5% equals $336,000 base salary for 9 rookies, or $3.024mil. In addition we can add the first years prorated signing bonus. We'll assume 4 year contracts throughout the draft, and use Denver's pattern of halving the bonus by round under Xanders (i.e, a 4th rounder gets a 400,000 bonus, a 5th rounder a 200,000 bonus, a 6th rounder a 100,000 bonus, etc.) This will add another $2mil in prorated bonus cap hits, for an estimated total rookie cap hit of $5.024mil.

Don't forget the dead money

We are currently at 53 players and $106.255mil. Legwold brought up dead money, and for the record I am going to go with his numbers, even though I show an additional 2.46mil in that area than he did. This means Bannan, Williams and Graham have cap hits in 2011, barring some rule in the CBA freeing up that space. (I also show a dead money cap hit from Jarvis Moss, but I'll defer to Mr. Legwold here). This total dead money will eat up 11.676mil of Denver's 2011 cap. Also worth noting that a lot of the favorite "fan cuts" to other players on the roster will also generate dead money, but we will account for that in another section.

Making Room for Free Agency

Finally we are ready to start the influx of free agents that we expect to address shortcomings on this team and give us a chance to compete in our division in 2011. We are currently at 53 players and $117.931mil, or $2.069mil under the cap. Clearly that isn't enough room to add much impact so now we can start looking at some expected cuts, trades and restructures.

Both Nick and Rodney echoed eachother's sentiments on several of these moves, and many members weighed in respectively and also agreed, so let's look at those moves individually and assess freed up space.

  • Brian Dawkins restructure. Lewold indicated it, Klis confirmed that all parties are ready for it, so now it is just a matter of getting a CBA and finalizing it. According to this gambit, Dawkin's hit a performance based incentive that bumped a $2.24 salary up to $6mil in 2011. Dawkin's earned the bump in pay, so he wants that money, but he also sees that it was sort of a gimme and was designed to put the team and Dawkin's in a restructuring position after two years. Dawkins indicated he wants to stay in Denver so this shouldn't be hard to push through. Ostensibly it is supposed to free up $3.76mil in cap space, but there is no guarantee that the Broncos will recoup all of that paybump. For the purposes of this exercise we will assume that they do however. Add $3.76mil of space for a total of $5.829mil of cap space.
  • Trade Orton. Orton clocks in with a $7.739 base salary in 2011, but his actual cap hit is $8.879, or about $800,000 less than Tebow. Because Orton signed his tender and is set to receive a roster bonus, there was no signing bonus to prorate from his contract, which means that there is no penalty to cut or trade him, except for $2.879 of his base salary which was guaranteed. But it doesn't count against the cap, and Denver doesn't need to actually comply with the cap until the 53 man roster is set, there isn't a huge hurry, though an expensive free agency will essentially put the writing on the wall. If traded, Orton could add $8.879mil for a total of $14.708mil of cap space.
  • Cut Buckhalter. Buck comes with a cap hit of 2.35mil, and after last year, it doesn't look like he will have enough gas in the tank to make a comeback. However, cutting him will cost from $450,000 to $900,000 in cap space, depending on whether the Jun 1st designation holds, and the timing of the move. Best case scenario denver will be allowed to spread the cap hit out over two years, limiting the dead money damage. Buck would then be worth a savings of $1.9mil for a total of $16.608mil of cap space.
  • Cut Renaldo Hill. While I don't find this terribly likely, I'll run the numbers anyway. Hill accounts for a cap hit of 2.775mil in 2011, but cutting or trading him takes a cap hit of $375,000 to $750,000. Again we can assume a best case scenario and that Denver can spread the hit out for a balance of $2.4mil added for a total of $19.008mil in cap space.
  • Cut Haggan. Another move that a lot of people have determined has a high likelihood of happening. Haggan has a relatively minor cap hit of $1.93mil, but with no cost to cut, that can be fully applied to give us a total of $20.938mil in cap space.

How much can that buy?

With the $20.938mil in cap space, Denver has some room to spend in free agency, and an expected 4 roster spots open.

An unscientific survey on my part indicates that for around $4.5 to $5mil in the first year Denver could get a top RB. $4.5 to $7.5 mil would cover a range of possible DTs in the first year, with quality and development reflected relatively in that scale. A one dimensional, but good, DT (pass rusher or run stopper) will likely cost about 5mil per year. A top guy, or a top commodity on the market could command as much as $8mil per year or more. Maybe figure 2 bodies there, situated in the lower and upper reaches of ranges of the scale, for a total of $11mil on the DL?

Additionally we need to resign Prater and Woodyard, and I would expect that to be around 2-4mil total in the first year for the two of them. Additionally we may want to replace Harris and sign a true FB, which could be an additional $4-5mil and $1mil respectively. All told, and understanding that these free agency numbers are rougher than a sandpaper speedo, a pretty decent free agency haul might clock in around $22.5 to $29 mil.

One last additional note: If DT were to move to IR (he will most certainly start the season on the PUP), that could free up an additional $3.23mil, which could be the difference in signing a one year veteran (since cap impacts on DT's return could adversely afect the long term outlook of signing a multiyear vet with these savings.)

So it would appear that if Xanders and Co. mind their P's and Q's, they could accomplish what needs to be done in pretty reasonable fashion... What say you? You feel like any of this is doable?