Back in September, Denver made an accounting move to clear up some cap space that raised some eyebrows around Broncos Country.
Since that move, where Denver restructured Joe Flacco’s contract, there has been a lot of misinformation and general hand-wringing over what this means for Denver’s cap situation and what it means for their commitment to Joe Flacco.
Given it was announced that Flacco will be placed on IR today, ending his season, and very likely his short-lived career in Denver, I want to set the record straight on what this means for the cap situation.
First of all, let’s recap the move Denver actually made. Joe Flacco was due $18.5M in base salary in 2019 with no additional guarantees when he was acquired from Baltimore.
Right before the season started (this is important as we’ll see in a few minutes) Denver restructured Flacco’s contract, reducing his base salary to $1.5M and converting the remaining $17M into a signing bonus which spread out over five years at $3.4M a piece.
One of the $3.4M hits landed in this year, making Flacco’s total 2019 cap reach $4.9M.
This means $13.6M ($18.5 - $4.9 = $13.6) of Flacco’s salary got pushed beyond 2019, clearing $13.6M in cap space for Denver.
This is important to clarify as there has been a lot of confusion on what actually happened. Denver moved $13.6M and only that much beyond 2019, and all of the guaranteed money came from Flacco’s 2019 base salary. They didn’t add any additional guarantees beyond that.
Now the natural follow up is, why did Denver make this move? Was it somehow indicative of their commitment to Flacco? Plain and simple: Denver just needed some cap space, and Flacco’s contract was an easy way to get it.
Right before the season started, Denver, finding themselves with several unexpected players moving to IR, and dead money from several previous contracts constraining their cap space, needed to shift some of this year’s cap burden into next year.
Denver was sitting on about $20M in 2019 dead money from Case Keenum, Paxton Lynch, Darian Stewart, Demaryius Thomas, Brandon Marshall, and Menelik Watson so it made sense to shift some cap burden into next year where they are projected to have between $60-70M in cap space.
They were also looking at maneuvering some of Von Miller’s contract as an option to get relief. So this was not in any way a statement on the team’s feelings on Flacco, nor did it make him harder to get rid of down the road. He was just selected as the easiest contract to restructure.
I didn't expect Flacco to be the one restructured given reports in the spring that they would not alter his contract, but he was the second most likely restructure candidate after Von Miller.— Nick Korte (@nickkorte) September 7, 2019
Flacco's new contract details can be found on his OTC page:https://t.co/EdOnU6YDPF https://t.co/2oDuUrUg3Z
Here’s is the crux of all the confusion around Flacco’s contract. The reason Flacco’s contract was a good candidate for a restructure is because his entire $18.5M base salary was set to become fully guaranteed if he was on the roster in Week 1, which he obviously was going to be (they restructured his deal the day his salary was set to guarantee).
Vested veterans (players with at least four years in the NFL) who are on the 53 man roster at the start of the season, have their entire base salary become guaranteed at the beginning of the season. Thus, Joe Flacco was already guaranteed to receive $18.5M from Denver (and count $18.5M against the cap) no matter what.
So Denver leveraged Flacco’s already guaranteed contract to move some money around and create some much needed cap relief, pushing the cap hit into the future when they would have much more cap room.
What it means
The biggest question fans have around the ramifications of this move is does this make Flacco harder to get rid of? The short answer is, no. Denver moved Flacco’s cap hit into next year once they knew he would be on the roster, locking in his $18.5M. Since they did not commit any other guaranteed dollars toward him, or add any new cap burden with the restructure, they can move on from him just as easily as they could have before the move.
The next question is, does cutting Flacco create extra dead money? It’s nuanced, but the overall answer is also, no. This is another place fans are getting tripped up. The term “dead money” is a loaded term that garners strong reactions, especially when it relates to QBs who are no longer going to be on the team.
Denver had already committed to paying Joe Flacco $18.5M, and if he is cut this upcoming offseason, that is all the cap hit Flacco will have cost the team. This restructure just shifted some of that to next year, in the form of the dreaded “dead money”.
However, of the $13.6M in cap space Denver created this year, they can roll over whatever they don’t use, essentially offsetting the “dead money” that would arise from cutting Flacco.
Put another way, Denver was going to shift cap space into next year regardless of whether it was via Flacco or someone else. The fact that it was on Flacco’s deal has Broncos Country up in arms thinking it’s somehow related to the quarterback, but I’m here to tell you this is just cap management 101 and shifting things around, and most importantly, doesn’t tie Denver to Joe Flacco anymore than when they first acquired him.
Still not convinced? Let’s talk about it. Fire off your questions below in the comments.