TRADES AND RELEASES

[Mr. Laz]

TODAY'S CBA LESSON: TRADES AND RELEASES

The Houston Texans' options for handling quarterback David Carr provide us with yet another opportunity to wax ineloquently regarding certain important but mundane aspects of the Collective Bargaining Agreement -- details which, frankly, some members of the "real" media don't fully understand.

Under the old CBA, a trade at any time of the year resulted in a full acceleration of any remaining bonus payments that had been spread over time. If, for example, a player was traded in the second year of a four-year contract that paid a $4 million signing bonus, the remaining $2 million allocation for years three and four hit the cap in year two, pushing the total bonus allocation for year two to $3 million.

The same result occurred under the old CBA if the player was cut prior to June 1.

For players cut on or after June 1, the cap hit was (and still is) divided into two seasons. For the current year, the team would carry only the portion of the payment that applied to the current season. Then, the rest of the hit would be taken in the following cap year.

In the above example, a termination after June 1 of the second year of the deal triggers a $1 million cap charge for the current year (which the team would have taken anyway if the player were still on the roster) and a $2 million charge in the next cap year.

Under the new CBA, there are two significant changes. First, trades on or after June 1 are now treated like cuts made on or after June 1. As a practical matter, this provides a greater incentive for teams to explore trades as the season approaches and unfolds, since they won't be handcuffed by a huge cap hit in the current league year.

Second, up to two players per team (per year) can be released before June 1, and the move will be processed, for cap purposes, as of June 2.

But here's the catch. The team still carries the player's base salary on the books until June 2. So if a team is trying to get under the salary cap before the start of the league year and hopes to dump a player's salary while at the same time maximizing the net cap savings by pushing part of the bonus acceleration into the next league year, this new device won't get the job done, because the team will still carry the player's full salary until June 2.

We know it's confusing. But here's how it would work. If the player in the above example has a $5 million base salary, cutting him before June 1 of the second year of the contract would result in a new cap savings of only $3 million. Why? Because the $1 million bonus allocation applies regardless of whether he's on the team or not, and the remaining $2 million that accelerates into the current year offsets the $5 million salary that was dumped.

Cutting him after June 1 would result in a $5 million cap savings for the current year, and $2 million in dead money the next year.

The bottom line is that there's absolutely no financial benefit to the team for having the ability to do post-June 1 cuts before June. So if there's no benefit to the team, why would a team ever do it?

In David Carr's case, would the Texans cut him early enough in the offseason to master a new offense with a new team, so that the Texans would look like even bigger morons for: (1) keeping Carr last year; (2) not taking Vince Young; (3) cutting Carr this year and getting nothing in return; and (4) watching him become an instant Pro Bowler elsewhere?

Unless and until the CBA is further revised to allow teams to dump the player's salary before June 1 but process the bonus consequences as of June 2, we can envision no circumstances in which a team would cut a player early under this new twist in the rules.

Okay, now wake up and keep scrolling.


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