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Agent’s Take: Why post-June 1 designations play a significant role in helping teams manage their salary cap

June 2 used to mark the beginning of the final wave of free agency. Teams would primarily release players with excessive contracts or declining performance because the bonus proration from the remaining or future years is delayed until the following league year when a player is released after June 1.

More than 20 players were released after June 1 in some years, with some big-name players hitting the open market. Hall of Famers Jerry Rice and Kurt Warner were June salary cap casualties. These free agents were at a disadvantage in the market place because most teams had already filled their needs through the NFL Draft and salary cap space was at a premium. As a result, most players couldn’t get deals that would have reflected their market value if they had been released at an earlier date.

This changed in 2006. To remedy the situation, the 2006 NFL Collective Bargaining Agreement included a new provision allowing teams to release two players each league year prior to June 2 (known as a post-June 1 designation) that were treated under the salary cap as if they were released after June 1. This provision has been in every subsequent CBA, including the current labor agreement. With a post-June 1 designation, a team is required to carry the player’s full cap number until June 2 even though he is no longer a part of the roster. The player’s salary comes off the books at that time unless it is guaranteed.

A majority of the time when a player is traded or released, there is a residual cap charge mostly because of bonus proration. This cap charge for a player that is no longer on a team’s roster is commonly referred to as dead money. It is typically a sunk cost where money isn’t owed to a player. Only if there are salary guarantees or money previously paid in the current league when a player is released or traded will there be a payment associated with dead money.

June 2 remains a significant date on the NFL calendar because of the change in salary cap implications. Only the current year’s bonus proration counts toward the cap when players are released or traded after June 1. There are several noteworthy players who could be involved in post-June 1 transactions with the 2021 dead money decreasing for their current team.

2021 salary cap number: $37.202 million
2021 compensation: $22 million ($6.8 million as March roster bonus)
2021 dead money (before June 2): $38.356 million
2021 salary cap savings (before June 2): $1.154 million increase
2021 dead money (post-June 1): $21.152 million
2021 salary cap savings (post-June 1): $16.05 million
2021 dead money difference: $17.204 million

Rodgers wants out of Green Bay while the Packers are adamant he won’t be traded. The Packers are more interested in trying to salvage their relationship with the reigning NFL MVP than dealing him to another team. One thing that could reportedly appease Rodgers is Brian Gutekunst’s removal as Packers general manager. Gutekunst’s job isn’t in jeopardy at this time. Since there doesn’t appear to be an end in sight with this rift, it will be interesting to see whether Rodgers reports to training camp in late July. He will be fined $50,000 for each day of training camp he misses.

2021 salary cap number: $23.05 million
2021 compensation: $15.3 million
2021 dead money (before June 2): $23.25 million
2021 salary cap savings (before June 2): $200,000 increase
2021 dead money (post-June 1): $7.75 million
2021 salary cap savings (post-June 1): $15.3 million
2021 dead money difference: $15.5 million

The Falcons have been listening to offers for Jones. He reportedly requested a trade in March. There’s more urgency in Jones’ situation than with Rodgers due to Atlanta’s extremely tight salary cap. The Falcons only have $285,693 of cap space according to NFLPA data. This is why none of the nine players the Falcons selected in this year’s draft have been signed. These dynamics haven’t put the Falcons in fire-sale mode where the 32-year-old will just be given away although he is coming off one of his worst statistical seasons. Lingering hamstring problems limited Jones to nine games in 2020. If Jones isn’t dealt in a timely fashion, the Falcons could restructure Pro Bowl defensive tackle Grady Jarrett’s contract for the necessary cap space to get the draft picks under contract.

2021 salary cap number: $15.94 million
2021 compensation: $10.54 million
2021 dead money (before June 2): $21.6 million
2021 salary cap savings (before June 2): $5.66 million increase
2021 dead money (post-June 1): $5.4 million
2021 salary cap savings (post-June 1): $10.54 million
2021 dead money difference: $16.2 million

Watson demanded a trade early in the offseason. Originally, the Texans had zero interest in him playing elsewhere. This seemed to change after multiple women made allegations of sexual assault and sexual misconduct against Watson. The trade market for Watson, who has a no-trade clause in his contract, cooled considerably once the allegations surfaced. The NFL is currently investigating these accusations. Watson could be facing discipline under the NFL’s Personal Conduct Policy and could be given a paid leave of absence by being placed on the Commissioner’s Exempt List.

2021 salary cap number: $12,721,500
2021 compensation: $8.5 million
2021 dead money (before June 2): $7,769,500
2021 salary cap savings (before June 2): $4.952 million
2021 dead money (post-June 1): $4,221,500
2021 salary cap savings (post-June 1): $8.5 million
2021 dead money difference: $3.548 million

The expectation was Ertz would have been traded prior to this year’s draft. Part of the delay is attributable to Eagles general manager Howie Roseman’s trade demands being excessive considering 2020 was a lost season for Ertz due to an ankle injury that sidelined him for five games and quarterback Carson Wentz’s startling regression. Ertz’s ankle injury required surgery after the season.

Drew Brees (QB) – Saints

2021 salary cap number: $12.225 million
2021 compensation: $1.075 million
2021 dead money (before June 2): $22.65 million
2021 salary cap savings (before June 2): None ($10.425 million Increase)
2021 dead money (post-June 1): $11.15 million
2021 salary cap savings (post-June 1): $1.075 million
2021 dead money difference: $11.5 million

As expected, Brees announced his retirement in March. Prior to the announcement, Brees and the Saints agreed to reduce his $25 million 2021 base salary to $1.075 million, his 2021 league minimum salary, in February so $23.925 million much needed cap relief could be gained instantly. The Saints easily had the NFL’s worst salary cap situation for 2021 when the offseason began. The Saints have been carrying Brees on the roster to prevent the $11.5 million in bonus proration relating to his voiding 2022 and 2023 contract years from becoming a 2021 cap charge. Now that this is no longer an issue, his retirement can be processed at any time.

2021 post-June 1 designations

Six players detailed in the chart below were given post-June 1 designations this year:

Name

Position

Team

2021 cap savings

2021 dead money

2022 dead money

Ja’Wuan James

OT

Broncos

$10M

$3M

$6M

Charles Leno

OT

Bears

$9M

$2.3M

$2.8M

Kyle Rudolph

TE

Vikings

$7,937,500

$1,450,000

$2,900,000

Tre Boston

S

Panthers

$3,550,000

$2,666,666

$2,666,668

Malik Jackson

DT

Eagles

$2M

$3,611,000

$5,040,000

Alshon Jeffery

WR

Eagles

$2M

$5,590,735

$5,435,706

James tearing an Achilles in early May working out away from the Broncos’ facility opened the door for his release. The Broncos exercised their rights by promptly placing James, who was scheduled to make a fully guaranteed $10 million in base salary this season, on the Reserve/Non-Football Injury list (NFI). An injury suffered by a player away from an NFL team facility while working out on his own is considered a non-football injury. Teams don’t have to pay players on NFI during the season but can elect to do so. The skill, injury and salary cap guarantees in NFL contracts aren’t applicable to non-football injuries. James was released several days after suffering the injury.

The expectation is the NFLPA will file a grievance on behalf of James for at least his 2021 base salary. James faces an uphill battle of prevailing.

The Eagles are the only team to use both of the available post-June 1 designations. Renegotiations of Jackson and Jeffery’s contracts took place right before the end of the 2020 regular season where their respective 2021 compensation was reduced to $2 million. This $2 million in base salary for each player was set to become fully guaranteed on the second day of the 2021 league year (March 18). Additionally, their 2022 base salaries, which each increased to $25 million, were also going to be fully guaranteed on March 18. These changes were made with the intention of using post-June 1 designations to release Jackson and Jeffery.

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