Black Monday, apart from being a coaches’ graveyard, is also the time when every team starts planning for the new League Year, which for 2015 will begin on the 10th of March. By then the Saints, and every other team, will have to be “under the Cap” – a level rumoured to be around 140 million dollars for 2015, up from 133 millions in 2014.

While the concept of Cap is (almost) universally known, its closely related accessory of Dead Money is not, at least judging to what is being posted on many blogs around the league, including on many Saints fan forums. Contrary to popular belief, teams can’t simply cut players as they wish, because they must account for the Dead Money resulting in doing so, which does affect the Cap and make some “glamour” moves unrealistic to achieve. This is a link that well explains the concept of Dead Money, in very simple terms. Notice what team has been chosen as poster-boy to illustrate this …

In any case this is the gist of the concept of Dead Money and the likely implications for the Saints this off-season.

The concept of Dead Money comes in play when a team starts to assess whether to cut a certain player. If he has been paid a signing bonus, or one from restructuring an existing contract, this bonus gets normally pro-rated for salary Cap purposes, for a maximum of five years. So (lets assume it is a five year contract) every year 1/5 of the amount hits the Cap, in addition to the other player’s remuneration. A restructure down the road that converts a high salary or a roster bonus into a second signing bonus can be cumulated with the first one and can be pro-rated as well. This mechanism is intuitive and allows the team to “spread” over time the one-off amount a player receives at the start of his contract or at the time of an extension.

As the contract gets closer to its conclusion, the initial signing bonus gets slowly “eaten up” by the salary Cap, year after year. What if the team decides (for whatever reason) to cut this player before the contract is off? As a general rule, whatever the player is due in terms of guaranteed money down the road, and whatever part of the signing bonuses hasn’t hit Cap yet, all of this accelerates and hits the Cap in the year the player is cut. This makes sure there is no free-lunch for the teams that need to be sure every Cap dollar is accounted for, year in and year out. The practice of spreading over time players’ bonuses has in some cases been compared to “mortgaging the team’s future”. It is a practice that allows a team to lock in elite players at a reasonable low Cap hit initially, but that not necessarily translates into wins. This practice, however, has been helped by the recent increase in the Cap over the last few years, as a result of the new TV deals.

Normally, by cutting a player, while getting some kind of amount of Dead Money, a team also gets some degree of Cap relief. However it can well happen that by cutting a player whose contract is in its infancy the team gets hit by Dead Money which can be even higher than the Cap space they would save by getting rid of the player in the first place. In other words, cutting this player not only costs the team Cap space, but also forces it to use more space to find a replacement – effectively a double whammy. While everything is possible in this league, unless a team decides to go in rebuilding mode or such a player suddenly gets hurt (or really stinks), he is “uncuttable” for Cap purposes.

The dangers of flopping on a big contract is well demonstrated by what happened to the Colts three years ago – they signed Peyton Manning to a huge extension in the offseason of 2011 (90 mil, 5yr) with a chunky signing bonus and a ton of guaranteed money down the road, only to find out that they had to cut him one year later, before a substantial option bonus was due, for his career threatening neck injury. The end result was a clean-house, an accelerated hit that year of over 60 millions (gulp), around 50% of the Cap of the time, tanking their season and drafting Andrew Luck with their #1 pick. While this house clean-up can happen, it is not the normal modus operandi of most GM in the league, for whom continuity is king.

The league however gives the team some kind of Cap relief from too much Dead Money hitting at the same time, by allowing to designate up to two players as “June cuts” – the Cap hit of player cut after June 1st can be split pro-rata over two seasons. However, this is a not a mechanism that allows a team to achieve wholesale Cap savings because of the limited scope (just two players) and, crucially, because of the fact that such relief only hits the books in June, not earlier. So for a team Cap strapped and in need to “go under” at the start of the season in March this type of relief is not at all effective.

While the Dead Money is an effective penalty for any team that splashes on ineffective players, it is not straightforward that a team will use to its full extent any time. A high dead-money is an indictment of any GM, and likely to cost him his job in the long run, regardless he is responsible of hiring players or not. On the other hand, “massaging” the Dead Money and keeping unproductive players around is only likely delaying the inevitable, as an underperforming team under his watch will at some point produce the same result – he loses his job. Most of the time, GM’s try to “manage” the Dead Money and keep it at small, acceptable levels (no more than 10% of the Cap of the year seems a common practice) and avoid “jumps” as much as they can.

It is interesting to note that a player’s Dead Money can be an effective tool for a contract re-negotiation. The team has normally leverage if a player has small Dead Money left on his contract, and can force him to take less money in order not to cut him. On the other hand, a player with high Dead Money or, crucially, with an amount which is bigger than his Cap hit of the year, will make the team think really hard, and probably desist from cutting him – a move in that direction would effectively cost the team Cap space.

And that takes us to our beloved Saints. While the season is finally (and mercifully) in the books, the wheeling and dealing toward the 2015 has in all likehood already begun. The mediocre result of this year is pushing a part of the Fan base to call for a “scorched earth” approach – “a la Colts” if you wish.

I don’t think this will happen. The main reason is Drew Brees. Even if his wish to play well into his 40’s is probably an hyperbole, I think it is reasonable to expect that he will be able to play at high level for another two/three seasons at the least. That means the Loomis and co will try to make sure to field the most competitive team and rely heavily on “continuity.” So any idea of wholesale players’ cuts at this point in time is probably wishful thinking.

Popular “wisdom” out there calls for a house cleaning of priced veterans that could result in a dead-money hit in excess of 40 millions. However, it is hard to see the team will get rid en masse of players, and swallow the Dead Money pill in full, and give Brees a supporting cast of rookies and players signed on the cheap from the street as a result of the lower cap available after all these cuts – in other word any rebuilding will only likely happen when Drew decides to call it quit, whenever that will be.

Now, we have been reading that the Saints are in dire Cap straits being at around 160 of projected Cap for the 2015 and have to slim down to around 140 by March 10th. As from recent past, getting under won’t be an issue for Loomis and co. Having room of manoeuvre while there, well, that’s another matter and far from a sure thing, unless they continue to defer Cap hits to the future or start hitting on draft picks in a more consistent basis.

In any case I expect some Cap relief to come in the following ways:

Expected moves to free up Cap space and take the team under:
– Brees’s extension for less money, all guaranteed (“a la Brady”) – we can expect Cap savings of around 10 mil in 2015 from the 26 mil that would otherwise hit the Cap;
– Galette’s conversion of his 12.5 mil roster bonus due in March to a signing bonus, which could save around 10 mil in Cap space this year;
– Graham (11 mil Cap hit) and Byrd (10 mil) could also see some “accounting” re-done on their contracts;

Pay-cuts:
– Evans and Grubbs, both with Cap hits of around 10 mil, will be offered pay-cuts, so to guarantee “continuity” on the line. I know this makes most people cringe, but that’s the path of least resistance. On the other hand cutting them both is unlikely for the sizeable Dead Money combined from the two contracts (over 10 mil). I suspect a negotiation will make sure they will settle somewhere in the middle;
– Colston will also likely agree to take less money, with his role going forward being more and more one of a mentor for the new guys, thus reducing his projected Cap hit of over 9 mil;

Releases:
The limited dead-money and mediocre contributions on the field seem to make Hawthrorne and Bunkley both expendable, with Cap savings of around 6 mil combined.

These are the most likely moves. While we cannot bar surprises, I think this offseason won’t be any different from those of the recent past.