Tennessee Titans: A Salary Cap Primer

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Dec 29, 2013; Nashville, TN, USA; Tennessee Titans running back Chris Johnson (28) warms up before a game against the Houston Texans at LP Field. Mandatory Credit: Don McPeak-USA TODAY Sports

Dead Money

With all of the talk of cutting players this offseason, it is important to know and understand how dead money will be incurred. Sometimes contracts are built to give the team an escape hatch (just in case it becomes necessary), and other times contracts are built to provide the player security (making it harder for the team to cut them). Most of the time during negotiations, the team and the player find a comfortable middle ground.

So how much dead money will a player count against the cap?

The biggest determinant in dead money is how much pro-rated bonus the player has left. Whenever a player is cut, all remaining pro-rated signing bonus counts as dead money in the year they are cut.

For instance, Chris Johnson has 2 years remaining on his signing bonus which counts $2 million per year. If the Titans decide to cut him this year, it will cost them $4 million in dead money. When compared to his $10 million cap number, it’s a savings of $6 million.

Another example is Kamerion Wimbley. He signed a 5-year, $35 million contract that included a $9 million signing bonus in 2012. At $1.8 million per year and 3 years left, cutting Wimbley would create $5.4 million in dead money if cut. Although his cap number is $7.8 million, it is important to note that only $2.4 million can be salvaged by cutting him.

June 1st Designations

Teams can wait until June 1st to cut players if they choose, or they can declare them a post-June 1st cut ahead of time. This impacts which year the salary penalty is applied. With a post-June 1st cut, the team will be penalized in the current year only for the current year’s portion of dead money.

In the case of Chris Johnson, a post June-1st designation would make $2 million of his penalty apply to 2014, and the remaining $2 million would count against the 2015 cap.

In the case of Kamerion Wimbley, a post June 1st designation would make $1.8 million of his penalty apply to 2014 and the remaining $3.6 million count against the 2015 cap.