What's the Salary Cap hit if the Bengals trade Chad Johnson?

by Kirkendall on Feb 1, 2008 9:39 AM EST in Chad Johnson Campaign

So reader MP45242 wondered what the salary cap would be if the Bengals decided to trade Chad Johnson. First, I needed to know what is hit when a team trades a player. A bit of history. When the Redskins put Laveranues Coles on the trading block:

If Washington trades the wide receiver, whom they signed as a restricted free agent in 2003, forfeiting a first-round draft choice to the New York Jets in that transaction, they face a cap impact in excess of $9 million. Efforts to have Coles bypass a $5 million deferred signing bonus due him on April 1, a move that would have dramatically decreased the cap hit, seem to have fallen apart. Coles had originally agreed to forfeit the $5 million, but only as part of an agreement that he would be released, and able to choose his next team.

So the cap hit would seem to figure on that player's prorated signing bonus.

John Clayton writes:

Often, it's because of that pro-rated signing bonus hit. Unlike releasing a player, there is no way that a team trading a player can delay taking a salary cap hit. Once a player is traded, the remaining pro-ration is moved into that season. The same standard applies if a player released on waivers is acquired in a waiver claim. Through most of the year, this only applied to players who haven't qualified for unrestricted free agency -- those players who haven't been through four NFL seasons. Waiver claims move up the cap hit immediately. The trading deadline begins Feb. 28.

So we accelerate the signing bonus to the year that the player was traded, from my understanding. Johnson signed a six-year deal in 2006 (actually five years with sixth year being an option) giving him $35.5 million. In that piece, it says Chad's contract includes a $5 million signing bonus. Since 2006 and 2007 are finished, we need to take that prorated bonus and apply it for four seasons -- adding $3.3 million against the cap next season.

But what about dead money? I hear that term a lot and don't understand why it's often described in a different breath that simply a cap hit. Well, there's nothing different about it, according to this San Francisco Gate piece.

Dead money refers to a portion of signing bonuses paid in the past to players who no longer are with the team.

Here's how it works:

Signing bonuses are prorated over the length of a contract for salary-cap purposes. If a player leaves the team before his contract expires, the remaining prorated portion of the bonus is counted immediately, in a lump sum, against the cap.

For example, when the 49ers got rid of Jeff Garcia following the 2003 season, they had to account for about $10 million of signing bonus previously paid to him but not yet counted against the cap.

That is known as "dead money."

So if we're specifically speaking about Chad Johnson's prorated signing bonus over the life of his existing contract, then we're looking at the mid-three million range.

Here's my questions. Do we worry about roster, workout, reporting and option bonuses? I tend to think no, simply because that's not considered signing bonuses as per the above references. But if it does, as calculated by go-Bengals.com in "dead money", that would make the cap hit reach near or over $17 million in 2008. However, to me, that doesn't calculate to that number simply by taking his prorated signing bonus over the contracts life -- which we figured above.

Furthermore, his salary cap value is an additional $3 million per season over his base salary -- which typically means the prorated portion of the contract. Figured into that, then the $17 million cap hit is more realistic. What exactly those amortized bonuses are, I'm not sure.

Geoff Hobson made reference of a hit being between $5-7 million in a early January mail response talking about the negatives of trading Johnson.

What bigger problem could there be for a receiver-oriented offense than missing your most explosive one, plus being unable to help your defense because you blew up the salary cap to the tune of about $5-7 million to take the salary cap hit of a trade?

So, in conclusion, the hit could be in the mid $3 million range. Or between $5-7 million. Or as much as $17 million. In conclusion, we really didn't learn much, did we?

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Comments

Thanks

Thanks for the explanation. I'm glad it's complicated because I felt like an idiot trying to figure it out. You'd think Hobson or Curnutte would explain this because if the cap hit is huge, it's probably not an option. If it's in the $3M range, maybe you consider it. Either way, Chad has really put the Bengals in a tough spot. Like you, I have defended him in the past but how do you do it now?

by mp45242 on Feb 1, 2008 10:48 AM EST 0 recs

RE

Well, you have to also consider that dumping Chad's base salary would figure into a gain.

2008 - $3.0 million
2009 - $4.5 million
2010 - $5.0 million
2011 - $6.0 million (option year)

It might hurt 2008, but in the long run, the team stands to gain rather than lose. And I don't think any of us expect 2008 to be a Super Bowl season -- especially if Chad does indeed leave losing a big-time threat offensively.

I'm not saying that's their thinking, but there is some logic in that mindset.

by Kirkendall on Feb 1, 2008 11:21 AM EST 0 recs

The only thing that matters...

...is the amortized signing bonus. Roster, workout, etc. bonuses, salary, all that will NOT matter.

Per the go-bengals numbers, there is still about $13 million worth of signing bonuses to be written off. If Chad were to be cut/traded, that $13 million would accelerate and hit the cap in 2008. UNLESS the Bengals designate Chad as a "June 1" cut, which would allow the hit to be spread out over two years, $6.5 million in 2008 and again in 2009.

Now...all that has to be considered in light of the cap hit if the Bengals KEEP Chad. His cap number next year, adding a little to the go-bengals number, will be around $8 million.

So...if the Bengals cut/trade Chad, worst-case scenario is a NET cap hit of about $5 million -- in a year when the Benals are coming into the free agency period with something on the order of $28 million in cap space.

If they split the hit over 2 years as a June 1 cut, the Bengals will actually GAIN something like $1.5 million in cap space in 2008.

Again, this all assumes the guy at go-bengals is accurate. Caveat emptor.

by BeerRun on Feb 1, 2008 6:48 PM EST 0 recs

Another consideration

is a trade for a player with a similar cap hit for their team at the same position, effectively replacing Chad with an expensive WR. The key is two WRs in two different towns, of similar ability and similar contracts, where both are unhappy and would like to be in the others shoes.

Happens every day right?

I'm a Denver fan, so we are dealing with issues with Javon Walker right now. Like Chad he has doozy of a contract to deal with, like Chad he is a great WR, like Chad he is obviously unhappy with his current situation.

But that begs the question of would they mind trading places? I think Javon would be happy in CIN, though he would have to realistically expect to be second fiddle to TJ, but he would have an experienced deep throwing QB and a spread attack to be a key part of.

Would Chad consider Denver a likely destination? It doesn't seem likely, for the same reasons Javon wants out, since we ask our receivers to play second fiddle to our running game, and they need to love getting physical and blocking. But he could fit in two other ways: 1)Denver (re: shanny) doesn't mind an outspoken WR, as long as the rules are honored and the team isn't put behind the 8-ball with his antics. For reference see Shannon Sharpe and now Brandon Marshall. Both produced first than talked later, rarely geting the team in trouble. 2) This year was a sort of anomaly for us, and though we didn't deserve to make the postseason, we were already addressing our issues as the final games were being played. We have some questions going into next year, but the opinion of the well-informed Broncos fan is that 09 is a championship run, and Chad might just recognize that.

On the other side of the coin again, Denver hasn't had a great relationship with Rosenhaus, but they are all professionals, and if the deal was something worth pursuing I'm sure they could hammer something out...

www.MileHighReport.com

by styg50 on Feb 1, 2008 8:12 PM EST 0 recs

RE:

I just don't see the Bengals making a trade, player for player. If they decide to let Chad go via trade, I suspect that it will Marvin and Brown's intentions to rebuild the position through the draft.

But who knows.

First thing that will have to happen from Denver's perspective -- and this is interesting considering Bowlen's comments about his regret over the existing CBA -- is that they'll have to rework Chad's contract and give him a new one.

Considering that there's a real chance that the owners will opt out making 2010 (I think) an uncapped year, I'm not sure if anyone will hand a contract to Chad right now.

Again, who knows.

by Kirkendall on Feb 2, 2008 2:13 PM EST 0 recs

The real issue...

...Is not, IMHO, the cap, but rather: if Chad is cut or traded, who replaces him?

The Bengals couldn't find a wideout to replace our No. 3, Henry, for just eight games, so I don't have a great deal of faith in their ability to run around and find a new No. 1 the very next season.

Moreover, the Bengals have had almost no luck developing WRs in the Marvin era. They have spent two 3rd round picks (Henry, Washington), a 5th (Mann) two 6ths (Tab and McNeal) and a 7th (Brazell) -- and shelled out FA dollars for Chatman to boot. Out of all that, only Henry can be called anything close to a success, and he's one traffic stop away from another suspension.

by BeerRun on Feb 2, 2008 2:30 PM EST 0 recs

Henry

Agreed. You just can't depend on the guy anyway. And it's unlikely the Bengals will go after a #1 or #2 in FA for a WR. So you basically have to assume, if Chad goes, that the Bengals could go WR with one of their top three picks.

It's just another reason why the Bengals won't let him go.

In fact, I could see a more likely scenario develop that the Bengals will give in to Chad's contractual demands and give him an extension with more guarantee money. That's the way things work now-a-days. Hire Drew, complain and get an extension.

by Kirkendall on Feb 2, 2008 3:17 PM EST 0 recs