The following is an analysis of Jason Smith’s contract and the trade between the Jets and Rams:
Smith originally signed a six-year $61 million contract ($33 million guaranteed) after being drafted in 2009 which included a second year $16.3 million option bonus. When an option bonus is exercised it is prorated, like a signing bonus, over the life of the contract, five years maximum under the current CBA (was six), so Smith’s bonus counted $3.267 million on the 2010-14 caps. While the player receives the full bonus amount ($16.3 m) during that year for salary cap purposed it gets spread out.
In April of 2012 Smith agreed to restructure his contract changing his salary in 2012 from $10 million to $4 million guaranteed with a $500,000 roster bonus a $5.5 million savings. His non-guaranteed 2013 salary of $12 million was reduced to $750,000 with a roster bonus of $11.25 million due on the first day of the league year, about mid March, and his prorated bonus of $3.267 million is still included on the Rams cap so a $15.267 million 2013 cap hit.
A big bonus due early in the year forces the team to release a player quickly so he can become available on the open market. An additional clause voids Smith’s 2013 contract year if he plays over 31% of the team’s offensive snaps in the 2012 season. Basically Smith, not technically, is under a one year contract, and if released or hits the playing incentive becomes a free agent who cannot be franchised.
Smith’s 2014 contract year was voided thus the prorated portion of his option bonus that counted in 2014 was pushed onto the 2012 cap. So before the trade Smith counted $11.035 million on the St. Louis Rams cap: $4.5 salary/bonus + $6.535 million prorated bonus.
The Jets and the Rams agreed to trade Wayne Hunter for Jason Smith but teams can only trade for a player’s future salary/bonuses any prorated money or past payment will count on the trading teams cap. What about Tim Tebow didn’t the Jets pay the Broncos salary which was already paid? The Jets repaid portion of Tebow’s salary advance, which was still considered future pay, even though he had received payment already,
A problem with the trade was Hunter’s salary $2.45 million guaranteed in 2012 and Smith’s $4 million with the Rams already having paid the $500,000 roster bonus a difference of $1.55 million. To alleviate this difference Smith restructures his contract just before the trade to receive a $1.55 million signing bonus, which is paid by the Rams prorated ($775,000) on 2012/13 caps, lowering his 2012 base salary to $2.45 million that gets paid by the Jets over the season. Now the 2012 money is equal and the Rams lose Smith’s contract and acquire Wayne Hunter’s which runs through 2014 but contains no guaranteed money after this season (‘13: $4 million, ’14: $3 million).
So how did the trade affect both teams’ cap? Since the trade took place after June 1st the prorated portion of Smith’s contract is broken up over two years. The Rams now have dead money hit, money which counts on the salary cap for a player who is no longer with the team, for Smith of $7.81 million ($6.534 million prorated bonus + $775,000 million prorated signing bonus + $500,000 roster bonus) and adding Hunter’s salary $2.45 million means Smith/Hunter count $10.26 million on the Rams 2012 cap, a $775,000 savings.
The Jets lose Hunter’s salary and gain Smith’s new salary so their 2012 cap does not change but their overall 2013 salary increases $8 million; gain Smith’s 2013 salary/bonus $12 million, lose Hunter’s $4 million salary. The Rams save $7.225 million in 2013, lose Smith’s $12 million salary adding Hunter’s $4 million but have dead money hit of $4.042 million, a $775,000 increase due to prorated signing bonus, for Smith in 2013.
If the trade took place before June 1st the prorated money would have accelerated onto the Rams 2012 cap and Smith would count $11.852 million dead money in 2012 but none in 2013. Hunter had no prorated money but was paid a $50,000 workout bonus by the Jets and will count as dead money against their 2012 cap.
The Rams acquire Hunter’s $3 million 2014 salary while the Jets lose Hunter’s salary gaining increased cap space that year but both teams can get out of either contract after the 2012 season saving the player’s entire salary under the cap.