2014 Kansas City Chiefs: Salary Cap For Dummies

Jan 4, 2014; Indianapolis, IN, USA; Kansas City Chiefs wide receiver Dexter McCluster (22) runs with the ball against the Indianapolis Colts during the 2013 AFC wild card playoff football game at Lucas Oil Stadium. Mandatory Credit: Brian Spurlock-USA TODAY Sports

The NFL salary cap is tricky. It’s not public school math by any stretch of the imagination. There are a lot of terms thrown around that many people – myself included for a long time — don’t quite understand. I’m going to attempt to break down the 2014 Kansas City Chiefs salary cap situation, and hopefully clear the image up for you so that as this offseason moves forward and Chiefs general manager John Dorsey makes moves to bring in free agents and make this team better you’re not lost in the confusion of the whole thing.

Here are some common terms used when discussing NFL contracts:

Base Salary – The salary a player earns strictly for playing. This does not include incentives or bonuses.

Guaranteed Money – This is money that is guaranteed to a player as part of a contract. This money will paid to the player no matter if they play, are injured, traded or cut.

Salary Cap – This is the total dollar amount that teams are allowed to spend on their total salaries for the season. All contracts must remain under this number during the league year or the team will face a stiff pentalty. There are ways that general managers can sign those big name players with a lucrative offer without killing their cap. The signing bonus is one of those ways. For the 2014 NFL season the salary cap is $129,218,627 which is about $3 million higher than this year. 

Signing Bonus – This tool gives general managers a little bit of wiggle room in signing those “big target” players and paying them a lot of money but making the contract “cap friendly.” Here’s an example. John Dorsey wants to re-sign Chiefs current left tackle, Branden Albert. Albert wants a big payday, akin to other “elite” left tackles in the league. However, that doesn’t help the Chiefs cap situation. What Dorsey can do is give Albert a contract where his “base salary” is around $5 million per year. Then, he can offer Albert a signing bonus of $11 million. If the contract is for seven years, the $11 million is prorated out over the length of the contract, which is about $1.5 million per year. Now Albert’s “cap hit” would be about $6.5 million a year, even though in his first year he received $16 million.

Dead Money – This is money that is owed to a player after they’ve been cut or traded from a team. If a player is owed money as part of their contract as “guaranteed money” and they are cut, the remaining amount becomes dead money. Also, if a player was paid a signing bonus and is cut or traded prior to the prorated portion of the bonus being paid out, that money becomes dead money as well. This number counts against the cap, so teams want to keep their dead money to a minimum. Dead money isn’t neccessarily a bad thing because even though they incur the “dead money penalty” the team saved cap space by cutting or trading a player.

Those are the most common terms in reference to the salary cap. I’ll refer back to them, so don’t be afraid to come back here and review if you get confused.

As we examine where the Chiefs sit at the end of this league year, they have $1,355,636 in dead money owed to the following players: Jonathan Baldwin ($998,018), Ricky Stanzi ($52,763), Braden Wilson ($59,010), Steven Baker ($5,000), Jalil Brown ($107,325), Jerrel Powe ($19,670) and Devon Wylie ($113,850).

Additionally, the Chiefs have 16 players hitting the free agent market. I’ve had quite a few readers ask me how much the team will save by letting them go. The answer is, they won’t save anything, per se, because they don’t owe them anything. But we’re getting ahead of ourselves. The Chiefs’ players entering free agency this offseason are:

Kyle Williams – WR

Akeem Jordan – LB

Quintin Demps – S/KR

Thomas Gafford – LS

Branden Albert – LT

Hsain Abdullah – DB

Frank Zombo – LB

Tyson Jackson – DE

Kendrick Lewis – FS

Geoff Schwartz – G/T

Jon Asamoah – G

Dexter McCluster – WR/PR

Chad Hall – WR/PR

Richard Gordon – TE

Jerrell Powe – DT

Ricky Henry – G

Of these free agents, I expect that the Chiefs would potentially re-sign a few of them. Who they re-sign and under what terms is the real question. Key players like Albert and Jackson could conceivably ask for a pretty high paycheck. If you remember last year, the reason Albert received the “frachise tag” was because he wanted more money than the team was willing to pay. Although Jackson renegotiated his contract to lower his inflated “cap number” this year, he had the best season of his career, so he may have a steeper asking price as well.

Prior to cutting any players or re-signing any others, the Chiefs have $6,892,740 in cap space to play with. That may seem like a huge amount of money to you or I, but when you’re talking about signing players to contracts, it’s not that much at all. The Chiefs may look at dumping some bottom of the roster players which can free up quite a bit of cap space to make room. Another way to free up some space is to “restructure” contracts.

When a player restructures his contract, he’s not taking less money, usually. What it does is puts the “base salary” or “guaranteed money” in the “category” thus giving it to the player up front, but spreads that money out over the length of the contract. Therefore, the player gets paid what the team originally promised him, but makes the cap number a bit more friendly. Of course, this is the equivalent of “floating a check” because it pushes the cost down the road, but the team can then worry about that the following year.

Here’s an example:

Chiefs Linebacker Tamba Hali is one of the highest paid players on the team.  He has a “cap hit” of $11,464,706 this season. That’s a huge chunk of money. That hit is derived from the following four sources: $6,250,000 in base salary, $2,964,706 in Prorated Bonus (from his previous signing bonus), $2,000,000 roster bonus (if he’s on the roster after June 1) and $250,000 in a workout bonus.

If Hali restructures his contract, it drops his base salary to $855,000 but jumps his “bonus” to $6,662,206 and stretches that bonus out over two seasons. In doing that, his “cap number” drops to $7,767,206 giving the team nearly another $4 million to work with. Of course, this bumps his 2015 “cap number” to nearly $15 million, but like I said, the team can deal with that when they get there.

This is just one way the Chiefs can attempt to manipulate the salary cap. It’s an ever fluid process.

When teams put these contracts together, generally they’re “backloaded,” meaning the majority of the money is paid in the last two or three years of the deal.

Here’s an example:

Chiefs wide receiver Dexter McCluster had a breakout year. Not only did he get voted to his first pro bowl as a punt returner, but he also found a bit of a groove in head coach Andy Reid’s passing game as well. Should the Chiefs decide to retain him, I would suspect they would give him a contract akin to what the Chicago Bears gave Devin Hester in 2010 because the two are similar players. Hester is a bit better, so I deflated McCluster’s contract slightly.

The Bears gave Hester a four year deal worth $21,956,025. This included a $2,499,99 signing bonus and $5 million in guaranteed money in the form of a roster bonus the first year of the contract.

For this example, the Chiefs give McCluster a four year deal worth $15,650,000. This deal includes $5 million in guaranteed money in the form of a $2.5 million signing bonus and a $2.5 million roster bonus in the first year. After that, should he be cut, there wouldn’t be a huge “dead money” committment because there’s no more guaranteed money, and the Chiefs get a great player for a decent price.

All of this can be pretty confusing and until you get into the numbers and really dissect it, it’s all Ancient Greek.

The website Over The Cap has a great contract calcuator where you can put your GM hat on and manipulate the team’s contracts and players. Jump on, play with it and let us know what you would do if you in the comment section below if you were in Dorsey’s shoes.

Also, let me know if you have any questions on the cap or contracts and I’ll try to answer them the best I can.

A big thanks to AA Commenter “Deadmeat” for requesting this piece.

As always, thanks for reading and GO CHIEFS!