2015 Salary Cap

2015 Steelers Salary Cap: Contract Restructuring And Dead Money Refresher

Over the course of the last few days I have received a few questions about contract restructures and dead money as it relates to how both work. Now is as good as time as any to post a refresher course on both of those topics.

Let’s use the contract of Pittsburgh Steelers safety Mike Mitchell as the example for both a restructure and potential dead money.

Prior to having his contract restructured last week, here is what Mitchell’s contract looked like.

2015 $2,000,000 $950,000 $2,000,000 $4,950,000
2016 $5,000,000 $950,000 $0 $5,950,000
2017 $5,000,000 $950,000 $0 $5,950,000
2018 $5,000,000 $950,000 $0 $5,950,000

As you can see, Mitchell was due base salaries of $2M, $5M, $5M and $5M from years 2015-2018. He was also due a March roster bonus of $2M.

Now, it is important to remember that when Mitchell was signed last offseason, he was given a $4.75 million signing bonus. A signing bonus can only be amortized for a max of five years and that is why you see the $950,000 charge in all four remaining years of his deal. That money has long been paid and this is how it is accounted for in the cap.

Here is how Mitchell’s contract looks after it was restructured last week.

2015 $745,000 $1,763,750 $0 $2,508,750
2016 $5,000,000 $1,763,750 $0 $6,763,750
2017 $5,000,000 $1,763,750 $0 $6,763,750
2018 $5,000,000 $1,763,750 $0 $6,763,750

In an effort to free up salary cap space, the Steelers lowered Mitchell’s base salary down to the minimum for his accrued seasons, which is $745,000. That difference of $1.255 million was combined with the $2 million roster bonus that he was scheduled to earn and paid out to him as a signing bonus. That total $3.255 million signing bonus can only be amortized for four years as that’s the amount of years left on his contract. In other words, another $813,750 was added in the signing bonus column under each year on top of the original $950,000 per year charges. That is why you now see a $1,763,750 charge in the signing bonus column on all four remaining years. By doing this restructure the Steelers cleared $2,441,250 in salary cap space for 2015. Mitchell didn’t lose a dime.

Now that we have covered the restructure, let’s jump ahead to next offseason and examine what would happen should Mitchell need to be released.

Here is what Mitchell’s contract will look like next offseason.

2016 $5,000,000 $1,763,750 $0 $6,763,750
2017 $5,000,000 $1,763,750 $0 $6,763,750
2018 $5,000,000 $1,763,750 $0 $6,763,750

If you will notice, Mitchell still has a total of $5,291,250 in amortized signing bonus that must be accounted for. None of his remaining base salaries, however, are guaranteed. If the Steelers were to release Mitchell prior to the start of the new 2016 league year, all of that $5,291,250 will accelerate into 2016 as a dead money charge. Now, Mitchell was originally scheduled to count $6,763,750 against the cap in 2016, so the team would essentially save $1,472,500 in cap space by releasing him.

If the Steelers wanted to release Mitchell after the start of the new league year and designate him as a post June 1 release, they would have to carry his full cap charge of $6,763,750 until that date. Once June 1 passes, only $1,763,750 would be dead in 2016 with the remaining two years of amortization charges totaling $3,527,500 being charged off as dead money in 2017.

I hope this working example helped explain both of these functions to you.

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