It sure is going to be interesting to see where the 2021 NFL salary cap number ultimately comes in at right before the start of the new league year in March. Depending on which “expert” you ask right now, you will get answers ranging anywhere from $175 million to $205 million. In short, nobody really knows what the number will be for 2021 right now. However, with so many doom-and-gloomers predicting that the number will come in closer to $175 million than to $205 million, we’re starting to see an uptick in social media conversations about some teams possibly making heavy use of voidable year contract extensions in the next six weeks to help them navigate through what could be a tough process of getting cap compliant yet able to participate some in free agency.
There’s no sense in me rewriting what Over the Cap already has written about voidable year contract extensions so if you don’t understand what that means or what the process involves, click the link in the tweet above. In short, it’s sort of way to do a contract restructure on players who don’t have any years past the current one left on their deals to help the team free up cap space in said year. The voidable aspect of the extension protects the player so that he’s not locked into what is essentially a faux deal that provides him no new money to sign for more years.
In a normal contract restructure, a player has multiple years left on his deal for starters. At that point, the team simply gets the player’s permission to turn chunks of his base salary and even roster bonus he might be due into a signing bonus. The player still gets all the money he was already due that season, but the team then gets the benefit of stretching out the amount paid to him as a signing bonus in equal parts over the remainder of his contract as part of salary cap accounting. It’s merely a move to create cap space and nothing more.
Outside of a player in the final year of his contract accepting a straight pay cut, a team has no way of getting cap relief unless they get more years added on to the deal so that bonus money can be prorated out. A regular contract extension can do the trick, but usually that includes more new money up front and obviously the player being obligated to a team for the extended number of years. For older players who might be done after the current season, a voidable extension can help the team and the player loses no money he was already due.
So, how do voidable contract extensions possibly play into the plans of the Pittsburgh Steelers this offseason.?
Well, should the Steelers deem that route necessary these next six weeks, there are really just three veteran players that the team might want to discuss doing voidable contract extensions with. Those three players would be quarterback Ben Roethlisberger, center Maurkice Pouncey and cornerback Joe Haden and that assumes all three want to play in 2021, they all don’t demand regular extensions with any new money, and all agree that they will more than likely just retire after the 2021 season is over with. After all, the whole idea behind these faux extensions is that they void immediately after the season is done.
In the case of Roethlisberger, who is scheduled to earn $19 million in 2021, doing a four-year voidable extension with him, should he agree to it, would result in the Steelers clearing $14.34 million in salary cap space. Doing that, however, guarantees that Roethlisberger’s contract will void right after the season and leave the Steelers with a dead money charge in 2022 of $14.34 million. All that is done to get there is that $17.925 million of the $19 million Roethlisberger is due in 2021 is turned into a signing bonus and then stretched out over five years, four of which are voidable extension years.
If the above example looks familiar, it’s because it should because I wrote about that possibly being an option for the Steelers with Roethlisberger in 2021 way back in September.
So, what about Pouncey and Haden and if they both were to agree to maximum voidable year contract extensions just like Roethlisberger’s example?
In Pouncey’s case, $5.54 million in 2021 salary cap space could be created via a voidable extension that adds four years on to his upcoming season. After his contract voids, in 2022, the Steelers would be left with a dead money charge of $5.54 million. In Haden’s case, up to $4.74 million in 2021 salary cap savings is possible with $4.74 million becoming dead money in 2022 after his contract voids after the season.
So, assuming Roethlisberger, Pouncey and Haden were all to agree to maximum voidable year extensions with no new money, the Steelers would clear $24.62 million in 2021 salary cap space while guaranteeing themselves that same amount in dead money in 2022.
Will the Steelers and all three players ultimately want to go this route? It’s obviously extremely hard for me to say for sure and especially with such extensions guaranteed to create nearly $25 million in dead money for 2022. Purposefully stacking large amounts of dead money like that is often highly frowned upon by many salary cap analysts and for good reason. It’s one giant kicked can and unmovable after it lands. Even so and depending on where the 2021 NFL salary cap number ultimately comes in at, and assuming that the three players used in this example are fine with 2021 possibly being their final NFL seasons, or at least their final ones with the Steelers, the voidable extension route for one or all three certainly could be something that’s at least plausible to happen in the next six weeks.
At the very least, you have now seen just how easy it can be for teams to massage their salary cap situation in a vastly different way if need be in 2021 due to the economic impact caused by the coronavirus in 2020.