03-04-2016, 02:46 PM
(03-04-2016, 10:30 AM)JungleRock85 Wrote: Another $3.5 million or so is earmarked for potential dead money; players cut, the off-season workout program, and practice squad salaries."
Full article is at: http://www.bengals.com/news/article-1/View-from-both-sides/3223b9ba-3afd-45c8-9145-9c709fa7c0ca
"Potential" dead money?
Dead money is money that has already been paid out in cash in the form of a bonus earlier during the life of the contract. They don't have to set aside money for potential dead money. The dead money is money they put aside for money they already spent. They don't need to put aside more money to cover the money they already put aside. Unbelievable. Many times the salary savings is greater than the dead money giving them extra salary cap room.
Generic example to make the math easy: Player signs 4yr/$12M contract with $8M guaranteed signing bonus. The $8M bonus is paid up front, but for cap purposes is evenly spread out over the life of the contract or $2M cap hit each year. $12M contract - $8M bonus = $4M to be paid in salary over the life of the contract (again to make the math easy $4M/4yr = $1M salary/yr. So player gets a $3M cap hit each year ($1M salary + $2M ammoritized bonus). Last year of deal player has the same cap hit. If you release him in the final year of his contract you have an additional $1M in salary cap space because you save on his salary. You don't have to put aside money for the $2M in dead money for the signing bonus because you already paid the cash 4 years ago and the $2M is what you put aside 4 years ago. You don't need to put aside more money for what you already put aside 4 years ago. It is more complicated than that, but it is the basic idea.
