THE MONEY CLIP – RAVENS’ SALARY CAP ANALYSIS

Ravens 2013 Free Agency Preview

Super Bowl Champs!

Every offseason should start off like that.

The 2012 season was a season of great highs and great lows for the team and its fans. A promising 9-2 start was followed by a 3-game losing streak (and losses in 4 of the last 5 regular season games), but the team then turned it on in the post-season and rode the emotional wave of Ray Lewis’ impending retirement all the way to a World Championship.

Now comes another offseason of change, as the team’s roster may see a great amount of turnover, both from retirements and from the need to open up Salary Cap space to retain some of its pending free agents.

Key among those free agents is the status of Quarterback, Joe Flacco. It’s safe to say that Flacco is going to get paid and that he isn’t going anywhere. But, exactly how he is retained is going to be greatly influence the team’s Salary Cap and what the team can do at other positions.

So, with that in mind, here’s a look at the Ravens’ 2013 Free Agency and Salary Cap status:

PLAYERS UNDER CONTRACT:

The Ravens presently have the following 42 players under contract for 2013 (with base salaries indicated):

QBs (1): Tyrod Taylor ($555K)

RBs (3): Ray Rice ($1M), Bernard Pierce ($480K), Vontae Leach ($3M)

WRs (8): Anquan Boldin ($6M), Torrey Smith ($683K), Jacoby Jones ($3M + $1M Roster Bonus), Tandon Doss ($555K), LaQuan Williams ($555K), Deonte Thompson ($480K), Tommy Streeter ($480K), Tori Gorley ($405K)

TE (1): Steve Watson ($405K)

OL (8): Michael Oher ($3.085M + possible $1M escalator), Marshall Yanda ($4.5M), Matt Birk ($2.75M), Jah Reid ($555K), Kelechi Osemele ($542K), Bobbie Williams ($1.2M), Gino Gradkowski ($480K), David Mims ($480K)

DL (6): Haloti Ngata ($4M), Terrence Cody ($630K), Pernell McPhee ($555K), Michael McAdoo ($555K) , DeAngelo Tyson ($480K), Swanson Miller ($405K)

LBs (6): Ray Lewis ($5.4M), Terrell Suggs ($6.4M), Jameel McClain ($3M), Courtney Upshaw ($631K), Brendan Ayanbadejo ($940K), Spencer Atkins ($630K)

CBs (5): Lardarius Webb ($2.385M), Jimmy Smith ($1.05M), Cory Graham ($2.05M), Chykie Brown ($555K), Asa Jackson ($480K)

S (2): Bernard Pollard ($2M), Christian Thompson ($480K)

ST (2): Justin Tucker ($480K), Sam Koch ($1.9M)

These 42 players are under contract for a total Salary Cap commitment of just over $109.783M. (Link to 2013 Projected Rule of 51 Salary Cap Spreadsheet).

UNRESTRICTED FREE AGENTS (UFAs):

The following 13 players are Unrestricted Free Agents (UFAs) and will be free to sign with other teams if they haven’t re-signed with the Ravens before Free Agency begins on March 12th at 4:00 p.m.:

QB – Joe Flacco

S – Ed Reed

LB – Dannell Ellerbe

CB – Cary Williams

DT – Ryan McBean

LB – Paul Kruger

OT – Bryant McKinnie

S – Sean Considine

DT – Ma’ake Kemoeatu

S – James Ihedigbo

LB – Ricky Brown

TE – Billy Bajema

CB – Chris Johnson

EXCLUSIVE RIGHTS FREE AGENTS (EFAs):

These players must be tendered contracts of the league minimum, based on the player’s length of service in the league ($555K, $480K or $405K). Once tendered, these players are fully under the team’s control and are not free to negotiate with other teams.

The Ravens have 9 players who are Exclusive Rights Free Agents (EFAs):

RB – Anthony Allen

RB – Damien Berry

RB – Bobby Rainey

LB – Josh Bynes

LB – Albert McClellan

LB – Adrian Hamilton

DT – Bryan Hall

S – Anthony Levine

S – Omar Brown

RESTRICTED FREE AGENTS (RFAs):

These are players whose contracts have expired and who have 3 years of accrued service time. The team must tender the player with an RFA offer. Once done, another team can sign the player to a RFA offer sheet, but the Ravens then have 7 days to match that offer sheet and retain the player under the terms of that offer sheet. If the Ravens were to choose not to match the offer sheet, they would then receive compensation based on which level of RFA tender was made to the player.

There are 3 RFA tenders (the 2011 CBA did away with the “high” tender of 1st and 3rd round draft picks as compensation):

1st Round Tender: allows the team to receive compensation of a 1st round – $2.879M

2nd Round Tender: allows the team to receive compensation of 2nd round pick – $2.023M

Low Tender: allows the team to receive compensation of a draft pick equal to the round in which the player was originally drafted or the Right of First Refusal (ROFR) for an undrafted player – $1.323M

The Ravens have 7 players who are Restricted Free Agents (RFAs) – with original draft round indicated:

TE – Dennis Pitta (4th)

TE – Ed Dickson (3rd)

LS – Morgan Cox (undrafted)

DT – Arthur Jones (5th)

OL – Ramon Harewood (6th)

WR – David Reed (5th)

S – Emmanuel Cook (undrafted)

In the past, the Ravens have usually tendered all of their RFAs, but on occasion, the team has non-tendered a player and instead, re-signed the player to a one-year veteran minimum contract. The veteran minimum salary for such a player for 2013 is $615K. This year, Emmanuel Cook is a likely candidate for such a deal, if he’s even retained at all. It is also possible that the team could choose to non-tender Ramon Harewood and David Reed if the team is forced to use the Franchise Tag on QB Joe Flacco.

For the purposes of this projection, we’ll assign the following RFA tenders – Pitta (2nd round tender), Jones (2nd round tender), Dickson (low tender – 4th round compensation), Reed (low tender – 5th round comp), Harewood (low tender – 6th round comp), Cox (ROFR) and Cook (non-tendered).

2012 SALARY CAP CARRYOVER:

Under the new CBA, teams can now carry over excess Salary Cap space from one year to the next. The Ravens finished the 2012 season with $1.182M in excess Cap space.

RETIREMENT OF RAY LEWIS:

Ray Lewis’ 2013 Cap number was set to be $7.3M. His retirement relieves the team of having to pay his scheduled base salary of $5.4M and creates $4.35M in Salary Cap savings. However, due to the acceleration of yet to be counted bonus prorations for 2014 and 2015 (along with the 2013 prorations), the team will have to carry $2.95M in dead money against the 2013 Cap.

PROJECTED SALARY CAP COMMITMENT:

Based on all of the above, prior to the team making any other roster moves (releases or retirements) or the restructure of any contracts, the team would enter the 2013 league year with $5.013M in Salary Cap space, with 56 players under contract or tendered. (Link to Projected Rule of 51 Salary Cap Spreadsheet).

This number represents the “Rule of 51” Salary Cap status for the Ravens. During the offseason, when roster can balloon to up to 90 players, only the highest 51 Salary Cap numbers (and all 2013 bonus prorations and all dead money from released players) are counted for Salary Cap purposes.

With that said, that number is going to be greatly affected by……..

LONG-TERM CONTRACT OR FRANCHISE TENDER FOR QB JOE FLACCO:

This is the priority free agent issue for the Ravens. QB Joe Flacco is a pending Unrestricted Free Agent and in order to retain their starting QB, the Ravens must either sign Flacco to a long-term contract or designate him as their Franchise Player.

It certainly seems that both sides would like to get Flacco signed to a long-term deal, but to date they have been unable to find a middle ground. According to league sources, the Ravens reportedly offered a sizeable deal, approaching $100M over last summer, but Flacco and his camp didn’t apparently like the structure of the deal, most particularly the guaranteed money.

Now, coming off of winning the Super Bowl MVP and having one of the best postseason ever, Flacco’s price has most certainly gone up and he’s proven that he deserves to be paid like one of the best QBs in the game. But, will this leverage help or hinder the parties’ ability to reach an agreement on a long-term deal.

From a Salary Cap perspective, a long-term deal is always the most Cap friendly option. On a long-term deal, the 1st year Cap number is generally the lowest Cap number of the contract, and with a relatively tight Cap, a new deal would allow the Ravens to allocate whatever other Cap Space they have to address other areas of need. Under a long-term deal, depending on the structure of the contract, Flacco’s 2013 Cap number would likely be in the $5-7M range.

The Ravens and Flacco have until March 4th to reach an agreement on a long-term deal before the team will need to use the Franchise designation. The parties can still reach an agreement after that date, but if a long-term deal is going to be reached, they would likely use March 4th as a sort of negotiating deadline.

If the Ravens cannot reach a long terms deal with Flacco, they will be forced to use the Franchise Tag on him. While it appeared likely that the Ravens would only use the “non-exclusive” Franchise Tag, which is a one-year contract for an amount that is the average of the top 5 QB Cap numbers (essentially) over the prior 5 years, that thinking has likely changed with Flacco’s impressive post season showing. Under the non-exclusive Tag, Flacco would be allowed to negotiate an Offer Sheet with other teams and, if he reaches an agreement with another team, the Ravens can either match that Offer Sheet and retain Flacco or let him leave and receive 2 1st round draft picks as compensation. For 2013, the non-exclusive Franchise Tag for quarterbacks is expected to be $14.642M.

Now, it appears that the team would be best served to protect its investment in Flacco by using the “exclusive” Franchise Tag. The exclusive Tag would prohibit Flacco from negotiating with other teams, but the tender amount for this version of the Tag is the average of the top 5 QB Cap numbers for the 2013 league year (as of a date in April). For 2013, the cost of that tender is expected to come in over $20M.

That said, it’s going to be difficult enough to create enough Cap space to accommodate a tender of $14.642M, so, if forced to use the exclusive Tag, the team will essentially have to tear apart its roster and do wholesale restructuring of contracts (something they have shied away from in recent years).

RELEASE/RETIREMENT/RESTRUCTURES:

No matter whether the Ravens are able to sign Flacco or forced to use the Franchise Tag to retain him, the team is going to have to create additional Salary Cap space to fit him into their Cap and be able to sign or re-sign other players to the roster. The primary way that the Ravens can – and will – create Cap space is through the release or retirement of players (which for Salary Cap purposes are treated the same). The below chart lays out the Salary Cap implications of the release or retirement of some Ravens players:

It seems fairly evident that Center Matt Birk and Guard Bobbie Williams will either retire or be released. Assuming both of those happen, the Ravens will initially receive a Cap savings of $3.25M, however, under the Rule of 51, that Cap savings will be offset by the Cap numbers of the 2 players replacing Birk and Williams amongst the top 51 Cap numbers. Once those Cap numbers ($405K each) are factored in, the net savings from the release/retirement of Birk and Williams will be $2.44M.

Even with that additional savings the Ravens are likely to still need more Cap space to work with – a lot more if they have to use the Franchise Tag on Flacco.

In order to create more Cap space, the team may be forced to release some of the players listed above or restructure the contracts of some other players on the roster – or, likely, both.

Candidates for restructures are LB Terrell Suggs, NT Haloti Ngata and G Marshall Yanda (although they just restructured Yanda last year). While restructuring always sounds like a good idea, it does come with negative ramifications for the future because a restructure basically creates present Cap space at the expense of future Cap space. Much like a credit card, the bill will eventually come do and wholesale restructuring is a good way of ruining your Salary Cap for the future. Because of this, the Ravens have shied away from wholesale restructures in recent years, but if they have to franchise Flacco, they may have no choice.

The team may also look to sign guys like Anquan Boldin, Jacoby Jones, Vonta Leach and/or OT Michael Oher to contract extensions, thereby securing the services of those players beyond next season, while also reducing their 2013 Cap numbers.

Needless to say, if it already isn’t evident, it all comes down to Flacco’s contract. If they can get a contract done with him before they need to use the Franchise Tag, the team will have a decent amount of Cap maneuverability, without too much pain. However, if they need to use the Franchise Tag on Flacco, they will likely need to make wholesale roster moves in the form of releasing players they would otherwise rather retain (Boldin, Jacoby Jones) and restructure the contracts of many players, thereby creating the potential for future Salary Cap troubles.

PRACTICE SQUAD FREE AGENTS (FAs):

In past years, the Ravens have usually re-signed their Practice Squad players to contracts for the coming year. The announcement of these signings will likely come in the next couple of days.

The 8 players currently on the Practice Squad are:

RB – Lonye Miller

LB – Nigel Carr

OT – Jack Cornell

QB – Dennis Dixon

LB – DJ Bryant

G – Antoine McClain

G/C – Reggie Stevens

TE – Alex Silvestro

Most of these players will be re-signed to one-year contracts of $405K. Dixon would receive a contract of $480K. Because of the Rule of 51, re-signing these players will have little or no impact on the team’s Salary Cap.