One of the things I have been getting more and more questions about is Alex Smith’s contract with the Redskins. As we all know Smith suffered a really bad injury a few weeks ago and has now reportedly had complications in surgery that have made his future even more questionable than before. Smith was in just the first year of a $94 million contract when the injury occurred so let’s look at what will happen from this point forward.

Smith’s contract was a pretty standard NFL contract. TheRedskins fully guaranteed Smith $55 million upon signing, including a rather large $27 million signing bonus. All told Washington paid $40 million of that guarantee in the first year of the contract. The $15 million that remains will be paid in 2019. This money is a sunk cost for the Redskins (for the most part,more on that in a minute) and there is no way to avoid the payments.

Where the Redskins have options is with an additional injury guarantee in Smith’s deal. Smith’s 2020 $16 million salary is guaranteed for injury at the moment. An injury guarantee means that if a player’s contract is terminated while he is injured his injury protection kicks in and he earns his salary if hurt. The condition to collect on the guarantee is that Smith would not be able to pass a physical in 2020. So obviously that is a long time for Smith to recover from his injury.

The tricky part for Washington though is that the 2020 injury guarantee is what is called a vesting guarantee. A vesting guarantee is one in which the injury guarantee becomes fully guaranteed at some point in time. For quarterbacks these are often early in a contract and it is no different for Smith. His $16 million injury guarantee vests on the 5th day of the 2019 league year. What that means is even if Smith can pass a physical in2020 but his skills are so diminished that he can’t be effective the Redskin sare still on the hook for the $16 million if his salary vests.

If Washington cuts Smith before that vesting date they do have the ability to escape that $16 million guarantee depending on how Smith’s recovery goes. But the situation gets more complicated when we look at the salary cap implications of cutting Smith.

Smith’s current salary cap number in 2019 is $20.4 million. If he was cut that number would increase by at least $17.7 million, which is the remaining portion of his unaccounted for signing bonus, leaving the Redskins with a $36.6 million dead money charge. On top of that typically future guarantees in a contract normally count when the player is released. Since Smith would be released with a failed physical termination in March the Redskins I believe should also have to account for an additional $16 million on the cap, regardless of whether or not the injury guarantee is actually paid in 2020 or not. If that is the case in brings thedead money to a ridiculous $52.6 million.

Regardless of whether Im incorrect on the acceleration of the guarantee, $36.6 million or $52.6 million is basically not feasible for Washington. The team has just $19 million in projected cap room for next year.Take off $17 million for Smith and they have nothing to spend. Add in the extra $16 million on top of that and they are in the worst position of any team in the NFL.

The Redskins could opt to use a June 1 cut on Smith. A June 1 cut essentially freezes Smith’s 2018 contract from March through June 1. On June 2 the cut would then be processed. In that situation the Redskins defer the $17.7 million in signing bonus acceleration to 2020. However the guarantee still accelerates so if the injury guarantee does count on the cap that would add $16 million to histotal putting the Redskins right up against the cap. In my mind none of these options are really feasible.

Washington does not get any cap relief from the NFL for this injury, which seems to be a topic people are discussing for some odd reason.Teams take on risks when they sign contracts and they are penalized when the contract blows up. So there is no special list to put Smith on to hide his cap hit. He will simply be placed on the PUP list next year.

There is some relief that would come the Redskins way if Smith can not play. Per JI Halsell, the Redskins did take out a $12 million insurance policy on Smith when they signed the contract. If Smith is unable to complete his contract due to the injury the $12 million will be paid to Washington. This reimbursement is going to give Washington salary cap relief but in my experience there is usually a delay in getting those cap credits meaning they usually come in future years so I don’t expect the $12 million to offset anything significant in 2019.

So what can Washington do? They have a few options. One option might be to work with Smith to defer the date on which is full guarantee kicks in just to give the Redskins more time to decide on the contract. I wouldn’t see Smith’s side agreeing to this since this was a football injury and you negotiate these contracts to protect from these rare instances like this one. They could just let the contract playout and hope Smith can play football somewhere. Even though his salary would become fully guaranteed there are offsets on the salary so they may be able to recover some of that $16 million in 2020 if he can play in the NFL.

I think what I might look to do is make the best of a bad situation. Odds are the Redskins are going to have to pay $31 million more dollars and account for $52.6 million on the salary cap for a player who most likely won’t play another meaningful snap for the organization.

If the Redskins reduce Smith’s salary next season to $1 million they can reduce his 2019 salary cap number from $20.4 to $10.275million giving them more money to spend on the season while they have to carry Smith on PUP. In 2020 you do the same if there is no new CBA agreement in place to bring his cap number down to around $15.1 million. At that point the Redskins will have deferred $27.2 million in cap charges to future years.

While this “kicking the can philosophy” is one I don’t like this is a unique situation. They aren’t adding money by doing it its just finding a way to shuffle it for accounting purposes. I cant come up with a scenario where it makes sense to take these massive cap hits in 2019 or 2020.My hope is that if there is a lockout I can release Smith in 2021 before alockup becomes official and potentially escape the $27.2M in dead charges entirely. Or maybe release at the end of the year if I have the cap room to doit in 2020 since a lockout would likely eliminate carryover anyway. Remember the Redskins will also be getting some type of credits for Smith because he cant play too which will help lessen the blows.

At the worst kicking the money in Smith’s contract allows me to use around 13% of my salary cap for the next three years on Smith rather than using 27% of my cap all on Smith next season and really blow up my year. The goal for Washington at this point now should be to just mitigate the impact on the salary cap and find the best way to account for his money without compromising the way I am going to build the team.