What Happens to an NFL Player's Salary Cap Hit When He Gets Cut?

The NFL salary cap is a crucial element of the league's financial regulations, dictating how much a team can spend on player salaries. When an NFL player is cut from a team, the impact on the team's salary cap is influenced by several factors. These include the player's contract structure, whether the release occurs before or after specific dates like the start of the league year, and the amount of guaranteed money in the contract.

Guaranteed Money

One of the most critical factors in determining a player's salary cap hit is the amount of guaranteed money in their contract. Guaranteed money is a permanent cap hit, even if the player is released. This is often the case with signing bonuses, which are usually prorated over the lifespan of the contract. When a player with guaranteed money is cut, the team continues to face the full cap hit until the money is dispensed or the player's contract expires.

Dead Money

Dead money refers to the portion of a contract that remains unamortized, such as signing bonuses or guaranteed salaries that haven't been spread out over the player's time with the team. Dead money is a dead weight on a team's salary cap, and it can be significant if the player has a large remaining contract. This term also describes the financial penalties teams face when they violate the salary cap or when a player is cut and a substantial portion of their remaining contract is still unamortized.

Post-June 1 Designation

Teams have the flexibility to designate certain cuts as 'cap relief.' This designation can be used to reduce the immediate cap hit a team faces. However, it's important to note that this relief is temporary because the money will eventually need to be accounted for over the player's contract period. When a player is designated for cap relief, the team is allowed to reduce their cap hit by the player's base salary for the remaining portion of the contract. However, any remaining unamortized salary or bonuses will still count against the cap in future years.

Timing of Release

The timing of when a player is released can also significantly impact the team's salary cap. If a player is cut before the start of the league year, the team can avoid the cap hit associated with any unguaranteed or unamortized bonuses or salaries. Conversely, if the player is released during the offseason or regular season, the team will still face the cap hit for the guaranteed portion of the contract.

Example Scenarios

Scenario 1: Player 1
Let's consider a player, Player 1, with a $2 million deal and no guaranteed money. If he remains on the team's roster, he takes up $2 million in cap space. If he is cut during training camp, the $2 million unguaranteed money disappears, and the team can regain $2 million in cap space.

Scenario 2: Player 2
Now, consider Player 2, who has a $10 million salary with $5 million in guarantees and another $2 million becoming guaranteed if he makes the roster at the end of training camp. If he remains on the team, he takes up $10 million in cap space. If he is cut in training camp, the team can avoid paying $5 million, but it will still have to account for the $5 million in guaranteed money. If he makes the roster but is later cut, the team can avoid $3 million but will still face a $7 million cap hit for the remaining $5 million in guarantees.

Scenario 3: Multi-Year Deals
When dealing with multi-year deals that have amortized guarantees and bonuses, things get more complicated. For example, if a player has a $5 million per year contract with a 50% guarantee clause, the team faces a $2.5 million cap hit in the first year, even if the player is cut later. This is because the guarantee is prorated over the contract's term. Thus, the team can only avoid the unguaranteed portion by cutting the player early.

Conclusion

When an NFL player is cut, the team's salary cap hit will typically include any remaining guaranteed money, even if the player is cut. The team will gain cap relief from the player’s base salary for the remaining portion of the contract. The timing of the release can affect the team's cap hit, with pre-league-year cuts offering the most flexibility. Understanding these nuanced aspects of the salary cap is crucial for teams to effectively manage their financial resources and maintain compliance with the league's regulations.