10 implications from Joe Flacco's restructured contract with Broncos
Earlier this week, there were varying reports about the cap space the Denver Broncos had as the 2019 regular season started. Now we know what the Broncos actually have, thanks to the report of the team restructuring quarterback Joe Flacco's contract.
The Broncos converted $17M of Flacco's 2019 salary into a signing bonus, then added two voidable years after the end of his deal. They did not change his base salaries for 2020 and 2021 and both appear to remain not guaranteed.
The Broncos now have a little more than $12M in cap space this season. They are projected to have $54.2M in cap space for 2020, based on an estimated base cap of $200M. Even if the base cap doesn't go that high (it was $188.2M for 2019), chances are the NFL will raise the base cap by at least $10M, so the Broncos should still have a large amount of cap space next season. Keep in mind that the Broncos' estimated cap space doesn't include any carryover yet.
It does mean, though, that the Broncos would face dead money charges if they moved on from Flacco in 2020. Thus, the move indicates the Broncos are likely planning on Flacco being with the team next season.
So what to make of the decision? Let's examine 10 questions I imagine Broncos fans will be asking now.
1. Was this the right move?
I have not changed my opinion that the Broncos shouldn't have restructured Flacco's contract. I believed it was for the best for the Broncos have as much flexibility as possible to get out of his deal when the time was right.
With that said, I can understand why the Broncos believed this was for the best. Flacco's $18.5M base salary was going to become fully guaranteed because of the vested veteran rule, which says that any veteran with at least four accrued seasons gets his base salary fully guaranteed if he's on the Week 1 53-man roster.
Since the Broncos knew they were going to have to commit to $18.5M in cash, they chose to adjust the method of payment of that cash. In doing so, they freed cap space for this season in case they have to add players to replace anyone lost to injury, or if the team decides to acquire a player in a trade, or they decide to extend a player set to become an unrestricted free agent in 2020.
This isn't the move I would have made to give the Broncos that flexibility, but I understand that they needed to make a move of some type. Otherwise, they would have been tight under the cap, given some of the roster choices they made and their decisions to keep certain players on injured reserve — and all the players on IR count toward the cap, along with the 53-man roster and 10-man practice squad.
2. Was there another contract that could have been restructured instead?
There was — Von Miller has three years remaining on his current deal. His deal expires just before Bradley Chubb would enter the fifth-year option of his first-round rookie deal.
In Miller's case, it would have involved a short extension — say, two years — that would allow the Broncos to lower his cap number, but keep him around for the next two or three seasons after 2019, then move on if necessary, when it would come time for Chubb to get an extension.
However, it's possible the Broncos thought that Miller's agent might seek a large amount of money in such an extension, because the market for pass rushers continues to rise. That might mean a larger signing bonus, or perhaps raises in future base salaries, that wouldn't have made an extension as desirable from the Broncos' side.
But given that Miller continues to play at a high level, it may have been worth it, so long as you have the ability to move on from Miller when it comes time to extend Chubb.
3. What other moves could have cleared cap space?
The Broncos could have considered extending Derek Wolfe to lower his $10.9M cap number. However, that really isn't the best option, especially when Shelby Harris tops the list of defensive linemen who should get an extension.
The Broncos could have approached Ronald Leary about converting some of his base salary into incentives. However, I think Elway is trying to avoid this practice because of his reputation for being stingy with contracts.
Plus, Leary might have been hesitant to do so because, even though a large portion of his base salary has been fully guaranteed for some time, he is coming off an injury and, for peace of mind, would want to maximize the amount of money he would receive this season.
Extending Chris Harris, Jr. wasn't going to happen because Harris wants to see where things are with the Broncos and the cornerback market after the season. Extending Emmanuel Sanders isn't in the plans, either.
So there wasn't much else the Broncos could do to clear a significant amount of cap space.
4. What's the deal with the voidable years?
Voidable years are a mechanism by which teams spread out a signing bonus over additional years than they would otherwise. In Flacco's case, he had three years left on his current contract.
The Broncos restructured $17M of his base salary and spread it out over five years using the voidable years tactic. That means a $3.4M cap charge in each of the next three seasons, then the same cap charge in 2022 and 2023 for the time being.
Flacco's 2020 cap charge rises to $23.65M, from $20.25M, and his 2021 cap charge rises to $27.65M, from $24.25M. Had the Broncos not used the voidable years, the cap charges would be higher, because the signing bonus could only be pro-rated over three seasons. The same would have applied to 2019, meaning the Broncos gain less cap space.
When the voidable years arrive, teams are free to extend the player if they desire. The Saints have used this trick with Drew Brees, the Arizona Cardinals have done the same with Larry Fitzgerald and the Patriots are doing it with Tom Brady. In the former two cases, their teams have extended the players. The Patriots could do the same with Brady if they desire.
Flacco isn't likely to be extended, though, meaning the dead money for 2022 and 2023 will both apply to 2022, a total of $6.8M. It's not desirable, but it can be managed, so long as the Broncos are careful with other restructures and make good decisions on extending players or signing other free agents.
5. What's the impact for getting out of the deal in future seasons?
The Broncos could still move on from Flacco after 2019 because they didn't fully guarantee his 2020 salary, meaning they wouldn't owe him that $20.25M if they cut him before the start of the 2020 regular season.
However, a straight cut in 2020 before June 1 means $13.6M in dead money with $10.5M in cap space freed. It's more likely the Broncos would wait until after June 1 to cut him, giving them $16.85M in cap space with a $6.8M dead money charge. There would be a $6.8M dead money charge in 2021.
If the Broncos keep Flacco in 2020, then move on at the start of the 2021 league year, they take a $10.2M dead money charge with $17.45M freed. A 2021 cut after June 1 means a dead money charge of $5.1M with $19.15M in cap space freed, and a $5.1M dead money charge applied to 2022.
Because Flacco has no guaranteed money in his deal, nor any roster bonuses that must be paid on a certain date, the Broncos don't have to cut him before the start of a new NFL calendar year and designate him post-June 1. They can simply wait until after June 1 to cut him.
If Flacco is traded, the cap space money freed and dead money charge are the same as for cutting him, with the only difference being whether the trade takes place before or after June 1.
6. Why didn't the Broncos do this earlier?
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First of all, the Broncos wanted to find out how well Flacco would look in practices and during the preseason before making a decision. If he didn't at least look solid with his play, it wouldn't make sense to restructure his deal at all, because they would definitely want to get out of the deal after 2019.
Second, there's no guarantee that the Broncos would have been able to add more free agents at the time they acquired Flacco. They may have gotten some cap space, but their cash commitments for 2019 would remain the same.
Signing bonuses may be pro-rated over the duration of a contract for cap purposes, but the cash for the signing bonus is committed upon signing or restructure. So it's still considered cash spent for 2019, even if it may not all be paid to the player during 2019.
This was more about the Broncos knowing they had to commit a certain amount of cash to Flacco under their 2019 spending. The restructure simply changes the payment schedule of the money.
7. What does this mean for Drew Lock?
I don't believe the Broncos are giving up on Drew Lock. They still see him as the quarterback of the future — it just means the future may not come as early as originally thought.
Had Lock not sprained his thumb and went into the regular season healthy, it's possible the Broncos don't restructure Flacco's contract, because Lock would have the chance to practice and be in a better position to take over as the starter in 2020.
But the thumb injury changed plans — at least for the time being. The Broncos may believe Lock would benefit from additional time to improve as a quarterback because of the time he will miss this season.
Things could still change, however, if Lock is cleared to play in a few weeks and the Broncos decide to bring him off injured reserve.
But even if Flacco sticks around in 2020, that doesn't mean Lock isn't in line to be the QB of the future. He still has the chance to become the Broncos' eventual starter — it's just that it might be delayed.
8. Could the Broncos now trade for Redskins LT Trent Williams?
There's been some speculation that the Broncos could make a push to acquire left tackle Trent Williams from the Washington Redskins. The cap space the Broncos gained does open the door for such a trade.
However, keep in mind that Williams is due a $10.85M base salary this year. He's also certain to want an extension — and even in the extremely unlikely situation that he doesn't, the Broncos would have to extend him because the $10.85M salary would take up the bulk of the cap space the Broncos freed.
While I did rule out trading for Williams earlier this year, I won't rule out it entirely now. However, I would wait it out for two important reasons. First, the Broncos need to see how they do in the coming weeks and determine if they have a legitimate shot at the playoffs. If they do, it would make more sense to trade for Williams.
Second — and more importantly — the Redskins are telling other teams that they don't want to trade Williams. "We don't want to trade a player" is code for "we have set our price at a point that nobody wants to meet." In other words, they are asking for too much in a trade.
Any team who trades for Williams needs to keep the trade the Seahawks made for Duane Brown in mind. The original trade the Seahawks made with the Houston Texans for Brown was to send cornerback Jeremy Lane, a 2018 fifth-round pick and a 2019 second-round pick. When Lane failed his physical, the Seahawks sent a 2018 third-round pick to the Texans, who sent a 2018 fifth-round pick back.
Therefore, the Broncos (or any other team, for that matter) shouldn't send more than a third-round pick in 2020 to the Redskins, plus a 2021 second-round pick, to acquire Williams (though the Broncos should expect a pick back, as the Seahawks did in the Brown trade after Lane failed his physical).
They could offer a current player (say, current left tackle Garett Bolles) and give up a fourth-round pick in 2020, plus the 2021 second-rounder. But if the Redskins are insisting on more than what the Seahawks gave up for Brown, you don't make the trade.
Remember that Williams is 31 years old and you have to keep his recent health issues in mind as reasons that you don't rush into a trade and you don't overpay, even though Williams has a lengthy track record as a top offensive tackle.
9. What other moves could the Broncos make this season?
The Broncos are now in position to extend Shelby Harris if they desire. They have the cap space available to work a signing bonus for him into his deal. The only issue is whether the Broncos have the cash to commit to a signing bonus.
The Broncos could also acquire a player in a trade other than Trent Williams. They might find other options to acquire from teams who are out of the playoffs and are looking to move veterans who the Broncos believe could help them with a playoff push.
Or the Broncos could just carry the cap space over into 2020, which would give them additional cap space at that time.
10. What does this mean for 2020?
First, I believe the Broncos will keep Flacco in 2020. That means my offseason game plan for 2020 that I discussed a few days ago doesn't change on that point.
Second, the Broncos still have plenty of cap space to work with, so they can still extend Shelby Harris and Justin Simmons, then add other free agents as desired. They can gain additional cap space by declining Ronald Leary's team option and the door could still be open for bringing back players who test the market but don't find deals to their liking.
In other words, the Broncos are still in a good position to address team needs through free agency, whether extending their own or signing other players. They still have some flexibility to gain cap space and they have plenty of draft capital to further build the team.
Restructuring Flacco's contract is a roll of the dice, but the Broncos seem to feel comfortable with him for at least the next two seasons. We'll find out how it pays off — if it does, of course.
Follow Bob on Twitter @BobMorrisSports and @MileHighHuddle.
