Salary Cap Savings & Injury Benefit Clarification Should Hampton & Mendenhall Be Released
As the Pittsburgh Steelers get closer to having to make key personnel decisions for salary cap purposes, I thought I would take time to research out the ramifications of terminating the contracts of nose tackle Casey Hampton and running back Rashard Mendenhall from both a salary cap savings angle and because both are still recovering from ACL surgeries, as both expected to start the 2012 season on the PUP (physically unable perform) list.
Let us start from an injury standpoint first, as I was confused how this worked myself. I was trying to look at it from an injury grievance viewpoint as it relates to a salary cap ramifications, but as I dug into the CBA, I see it now from an injury protection benefit viewpoint, which I believe it is.
First let us look at the injury protection benefit section as it reads in the CBA.
Section 1. Qualification: A player qualifying under the following criteria will receive an Injury Protection benefit in accordance with Section 2 below:
(a) The player must have been physically unable, because of a severe football injury in an NFL game or practice, to participate in all or part of his Club’s last game of the season of injury, as certified by the Club physician following a physical examination after the last game; or the player must have undergone Club-authorized surgery in the off-season following the season of injury; and
(b) The player must have undergone whatever reasonable and customary rehabilitation treatment his Club required of him during the off-season following the season of injury; and
(c) The player must have failed the preseason physical examination given by the Club physician for the season following the season of injury because of such injury and as a result his Club must have terminated his contract for the season following the season of injury. This preseason physical may be given by the Club physician prior to the beginning of preseason camp, so long as such fact is clearly communicated in writing to the player at the time of the physical exam. The preseason physical examination given for qualification need not be the entire Standard Minimum Preseason Physical Examination, but shall be that necessary and appropriate to evaluate the injury for which the benefit is sought.
It is agreed that a player who qualifies for Injury Protection under Subsections 1(a) and 1(b) may be waived prior to being given a pre-season physical examination, but the waiving Club would retain Injury Protection liability unless and until the player signed a contract with and passed the physical examination of another NFL Club. In other words, a Club cannot evade Injury Protection liability by early waiving.
Section 2. Benefit: A player qualifying under Section 1 above will receive an amount equal to 50% of his Paragraph 5 Salary for the season following the season of injury, up to a maximum payment of: $1,000,000, in the 2011–12 League Years; $1,050,000, in the 2013–14 League Years; $1,100,000, in the 2015–16 League Years; $1,150,000, in the 2017–18 League Years; and $1,200,000, in the 2019–2020 League Years; in each case unless he has individually negotiated more injury protection or a larger guaranteed salary in his contract. A player will receive no amount of any contract covering any season subsequent to the season following the season of injury, except if he has individually negotiated more injury protection or a larger guaranteed salary in that contract for the affected year in question or if he qualifies for the Extended Injury Protection benefit described below. The benefit will be paid to the player in equal weekly installments commencing no later than the date of the first regular season game, which benefit payments will cease if the player signs a contract for that season with another Club. A player will not be entitled to such benefit more than once during his playing career in the NFL, and such benefit shall be reduced by any salary guaranteed to the player for the season following the season of injury.
If I understand the above correctly, both Hampton and Mendenhall both qualify for the injury protection benefit, because both suffered a severe football injury in a game and were unable to participate in all or part of the last game of the season due to the injury. Both have undergone Club-authorized surgery in the off-season following the season of injury; and both are undoubtedly undergoing whatever reasonable and customary rehabilitation treatment his Club required of him during the off-season following the season of injury.
Assuming both meet the criteria above, let\’s look at the benefit both should receive. Based on their 2012 base salaries they both should qualify for the $1 million benefit should they have their contracts terminated as shown in Section 2 above. Now the question becomes whether or not that $1 million is charged to the Steelers 2012 salary cap as a result.
Once again we will defer to the CBA.
Section 5. (h) Injury Protection. Beginning in the 2016 League Year, any type of Injury Protection liability shall be included in Team Salary for the League Year for which such Injury Protection applies, or the League Year in which such Injury Protection is paid, agreed to be paid by settlement, or awarded, whichever is later.
Judging by the above, the injury protection benefit is not charged to the salary cap right now, but starting in 2016 in will be.
So based on all of the above criteria, both Hampton and Mendenhall both can have their contracts terminated without the Steelers suffering any salary cap ramifications because of the injury protection benefits they would pay out.
Now let us look at the money saved, if all of the above is true. Hampton is due a $4.89 million base salary in his final year under contract. His cap hit is scheduled to be $8.056668 million because of $2.166668 left over signing bonus proration and a $1 million workout bonus. By terminating his contract, it should present a cap savings of $5.89 million which is his base salary and workout bonus that he would not be paid. Being as he is already expected to start training camp on ACTIVE PUP and because that could roll over into a RESERVE PUP spot, you can see that merely asking him to take a reduction in salary still might not be the most economical thing to do. He will turn 35 before the season starts and this is the second left knee surgery he had and the third total. The big question is how long will it take for him to get back into playing shape and is he worth at least a 6 week stay on the RESERVE PUP list. He is going to cost the Steelers $2.166668 million regardless and I suppose if he agreed to lower his base salary down to the vet minimum, it would be worth taking a chance on him. Anything more than that on a team that is strapped for cap space would be irresponsible in my opinion. Before it was announced that he needed surgery I had a different opinion on it, but now that the rehab will be 6 months at best, I can really see him having his contract terminated now. That of course would leave the Steelers with just Steve McLendon as the only true nose tackle on the roster with game experience as Chris Hoke already has retired. It would however free up a well needed $5.89 million and they could always sign Hampton back after he is fully recovered to a minimum contract should the need arise and if he hasn\’t already been signed by another team.
Now Mendenhall, the Steelers former first-round draft pick. Due to performance escalators in his contract, he is scheduled to earn a base salary of $2,050 million in 2012 and carries a cap charge of $3.4275 million because of a $275 thousand roster bonus he is due and a leftover signing bonus proration of $1.1025 million. Like Hampton, he too is headed into the final year of his contract. By terminating his contract the Steelers will save $2.325 million against the 2012 cap. GM Kevin Colbert has already shared his concerns this week as far as how long it may take for Mendenhall to recover from his surgery and hinted that he could even miss the entire season. Even if he doesn\’t miss all of it, he is likely to at least miss the first 6 weeks as he is destined for the RESERVE PUP list. Is he worth carrying as a $3.4275 million cap charge on a cash strapped team for basically a half a season, and maybe even less than that? He would be an unrestricted free agent once the season is over and that would likely be exposed to free agency anyways as I highly doubt they would place any type of a tag on him coming off of his injury. If the Steelers had the extra cap room available, I would say that it would be a no-brainer to let him ride on PUP and see what happens, but the more I look at these salary cap problems, the more I think he could end up a casualty, especially if there are no ramifications from the injury protection benefit.
Colbert was already facing big decisions before the 2011 season even ended in regards to the 2012 salary cap and the injuries to both Hampton and Mendenhall add to those tough decisions. The Steelers need the cap space and it is hard to ignore the $8.215 million they will free up by terminating the contracts of two players heading into the final years of their contract that could very well miss a good portion of the 2012 season, if not all of it.
I certainly am glad I am not in the shoes of Colbert and having to make those calls.