Different ways the Chargers can get cap-compliant vs. what it will cost them

The Titans became the first team of the offseason to make the necessary cuts and changes to become cap compliant before the start of the new year. Doing so involved parting ways with Robert Woods, fan favorite and three-time Pro-Bowl left tackle Taylor Lewan, kicker Randy Bullock, and linebacker Zach Cunningham. The moves created holes on their roster, but they managed to become cap compliant without mortgaging their future... and there are likely more moves to come as many believe they still need to figure out their QB of the future.

This shifts our focus to the Chargers, who are one of the 15 teams "in the red" against the salary cap, with the 5th-highest deficit in salary cap space. No matter which avenues they choose to take there will be fan favorites that won't be returning this year, be it breakout UFA's like Drue Tranquill preparing to cash-in on free agency, or one of the few remaining Bolts who began their careers in Qualcomm.

This is likely the greatest test of Telesco's career. The team is undeniably operating within a Super Bowl window but continues to be dwarfed by it's big brother in Kansas City, so mortgaging its future for another "All-In" year seems questionable at best. As such, my goal with this article is to teach the various tools GMs can use for cap management, and to help understand the consequences of each decision.

I'm operating from an understanding that we are currently an estimated $28,400,000 beneath the salary cap, with the rookie class allocations, a full roster, an assumed roll-over of $1,834,704, and an in-season budget of $4,000,000. My numbers aren't perfect and don't account for the likely ERFA's and RFA's we'll likely retain, but here is the spreadsheet I use to track this. I encourage anyone to make a personal copy for their own enjoyment and let me know if any corrections need to be made.

The Tools a GM has

Before diving into to the various moves the Chargers could make this offseason to work towards cap compliance, let's go over the various moves a team can use to manipulate their cap space. We'll use Joey Bosa's contract as a starting place, since nearly every tool is available for us to discuss. Below are the remaining 3 years on Bosa's deal.

Year Age Base Salary Prorated Bonus Roster Bonus Guaranteed Salary Cap
2023 28 $24,000,000 $7,000,000 $0 $24,000,000 $31,000,000
2024 29 $15,000,000 $7,000,000 $7,000,000 $0 $29,000,000
2025 30 $17,000,000 $0 $8,360,000 $0 $25,360,000

The tools to free up cap space are Cutting, Trading, Restructuring, and Extending. Cutting and Trading are the two options that part the player from the team and create another decision as to how to allocate their dead cap penalities; Restructuring and Extending are the two options available to retain core players, while leveraging them with higher future cap hits.

Let's start with Cutting and Trading, as they mirror each other on how they impact the present and future cap hits.

Moving On: Cutting and Trading

Cutting, and Understanding Post-June Designations

The easiest way to move on from a player is a quick "cut" candidate. Let's say (and this is MERELY AN EXAMPLE, not what I would recommend) the Chargers wanted to cut Joey Bosa. The total "dead cap" the team would be stuck with is the sum of his "Prorated Bonus" and "Guaranteed Salary" columns, totalling $38,000,000.

A team then has a decision to make - to either designate the player as a pre or post-June 1st cut. By choosing to designate a player to be cut before June 1st, the entire dead cap hit is applied to that year. If Bosa were cut in this manner, the Chargers would take a dead cap hit of $38,000,000 against Bosa's cap "savings" of $31,000,000, pushing them $7,000,000 further in the red. By choosing a post-June 1st cut, the remaining dead cap after the given year is accelerated and assessed against the following year's cap. In the case of Bosa, his 2023 Prorated Bonus (which is a original Signing Bonus prorated evenly across the first 5 years of his contract) and his 2023 Guaranteed Salary would attach as dead cap in 2023, and the remaining $7,000,000 from his 2024 Prorated Bonus would apply against the 2024 cap, making the Chargers net-neutral in 2023, and saving $22,000,000 in 2024. If Bosa had an additional $7,000,000 in prorated bonus allocated in 2025, it would accelerate into 2024's dead cap, making the total dead cap number $14,000,000 (this is just an example for how such a cut would affect other contracts).

This is clearly a terrible option for the Chargers. Cutting Bosa outright results in no 2023 savings, even if you designate it as a Post-June cut.

The Benefits of Trading

Before even exploring the actual trade compensation for a player, trading is still almost always a better path from a cap-savings perspective.

The same Pre-and-Post-June rules apply to trading, but the added benefit is the team receiving the player retains the Guaranteed Salary hits. Using Bosa's example, this would mean a trade partner would assume his $24,000,000 guaranteed salary for 2023. The remaining $14,000,000 in dead cap from Bosa's prorated bonuses would be spread according to the Pre-or-Post June designations; if Pre-June were designated, the entire $14,000,000 would apply to 2023's cap, and the Chargers would save $17,000,000 in 2023 and 29,000,000 in 2024. If they chose to trade Post-June, the dead cap would be spread through the two years and save the Chargers $24,000,000 in 2023 and $22,000,000 in 2024.

It's important to remember that these dead cap figures result in a lower, and thus more attractive, contract for the team trading for Bosa. His cap hits of $31,000,000, $29,000,000, and 25,360,000 would suddenly be lowered to $24,000,000, $22,000,000 and $25,360,000. For a team with cap space and the need for an impact EDGE player, this is an extremely reasonable contract, especially considering it was no guaranteed money after 2023. There is further salary manipulation that could take place if a contract wasn't attractive enough, like a restructure-and-trade that sticks the original team with additional dead cap, but that is largely done on a case-by-case basis and adds unnecessary confusion when discussing trades on a macro-level.

Lastly, for each player you're exploring any salary-saving move for, you should always explore what the potential trade compensation would be, and remember that the "subsidized" contract is actually an asset for the team trading for the player. In the case of Bosa, Bradley Chubb is a great comp that supports a starting price of a 1st Round pick with some minor sweeteners like a Day 3 pick or a role player or two. This compensation compounds with net savings of $71,360,000 spread over 3 years, and would immediately get the Chargers to cap-compliance by the March 15th deadline if they chose the Post-June designation (maybe I'm showing my cards which way I'm leaning).

Redaction: Thanks to Tau's observation regarding June designations, I need to point out that I was wrong about these designations being a tool for immediate cap compliance. If a team chooses to use a post-June designation, they DO have to keep the player's salary on their books until June, meaning the salary will count against their cap at the start of the league year when teams are required to be compliant.

A team would not have to budget for future obligations in their compliance, and thus has around $7,000,000 in rookie pool and in-season budget in extra space to play with if needed. This could mean waiting to sign rookies until after a post-June cut cleared and freed up the extra capital needed.

As such, there really isn't a "designation" for trading players; teams could agreed to terms before June, but to receive post-June dead cap deferral they would have to carry the salary and roster until after June 1st.

However, in light of these new findings, it only changes a couple ways we can immediately get cap compliant, which I'll explain below.

Hanging On: Restructures and Extensions

Restructures and extensions are tricky. I typically don't explore Extensions as an option unless a player is in their contract year, but Tau wrote an excellent article about how he'd like to see Keenan Allen extended to free up some cap space in 2023. It's admittedly not the path I'd personally like to see the Chargers take due to Allen's age, and I'm not well-versed in the constraints of extending a player with multiple years remaining, but Tau's always been a wealth of knowledge so this is a great place to learn about such extensions.

The only players in their contract years that could add some savings through an extension are likely Austin Ekeler and Michael Davis. Both have fairly low base salaries in 2023 and would likely command a decent signing bonus, so I would only estimate them saving a maximum of a couple million dollars apiece. We may see such extensions happen, but if they do I believe it;ll be more as a complimentary piece later in the offseason, similar to Derwin's extension last year.

The main tool for cap savings through retention is a Restructure. There's been confusion over how Restructures work, so I'll try to make it down as easily as possible.

Revisit Bosa's numbers in the chart above. A team may opt to convert a player's "Base Salary" into another "Prorated Bonus." The constraints are as follows:

  • Players do have to approve restructures if their contract doesn't specifically give the team power to do so at-will. However, it's a player-friendly move. Players receive the restructured amount immediately as if it were a signing bonus, usually converting non-guaranteed money into guaranteed money, and makes it more punitive for teams to release them in the future.
  • A base salary can't be reduced beneath the minimum salary, given a player's veterancy. Bosa has 7 accrued seasons, giving him a minimum base salary of $1,165,000. That leaves a maximum amount to be restructured of $22,835,000. A team can restructure any amount up to the max as they wish.
  • The restructure's cap disbursement follows the same rules as a signing bonus: it is spread evenly across the deal, up-to the first five years of the deal, including the year the restructure takes place. A team may elect to add "void" years to spread out dead cap onto years that extend beyond the player's contract, but still must abide by the five year rule. For Bosa, this would allow them to add two void years to the deal in 2026 and 2027, lowering the per-year cap increases from $7,611,666 to $4,567,000 but dragging it through year 2027.
Because of the mechanic of spreading the money evenly over the remaining years of a contract, the most important factors in a restructure are how much "base salary" they carry, and how many years you can spread the restructured bonus across. A player like Mack with only two years on his deal means whatever you convert to a restructured bonus is split between this year and next, meaning whatever you save this year is being directly applied to the following year unless void years are added.

For a visual representation of how this would affect Bosa's future cap hits, here is the adjusted contract:

Year Age Base Salary Adjusted Bonus Roster Bonus Guaranteed Salary Cap
2023 28 $1,165,000 $14,611,666 $0 $24,000,000 $15,776,666
2024 29 $15,000,000 $14,611,666 $7,000,000 $0 $36,611,666
2025 30 $17,000,000 $7,611,666 $8,360,000 $0 $32,971,666

Notice that although Bosa's hit drops significantly in 2023, it balloons his hit in 2024 and carries $22,223,332 in dead cap should they attempt to move him again next year. Restructuring Bosa will be hitching the Chargers to his wagon at least until 2025.

Where Do Players Fit Into These Options

Cut Candidates

The following players are "Cut" candidates because they wouldn't net a return from a trade. Players that the Chargers could receive compensation for, like Allen or Bosa, should not be considered a cut candidate. Players are listed here from "most likely" to "probably not going to happen."

CUTS Pre-June 1st Cut Post-June 1st Cut
Candidate 2023 Savings 2024 Dead Cap 2023 Savings 2024 Dead Cap Net '23 Savings
Matt Feiler $6,500,000 $0 $6,500,000 $0 $5,750,000
Dustin Hopkins $1,486,045 $0 $2,286,045 $800,000 $1,536,045
Kenneth Murray $2,379,310 $0 $2,379,310 $0 $1,629,310

Like most, I believe that Feiler and Hopkins are casualties. I did not include Dicker's contract as the replacement-level contract for Hopkins; all cut/trade candidates are assumed to be replaced by the 53rd member of the roster making the rookie minimum, and future resigns are taken out of the "Spending Budget" we'll have left over.

Kenneth Murray is an interesting case. He has been a disappointment in Staley's scheme for two years running, but is a high-character guy that Telesco typically likes to keep around. I don't believe they move on from him, but I have to acknowledge that he does represent some savings if they chose to retain Drue Tranquill and perhaps draft a new inside linebacker.

Restructure Candidates

I'm not personally a fan of adding void-years unless you are trying to keep an aging QB's window open, as I akin it to shoving a stick underneath a failing "championship window" to keep it pried open, until the proverbial stick snaps and the window slams shut. I don't see void years as a solid option for a team attempting to build around a young QB this early in his career. That's a personal opinion, but it's also one we've never seen the Chargers explore, so I'm not going to include void years as an option in this exercise.

Candidate 2023 Savings Added '24 Hit Impacted Yrs Total Hit '24
Corey Linsley $6,223,333 $3,111,667 2 $17,211,667
JC Jackson $8,190,000 $2,730,000 3 $22,105,000
Joey Bosa $15,223,333 $7,611,667 2 $36,611,667
Khalil Mack $10,867,500 $10,867,500 1 $38,617,500
Keenan Allen $8,917,500 $8,917,500 1 34,717,500

Last offseason, I thought Linsley and Bosa were shoo-in's to be restructured. Now, I'm much less attracted Bosa potentially having a 2024 Cap Hit of over $36,000,000 after his recent antics, the strong play and leadership of Mack, and the overall dynamic of the team.

Mack and Allen have been mentioned as candidates for restructure as well by some, but the lack of years beyond 2024 to spread the cap savings across make it extremely unappealing to me. Those ballooned 2024 cap hits would put us in a serious bind.

Restructuring JC Jackson makes the most sense to me, as his longer deal creates a smaller impact on a year-to-year basis. In his final year, his extra $2,730,000 in restructured bonus would represent just over a 14% increase to his current cap hit of $19,100,000. If the cap continues to increase by approximately 8% a year, it will have increased by approximately 36% from now until 2026. Although we have increased JC's cap, we've done so in a way that is outpaced by the salary cap "inflation."

Trade Options

There are only two players that the Chargers could consider trading for salary cap relief: Keenan Allen and Joey Bosa. This is the trickiest one to navigate emotionally, as they are two of the last guys from the "old guard" that played at Qualcomm.

I personally am growing more keen on trading Joey by the day. For starters, trading him would immediately make the Chargers cap-compliant if they do so with post-June 1st designation. They would still need to create additional room for their in-season budget, but it removes the urgency for making immediate moves that could mortgage our future.

Joey should at least return a 2023 1st Round Pick, with another Day 3 Pick sprinkled in there. The best comparison for this appraisal is Bradley Chubb, who had been marred by injury more frequently than Joey and was in his contract year when he was traded by the Broncos to the Dolphins for a '23 1st Rounder, a rotational RB, and a swapping of Day 3 picks. That compensation, as well as the immediate savings of $24,000,000 in '23 cap space, should be something the management ponders on.

Keenan Allen is a little more tricky, as he certainly elevates the Chargers offense, and is nearing the end of a window where we can get a return on trading him. I currently have his trade-floor at a 3rd Round pick, with Julio Jones commanding a 2nd out of the Titans despite repeatedly showing hamstring concerns that ultimately ended his 2020 season early as my main comparable. Julio has certainly had the more storied career, but I think Allen ending his season healthy and effective would give him a decent amount of added value over a player that was showing serious signs of regression via injury in Julio.

TRADES Pre-June 1st Trade Post-June 1st Trade
Candidate 2023 Savings 2024 Dead Cap 2023 Savings 2024 Dead Cap Net '23 Savings Additional Compensation
Joey Bosa $17,000,000 $0 $24,000,000 $7,000,000 $23,250,000 2023 1st, 2023 6th
Keenan Allen $16,300,000 $0 $19,000,000 $3,700,000 $18,250,000 2023 3rd, 2024 5th

The Matrix of Options

If I condense the net-effect of these scenarios into one matrix, with nods to how each decision affects 2024, it looks like this:

As you can see, we are already heavily leveraged in 2024, with only a little over $9,000,000 available in "spending" once a full roster and in-season budgets are added (assumptions were: 2mil in rollover, 8% cap growth, 3mil in rookie pool, 4 mil in-season budget, 53 man roster filled with minimum contracts), and that is before a Herbert extension is considered (his 5th year option is not included in the totals).

To build your own decisions matrix, pick which options you want, add their '23 Net Savings together until you get enough to get back in the positive for spending power (we only have to clear about $20,000,000 before March 15th, the remainder is for in-season budget and the rookie pool). The struggle between balancing the budget in 2023 and still having flexibility in 2024 is a real challenging issue.

The Dream Scenario (In My Opinion!)

Because of the various elements in play, my preferred scenario would be to Cut Feiler and Hopkins, Trade Bosa (Pre-June), and Restructure Linsley and Jackson. Bosa, as mentioned, should net at least 1st and 5th round picks in 2023. Although trading him now would immediately incur the full $14,000,000 in dead cap, we would have saved $29,000,000 in next years cap. The moves I suggest below can all squeeze within our budget constraints, but if additional opportunities presented themselves post-draft and we needed to free up some extra capital we could choose to do nominal restructures for Mack or Allen, which would allow us to borrow a couple million against next year's cap which now has much more flexibility.

The team would be left with over $9,465,475 in available spending to sign internal and external UFA's.

My preference would be signing Trey Pipkins and Drue Tranquill to contracts at the amounts I projected them to fetch in the linked articles. With respective cap hits in 2023 of $3,000,000 and $3,100,000, we would have just under $12,000,000 left in our war chest (in our spending budget calculations, they are both replacing minimum salary players).

Our remaining UFA's that are likely to net compensatory-grade contracts are:

  • Kyle Van Voy
  • Bryce Callahan
  • Morgan Fox
  • Nasir Adderley
  • DeAndre Carter

Kyle Van Noy should at least be given another offer of a one year deal with a decent raise, likely around $3,500,000. I would also try to lock Morgan Fox down to a similar deal he signed with Carolina in 2021, around $8,250,00 over two years. Structured right, this could give him a $2,250,000 cap hit in 2024. Should they both turn down their offers, the Chargers would be almost guaranteed to earn four compensatory picks in 2024. Should one decide to return, we'd likely be looking at three or four 2024 compensatory picks. In this scenario, for now, I'm assuming they do immediately return at these numbers, which leaves us looking at 2-3 potential compensatory picks in 2024.

This would leave us with the bulk of our core pieces that were impactful in bringing the Chargers to the playoffs for the first time since 2018, with a bounty of draft capital.

In an upcoming article, I'll put this all together with a mock draft to paint a picture of what I'd love to see the 2023 roster look like when all is said and done.

Let me know what you think, and what decisions you think you'd make to bring this season together!

This FanPost was written by a member of the Bolts From The Blue community and does not necessarily reflect the views of the Bolts From The Blue editors or SB Nation.