The Denver Broncos didn’t make it to Super Bowl XLVII, but they had the eventual champs beat if not for Rahim Moore’s meltdown at the end of the fourth quarter. The Broncos could put the exact same team on the field in 2013 and probably still be one of the favorites to win Super Bowl XLVIII.
That’s why it doesn’t make a lot of sense to release core players like Champ Bailey as Jason La Canfora of CBS suggests could happen. It makes even less sense because Bailey is still a productive cornerback in a league where they can be hard to find.
There is no doubt that the Broncos have a decision to make and La Canfora’s reasoning is that Bailey is no longer worth what he is being paid. It’s not totally absurd because Bailey has been declining, and he will make a lot of money in 2013, but La Canfora ignores the more realistic method for reducing Bailey’s cap number which is a simple restructuring.
According to Spotrac.com, Bailey will make $9.5 million in base salary with a roster bonus of $1 million in 2013. Base salary is the easiest thing to convert into a signing bonus in order to spread the cap hit out over multiple years. That means the Broncos could actually convert some of his base salary into a guarantee and give him an extension that will enable the team to take the cap hit over several years.
There are pros and cons to using this tool, and the only reason it is available to the Broncos is because of how smartly the team structured Bailey’s deal in 2011. The benefit is that the team will be able to keep Bailey and take a smaller cap hit that is in line with his ability level in 2013. The Broncos could basically drop Bailey’s $10-plus million cap number to under $7 million in 2013 and 2014.
For example, the Broncos could convert $15 million of his base salary in 2013 and 2014 into a signing bonus and spread it out over four years. That’s $7.5 million of his base salary being converted to signing bonus each year and lowering his cap number to $6.75 million. Bailey gets more guaranteed money, and the Broncos get cap relief making it a win-win situation.
The drawback of using this tool is the eventual cap hit the Broncos will have to take when they release Bailey or when he retires. In my example, $3.75 million would be prorated for each year of his contract. Bailey’s is set to be a free agent in 2014 and although this extension would extend his contract two years, he’d be due base salaries in 2014 and 2015 that make it impossible for the Broncos not to release him.
When Bailey is released the Broncos would take a $7.5 million cap hit in this scenario. However, there is another tool NFL teams can use to spread out the damage. The Broncos could designate Bailey as a post June 1 cut if he wants to continue playing or if he decides to retire at that time. The Broncos would take $3.75 cap hit over two years.
Bailey would make the same amount with additional guaranteed money, and the Broncos would get cap relief for the two years they have Peyton Manning under contract. Instead of feeling the pain for one or two seasons with Bailey making huge salaries, the Broncos would feel it over four years and for smaller amounts. Spreading out guaranteed money over multiple years is not something you want to do a lot or you effectively reduce the amount of salary cap available, but in the case of Bailey, it makes sense.
Release and Re-Sign
The Broncos could also release Bailey and then attempt to re-sign him for less, but they would have to compete with other teams for his services. This isn't usually necessary unless a player vastly overrates the market for his services or has a huge roster bonus the team has to avoid.
There are a number of ways the Broncos could restructure Bailey's contract, and there aren't any major roadblocks. One restructuring option would to keep Bailey in Denver through 2014, but they could just as easily only commit to him in 2013. There are too many avenues that make more sense than releasing Bailey.
Considering the lack of quality cornerbacks in free agency, Bailey would be stupid not to field other offers if he was released. Some of the better teams will be looking for cornerbacks like the Patriots and 49ers and that could be attractive to Bailey.
It just doesn’t make sense for the Broncos to take the risk if they want to keep Bailey around. The only reason the Broncos wouldn't want to keep Bailey around would be his level of play which was still pretty good in 2012. Bailey graded out as the 10th best cornerback in the NFL by ProFootballFocus.
Clearing cap space can be done in any number of ways, and the Broncos already have a nice chunk of space. The Broncos could just as easily leave Bailey’s contract alone and therefore not guarantee him any more money. In other words: pay the man.
What's the best option for the Broncos?
If the Broncos chose not to restructure Bailey’s deal, then they could release him in 2014 if his play declined significantly without incurring any additional cap hit. The Broncos would just pay Bailey what he is due in 2013 and see how it plays out.
If history is our guide, the Broncos prefer to keep their books clean. For example, Manning was given guaranteed base salaries instead of signing bonuses which guarantee the Broncos will not incur dead cap money.
Paying Bailey more now means there will be more resources later when the Broncos need to go looking for a replacement. Extra resources are always good, but sometimes teams have to choose when they want those resources.
If the Broncos feel they have enough resources to do what they want in free agency, then it only makes sense to just leave Bailey’s contract alone and pay him what he is owed in 2013. If Bailey’s play declines even further, and his performance against the Ravens was a sign of things to come, then the Broncos can let Bailey go next year when he is also due over $10 million.
The Broncos certainly have to make a decision on Bailey, but releasing him is only one of the three available options and wouldn’t even rule out him returning to the team. It’s likely that Bailey is going to stick around even if it’s not under his current contract.