Understanding Ravens’ dilemma with Joe Flacco’s contract…

When QB Joe Flacco signed a then-record $120 million six-year deal with the Ravens back in 2013, the contract was structured so that the Ravens would not have to incur really serious salary-cap limitations from the deal until the back end of the contract—i.e., 2016, 2017, and 2018.  The contract also provided for the opportunity for the Ravens to opt out of the major liability of those later years if Joe was released from the team.

So here we are in 2016. Flacco is expected to come back as the Ravens’ offensive leader and franchise quarterback after rehabbing from successful surgery to repair a knee damaged by a mid-season collision. The Ravens want him back. Joe wants to be back.

But for the first time in the life of his contract, his deal will produce a serious cap hit against his team— $28.5 million — unless Joe agrees to restructure the deal and replace guaranteed salary with a new signing bonus number—a signing bonus which for cap-space accounting purposes can be deferred and pro-rated over the remainder of Flacco’s future years with the team.

Think of it like an accountant kicking a can down the road…

“Come on, I want to win,” Flacco told WBAL 1090 Radio last month. “So I want to do everything we can to get something done.” His agent Joe Linta is open to restructuring the contract  Flacco is open to it. But so far, no formal negotiation has happened between Flacco and the Ravens front office.

What would it take to make a restructured deal something the Ravens could live with as far as reducing that $28.5 million cap hit in 2016 to a more workable number?

Here’s what Jamison Hensley of ESPN.com  thinks would work: “If the Ravens can cut Flacco’s cap number to $19 million – which is what Owner Steve Bisciotti once suggested last year – Baltimore can make a run at a much-needed veteran wide receiver, pass rusher, cornerback or left tackle,” wrote Hensley. “If the Ravens and Flacco can’t strike a new deal, Baltimore will be a spectator in free agency just a couple of months after finishing up its worst season under coach John Harbaugh.”

At last month’s end-of-season press conference, GM Ozzie Newsome said the team might be able to live with Flacco’s $28.55 million cap hit in 2016. The problem is the cap hit escalates even higher in 2017 and 2018. Ozzie would be expected to make a restructure offer at some point between now and March 9th when free agency begins. But maybe he is withholding an offer pending his review of Joe’s comeback performance after knee surgery? Who knows—just a guess.

This calls for a closer look at the Flacco contract to really understand the back-end implications and the non-guaranteed money aspects of the deal.

Here’s a quick study of the Flacco contract—

Here are some notes on the contract from the Dawgs By Nature fansite:

• Flacco’s signing bonus was worth $29 million, and his $1 million base salary for 2013 was considered guaranteed as well. Flacco earned all of that money right away, but the Ravens, for cap purposes, got to spread it out over the first five years of the deal. Therefore, you can say that Flacco’s deal includes $30 million that is definitely guaranteed.
• You should notice that Flacco has $22 million in the “miscellaneous bonus” category. While that money is not 100% guaranteed, it is basically the same thing as being 100% guaranteed if the team exercises its options to retain the QB. In 2014, a $15 million option bonus kicked in for Flacco. In 2015, an additional $7 million option bonus kicked in for Flacco.Like his signing bonus, the Ravens spread the amounts over the final five years of the deal. That money is guaranteed for injury only. For example, if Flacco suffers an injury and the Ravens cut him, Flacco will make all $22 million right away. If they cut him next offseason and he is not injured, though, he would not get any of that $22 million.
• The Associated Press stated that Flacco’s deal included $52 million guaranteed. The Associated Press also stated that Flacco was set to pocket $51 million over the first two years of his deal. How did they reach that amount? In 2013, Flacco got his $29 million signing bonus and his $1 million base salary, a total of $30 million. In 2014, Flacco got his $15 million option bonus plus his $6 million base salary, a total of $21 million. Adding those together ($30 million + $21 million) makes $51 million. However, the amounts that count against the cap for Baltimore in both of those years were much smaller.
• Flacco’s low cap hit in 2013 meant that the Ravens had some flexibility in 2014. His numbers against the cap escalated in the following two years at a shade over $14 million per year, but it’s not a terribly crippling number. For that reason, the contract was structured in a way in which Flacco got a nice payday, but Baltimore could retain at least some of their other key free agents over the next couple of years.
• Starting in 2016, Flacco’s cap hit shoots up to $28.5 million.  The team can choose to re-structure Flacco’s deal going forward and Flacco will probably agree to restructure. He will have all of the leverage, however. He can force Baltimore to extend his contract even further, shifting some of the money he was due to make in those future years, but it really only prolongs the inevitable. If the Ravens decide to cut Flacco, the cap number would still be relatively high in dead money, except in 2018.

So you see it’s a little more complex than it sounds when you hear the word “restructure”.  It’s a leverage game as to how far down the road you want to keep kicking that inevitable big cap hit or ultimate “dead money” hit— and how much you really believe Flacco will still be your franchise guy over the next 5 years. Right now the Dallas Cowboys are dealing with a similar puzzle in dealing with Tony Romo’s contract.