The Philly Loophole

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October 17, 2005
The Philly Loophole

by Keith Weiland

The Texans’ fourth season in existence is all but lost. Opening with five losses in as many tries, there are going to be several key members of the staff and front office that will soon find themselves extinct, making Reliant Park look a bit more like Jurassic Park by the end of the year.

Ah, but there is something trapped deep within the DNA code of the salary cap rules of the league’s Collective Bargaining Agreement. Something that can give new life to this franchise.

Something called the Philly Loophole.

But more on that in a minute. I’ve got to set up the backstory first before I let you see what these dinosaurs can do in the climax.

Quarterback and hair model David Carr sits on the brink. A couple years ago, his performance triggered an option in his rookie deal to accelerate his salaries and expedite his contract expiration so it could terminate after the 2005 season.

Of course, the milestone caught no attention in the media because the contract also allowed the Texans to counter Carr’s action with one of two buyback options by the end of this season, inclusing one that would trigger an $8 million bonus and a three-year extension at salaries of $5.25 million in 2006 and 2007 and $6 million in 2008. The other, a two-year version, would give Carr a $5.5 million bonus and salaries of $5 million in 2006 and $5.25 million in 2007.

Things were going along as planned with Carr’s contract, much the same way they seemed to have been going with the franchise itself through the first three seasons. The Texans’ decision to exercise the buyback option on Carr’s contract was more than just a foregone conclusion before the season. When I asked general manager Charley Casserly about it, he confirmed that the team was even keeping an extra $2 million in cap space available this season to take advantage of prorating that three-year option bonus across a fourth year.

Then came the horrid start to this season. Despite the losses and the subpar quarterback play on the field, Casserly remains adamant to this day that Carr is – and will be – the future of their franchise. There is ample reason to believe him. While the coaches may change over the years, the core of key players often remains.

Yet, the Texans aren’t obligated to exercise either of the buyback options. Failing a trade before Tuesday’s deadline (don’t count on it), Carr and the Texans could amicably part ways after the season is over. Carr can become an unrestricted free agent and take what the market will give him (which is likely to exceed a three-year contract for an $8 million bonus), and the Texans can absorb exactly $0 in salary cap dead space.

But here’s an idea if the Texans aren’t willing to say goodbye to Carr and all that hair just yet: renegotiate the buyback option.

Depending on which resource is to be believed, the Texans have somewhere in the neighborhood of $4.5 million to $7.8 million of cap space remaining this season, the latter figure reported by a month ago, which ranked the team as having the second-most available cap space in the league. By simply exercising the buyback before the end of the season, the Texans will still have $5.8 million of cap room left unused according to ESPN’s figures.

Restructuring the contract could allow the team to accelerate some of those bonus and salary dollars to this year’s cap. It could also allow the team to – big climaxing music here – actually create additional cap space in 2006.

Which brings us back to the Philly loophole.

Here’s how it works: Any incentive bonus added to a contract after the season has started is deemed as “likely to be earned” (“LTBE” in the NFL’s abbreviated nomenclature) no matter how unlikely it is for that bonus to be achieved. If any of those LTBEs are not earned by the end of the season, those amounts get added as extra cap room for the following season.

  Laura Dern   Laura Dern

If this sounds like a huge freaking loophole, that’s because it is. I told Laura Dern about this a week ago, and she still has this look on her face. Yes, Laura, there is a trick: those LTBEs have to fit under the current year’s cap first, which is why not every team in the league can do this. Ever hear of the saying that “it takes money to make money?" Well, the same applies to this loophole, except that it takes cap room this year to make cap room next year.

It is called the Philly Loophole because the Eagles (who are, not surprisingly, the ONLY team with more cap space right now than the Texans) first took serious advantage of this gap in the salary cap rules a couple years ago by granting a small-time player a new contract after the season had started, one with a multi-million dollar incentive only an every-down player could ever achieve.

Several teams have taken advantage of the loophole since then, including the Texans’ divisional rival Jaguars. Late last season, they wrote in a $6 million incentive for third-string quarterback Quinn Gray, payable only if he were to lead the team in touchdown passes. As if, right?

(And try forgetting for a moment that it was the Texans who first let the Jaguars out of cap hell to write such an incentive when they took Tony Boselli, Gary Walker, and Seth Payne in the expansion draft, thereby making the Philly Loophole all the more possible for them.)

With the introduction of a few likely to be earned incentives that Carr would have no way of achieving in 2005, the Texans can also create some additional cap room for next season. Carr would agree to it because he still makes the same amount of money (possibly more in a renegotiated deal), and it helps his team at the same time.

So it’s about time for the Texans to spare no expenses before it’s too late. Carr’s buyback option is the perfect opportunity to do it. Adding about $4 million worth of special teams incentives in Carr’s renegotiated deal ought to do the trick. Doing so would allow the team to reap the benefits of a lost season beyond just a high pick in next April’s college draft.

Keith Weiland is simply saying that life finds a way. David Carr David Carr Home

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