Financing a Used Carr

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January 3, 2007
Financing a Used Carr

by Keith Weiland

If rumors and speculation are to be taken seriously out of Reliant Park, David Carr’s career with the Texans might be nearing the end. There is talk of the team either trading or releasing the first overall draft pick of the 2002 draft, but taking such a measure has salary cap implications worth evaluating.

First though, here are some presumed facts about how the Texans have financed their Carr to date:

• The Texans executed a three-year buyback option before the official start to the 2006 season, allowing the team to prorate the $8 million bonus across a fourth year and onto the 2005 salary cap at $2 million per season.

• As it stands now, Carr has a 2007 cap value of roughly $7.25 million, the same as it was in 2006, which is made up of the $2 million bonus prorate plus a base salary of $5.25 million next season.

• Carr is scheduled to earn a base salary of $6 million in 2008, making his current cap value in the final year of his contract roughly $8 million.

• While we do not know for certain how much room the Texans currently have under the 2007 salary cap, recent projections put the team somewhere near $19.8 million. I keep an unofficial tally here on, and depending on how the team treats the dead money for earlier big cuts like Gary Walker, Todd Wade, and Robaire Smith, that cap room could be closer to $14 million or less.

So onto the “what if” scenarios…

What if the Texans cut Carr?

The team will need to figure out how to treat the remaining $4 million of Carr’s unamortized bonus (also known as “dead money”) on their salary cap. They can do it one of two ways, and the more conventional approach of the two is to absorb all $4 million on the 2007 cap, assuming they have ample space. Because the Texans would no longer have to pay Carr’s base salary if he is cut, the team would be able to pocket the $5.25 million Carr would have earned in base salary, netting a $3.25 million in savings to the cap.

The Texans can also take advantage of a new wrinkle to the revised collective bargaining agreement (or CBA) which would allow the team to treat Carr like a post-June 1 cap casualty even if he is released long before the summer humidity settles into town. The Texans released Walker under this new rule last year, at least initially. If you are so inclined to read the text of the CBA that explains the rule, have at it. It’s on page 66, buried within Article XXIV. What it basically says is that the Texans can carry Carr’s scheduled 2007 cap figure of $7.25 million until June 1, then reduce it to $2 million this year and $2 million in 2008. Doing so would save the team $5.25 million on the 2007 cap.

Keep in mind that cash flow is the key here as much as the salary cap, which is more of an accounting figure. The Texans would save $11.25 million from owner Bob McNair’s petty cash account if Carr was no longer on the roster (and possibly as much as $15.25 million if you keep reading further down). If the Texans are really prepared to move forward without Carr, it makes no sense to chase real dollars to minimize the book value of any dead money.

What if Carr is traded?

Should the Texans find both a willing partner and a fair exchange price for Carr’s services, the Texans can still defer half Carr’s $4 million in dead money to the 2008 salary cap, thanks to that same revised rule in the CBA last year. Generally though, when a team trades a player, only the base salaries and any performance incentives go with him, a big reason why the NFL has so few trades compared to other pro leagues.

Timing-wise, the trade deadline for the 2006 season has passed, but that won’t keep teams from negotiating deals before March 1, roughly the start of each new league year from a fiscal perspective.

  Morpheus   Morpheus

Okay, if you want something to blow your mind, I’m going to play Morpheus and drop a big red pill on you right now. If you get headaches easily and prefer the comfort of the blue pill instead, just skip down a couple paragraphs. Remember, all I’m offering is the truth, nothing more.

Carr has yet to actually receive the entire $8 million bonus the team opted to give him last year. It was scheduled to be paid in two equal installments, the second of which is due to be given to him on March 15, 2007. If another team is willing to give Carr the $4 million he is owed in a trade scenario, Carr can actually give back (or, more specifically, forfeit) the $4 million he is about to receive from the Texans so long as he does it before the new league year begins in March, thereby saving the Texans that dead money altogether.

In the immortal word of Keanu Reeves… whoa.

Easier said than done, as the Texans would need to (a) find a trading partner willing to pay Carr his $11.25 million in base salaries over the next two years or restructure/extend his contract, (b) get Carr to agree to the forfeiture, probably in exchange for some say in where he is traded and some guarantee his new team will build it into his modified contract, AND (c) hope that new team gives up some kind of trade compensation to the Texans in return for Carr, preferably a decent draft pick.

If it seems like a lot to ask, that’s because it is. Laveranues Coles and the Redskins tried working out something a similar with the Jets two years ago. Talks soured quickly, and the Redskins wound up just trading Coles in a bit more of a conventional manner, getting another player in return and eating a massive bonus acceleration.

Should the Texans be unable to find a willing trade partner, then in order to get the extra $4 million back from the deferred bonus, Carr would have to be a willing unrestricted free agent, able to sign what the market will bear for any team he chooses. If he was bullish on his opportunities, maybe he might be open to this, but no one likes giving up cash (almost) in hand. Considering all of the cap room the rest of the teams in the league will have entering next season (better than half the league will have more cap room to start 2007 than the Texans), this is actually not a bad time to become a free agent.

What if Carr never plays again for the Texans? Then what?

Then you have to remember the Texans would need to find a new starting quarterback of course! The team already has a couple quarterbacks on the roster worth watching. Sage Rosenfels relieved Carr in Nashville and performed well, throwing three touchdown passes for a late rally. The Texans also signed a promising young passer in Bradlee Van Pelt near the end of the season. Either could be given a chance during offseason workouts and training camp practices to win the starting job.

The more likely scenario though has the team looking outside the roster for another quarterback, either through free agency or the draft. Regardless of how they add another passer, in all of these scenarios in which Carr is either released or traded, the team will also have to consider the additional cap room needed to fit in a new quarterback on top of whatever dead money they will have to absorb from Carr’s contract.

And if the team wants someone better than Rosenfels, that player won’t come cheap, something else to keep in mind. But back to my red pill scenario… McNair pockets the $11.25 million owed to Carr in base salary if the team cuts or trades him. Add another $4 million to that if the team can somehow get Carr to give back the deferred bonus payment, and all of a sudden McNair has a nice wad of cash to spend this offseason.

Whoa, indeed, Mr. Keanu Reeves.

Keith Weiland knows what you’re thinking because right now he’s thinking the same thing. Actually, he’s been thinking it ever since he got here: Why oh why didn’t I take the blue pill?

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