Posted: 10:33 am Thursday, May 10th, 2012

Salary cap 101: Why the Miami Dolphins only need $2.36 million in salary cap space to sign their rookie class 

By Post Staff

Warning: Today’s post contains a lot of math and not much football.

Free agency is essentially complete and the Dolphins’ roster is mostly set for 2012, but one question I still hear a lot is, “How much salary cap space do the Dolphins need to sign their rookie class? Do they have to cut or restructure any guys to fit their rookies under the cap?”

In short, the answer is “no.” But it’s a complicated subject, so we’ll do our best to explain it in plain English today.

Last week it was announced that the Dolphins will have exactly $6.438 million in salary cap space for its rookie class. And indeed, when the regular season begins, the Dolphins will have approximately $6.438 million worth of cap space represented by the rookies (a late-round player may not make the team).

But during the offseason, the Dolphins, who currently are $5.49 million under the salary cap after giving Cameron Wake his contract extension, don’t need to get to $6.438 million to sign the rookie class. Instead, the Dolphins’ rookie class will only add $2.36 million to the salary cap’s bottom line.

How? First, quick background:

During the offseason, a team carries 90 players on its roster. Obviously, 37 of those players won’t be around come the regular season, when teams are only allowed to have 53 players. So to be compliant with the salary cap during the offseason, the NFL has a “top 51 rule,” in which only the top 51 contracts count against the salary cap.

A team’s offseason salary cap essentially boils down to: The top 51 contracts + all dead money. This year, the Dolphins have $13.22 million in dead money, mostly due to the Brandon Marshall trade, the cutting of Yeremiah Bell and last year’s restructuring of Vernon Carey’s contract. Before the draft, the Dolphins’ top 51 + dead money spending was approximately $124.95 million, with a salary cap north of $130 million.

Now, let’s turn to the rookies. Under the new CBA, a rookie’s entire four-year contract – the signing bonus and base salaries – is determined by his draft position. The NFL and NFLPA actually assign a specific salary cap number to each drafted position.

But here’s the kicker (pun intended): Most of the Dolphins’ rookies won’t count against the top 51. Their salary cap numbers will be too low.

Ryan Tannehill, the No. 8 overall pick, certainly will qualify for the top 51. He will sign a four-year contract (with an option fifth year) worth $12,668,502, every penny of which is guaranteed, and he will receive a signing bonus of $7,653,456 (which is prorated over four years for salary cap purposes).

Tannehill’s salary cap number in 2012 will be exactly $2,303,364 (a $390k base salary plus ¼ of his signing bonus). It’s the 16th-highest cap number on the team, just ahead of Wake.

Jonathan Martin, the second-round pick (42nd overall), will also qualify for the top 51. He’ll rank 31st on the Dolphins with a salary cap number of $869,867 after signing a contract with a $1,919,468 signing bonus.

And Olivier Vernon, the team’s first third-round pick (72nd overall), will qualify for the top 51 – just barely. He will be 45th on the Dolphins with a $552,000 salary cap number after signing a contract with a $648,000 signing bonus.

But no other rookies will qualify (linebacker Austin Spitler is 51st on the Dolphins with a $540,000 salary cap number). Tight end Michael Egnew, a later third-round pick (78th overall), will have a salary cap number of $539,719, which places him 52nd on the roster. Fourth-round pick Lamar Miller (97th overall) will be 53rd with a salary cap number of $511,500. And the four draft picks behind them also won’t count in the top 51.

So only the top three rookies will count against the salary cap this offseason. And when players outside the top 51 make the roster this season – several will – they will simply be displacing a player with a higher salary cap number.

As we mentioned before, the Dolphins’ top 51 + dead money before the rookies have signed is approximately $124.95 million.

Add in Tannehill, Martin and Vernon (and take out the three veterans they displaced), and the Dolphins’ top 51 + dead money will be approximately $127.31 million.

Subtract the two, and the rookies will only add $2.36 million to the bottom line this offseason. The Dolphins have $5.49 million in cap space, so adding the rookies isn’t a problem.

Footnote: Where did all those funny rookie numbers come from?

Glad you asked. Let’s use Tannehill as an example.

First off, know that under the new CBA, every rookie has the same base salary in Year 1: $390,000. That goes for Tannehill or an undrafted free agent.

After that, base salaries are determined by the “25 percent rule,” which means a rookie’s total compensation can’t increase by more than 25 percent from Year 1 to Year 2.

With Tannehill, we know his signing bonus is $7,653,456, which prorated over four years means the signing bonus counts 1,913,364 per year against the salary cap. Add that to his $390,000 base salary in Year 1, and his 2012 cap number is $2,303,364.

In 2013, Tannehill’s total cap number can be 25 percent more of $2,303,364, which is $2,879,205.

Subtract the signing bonus portion from that total ($2,879,205 – 1,913,364) and Tannehill’s base salary in 2013 will be $965,841, an increase of $575,841.

That last number is important. Starting in Year 3 (2014), the 25 percent rule no longer applies to determine base salaries. Instead, the final two base salaries both increase by the same $575,841.

So Tannehill’s base salary in 2014 is 965,841 + 575,841 = $1,541,682.

And his base salary for 2015 will be 1,541,682 + 575,841 = $2,117,523.

To recap Tannehill’s contract:

Signing bonus — $7,653,456
2012 salary — $390,000
2013 salary — $965,841
2014 salary — $1,541,682
2015 salary — $2,117,523

Total value: $12,668,502, fully guaranteed

The same principles apply for determining the base salaries for the other draft picks.

Post-script: Thanks to the agents who helped explain this stuff. You know who you are.