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Advanced Accounting: How the Broncos create salary cap space out of nothing

John Elway

The Broncos are broke. Well, figuratively at least. They’ve been given a yearly allowance, and it’s all but gone. Unfortunately, they’re not done spending, and that makes the remainder of this offseason very interesting.

Colin Kaepernick, Von Miller, Brandon Marshall … these guys aren’t playing for free — or cheap.

As of today, Denver has an estimated $2.9 million in cap space, according to Spotrac.com. It’s also important to note that, unlike other professional leagues, the NFL’s salary cap is a hard one, not one in which you can surpass if you’re willing to pay a little extra.

So, to put it in layman’s terms, the Broncos are hoping to buy a couple Ferraris with a five-dollar bill they broke out of their piggy bank. Unless that Ferrari is willing to cut $4.9 million of its asking price — *cough Kaepernick cough* — you’re not getting your hands on the wheel.

And what about Miller? Both parties have said they expect “peaceful negotiations,” but I can’t imagine those will remain very peaceful once Von realizes John Elway cannot afford to give him a long-term deal. Right now, he’s scheduled to make $14.1 million under the franchise tag, but reports are that Von is looking for $22 million a year. Let’s just say they settle in at $20 million; that immediately ads another $6 million to the Broncos salary, putting them $3 million over the cap. Sorry, but you can’t do that.

Oh, and you want to lock Marshall up too? I mean, he’s already insinuated, if not threatened, that he’ll skip offseason workouts if he doesn’t get a long-term deal. Under his tender, he’d be making $2.6 million in 2016, but he’s undoubtedly looking to make Danny Trevathan money, $6.1 million a year. Again, like with Miller, that would put the Broncos over the cap.

And that’s all without mentioning that if Kaepernick comes to Denver — and yes, that’s still a possibility — the Broncos have already agreed to pay $7 million of his salary. Again … that puts them over the cap.

Now, we already expect the Broncos to either trade or cut Ryan Clady. That would clear up about $9 million in cap space, giving the Broncos about $12 million in total. Still, though, that doesn’t take into account the money Denver will eventually owe their 2016 draft picks, which, according to Spotrac.com, is projected to be just under $5.5 million. So, even with the release of Clady, the Broncos would have only $6.5 million to work with.

All this raises the all-important question: How do the Broncos create $10 million in cap space ($16.5 million needed – $6.5 million already available) to trade for Kaepernick and re-sign Miller and Marshall to long-term deals?

The easy answer is that they don’t — that they keep Miller and Marshall on their one-year tags and tenders — but that’s not as fun of a thought experiment, is it?

So let’s break it down:

Backload the contracts

Kaepernick’s $7 million is etched in stone. He’s not coming down from there, and the Broncos have already agreed to pay it; if he comes to Denver, it’ll be because the 49ers have agreed to pay the other $4.9 million. With Miller and Marshall, though, there is some wiggle room.

Essentially, if the Broncos backload their contracts so that the final two or three years are more expensive than the first, they can get both guys in under the 2016 salary cap with a lower cap hit. The downside being that it’ll likely cost the Broncos more in the long run, as Miller and Marshall would probably ask for more guaranteed money in exchange for the backloaded deal — players, especially NFL players, like their money up front.

For example, the contract Ndamukong Suh signed with the Dolphins last offseason pays him an average of $19.1 million, but his cap hit in 2015 was only $6.1 million and in 2016 it’ll only be $12.6 million. In 2018, though, Suh’s cap hit will be $26.1 million, and the next year it’ll be $28.1 million.

Let’s just say the Broncos were able to get Miller in at $18 million in 2016 and Marshall in at $4 million; that would save them about $4.5 million, meaning that the Broncos would now be short just $5.5 million in this scenario.

Consolidate draft picks

The Broncos currently have 10 draft picks in the 2016 NFL draft, and with that comes a projected price tag of roughly $5.5 million. If they can consolidate those picks, though, they can cut down on those costs.

In this hypothetical situation, let’s imagine that the Broncos cut down to a cost of $3 million, either by trading up or down, bringing their needed space to roughly $3 million.

Cuts

Now that we’re at this point, the last thing to do is part ways with a few of those already on the roster. This can be done in one of two ways: (1) Cut one bigger-named player whose saved salary will open up the room entirely or (2) cut ties with a handful of guys whose combined salaries will clear the space.

In the first scenario, there are only a few logical options, and even then, I doubt many fans would be too happy to see them go: Emmanuel Sanders (save $5.6 million), Russell Okung (save $5 million if cut before offseason workouts), Britton Colquitt (save $3.25 million), Darian Stewart (save $2.5 million).

Aside from Colquitt, I have a hard time believing Elway would even dream of parting with any of those guys, but even if he did, he’d need to find (and pay) a replacement.

In the second scenario, there’s a collection of roughly 15 guys at the bottom of the Broncos roster who are due between $450K and $525k in 2016. The Broncos could easily toss a few to the wayside, but they’d still need to be replaced at some point, and that’s not free, either.

Out of the box thinking

If the Broncos want to clear cap space quickly, there are a few unconventional ways to do so. Trading Aqib Talib would be one. That’d save about $9 million, and with Bradley Roby waiting in the wings, it might be a loss they’d be willing to take. If Kaepernick does come in, Mark Sanchez could become expendable, too.

Extending Emmanuel Sanders is another. His cap hit is $6.6 million, but with one season on his contract, some more guaranteed money and a few extra years could be enough to help cut that 2016 cap hit down a few pegs.

Recap

The point of all this being that the Broncos do have ways to clear the space needed to trade for Kaepernick and re-sign Miller and Marshall to long-term deals, but it’s not going to be easy. And we’re only talking about three players. If another free agent comes onto the Broncos’ radar, they’ll have to find some more money for him, too.

John Elway is one heck of a general manager, and he gets guys to sign with the Denver Broncos. But if he’s going to win this offseason, he better hope he’s got an advanced accountant on his side.

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