LA Rams conditional cap considerations of Cooks contract

As the LA Rams weigh the future of WR Brandin Cooks, what are the conditional salary cap considerations that impact Cooks’ contract?

The LA Rams learned the hard lesson of why not to commit too much money, and particularly too much guaranteed-money, to a single player.  The result was the LA Rams needed to release a still productive running back, Todd Gurly, to avoid guaranteeing even more money to the player to 2021.

Now the LA Rams approach an almost identical situation, but this time it is over WR Brandin Cooks.  Now he is the player with a contract which overpays a player while that same player’s production has plummeted. And his health is a huge question mark as well.  So let’s get the dollars onto the table and see if we can sort this out together. We will need the help of Over the Cap.com to do that.

But why do it at all? Well, I was asked by a reader to clarify the matter. There are so many reports out there, and the complexity of the Rams situation is such that the team will need to do something in 2020 to free up cap space.  Since there have been plenty of rumors about the Rams fielding offers for Brandin Cooks, he is likely to be one of the players under consideration.

Wide Receiver Brandin Cooks has an $8,000,000 salary due to being earned in 2020. He is also due to earn a roster bonus of $4,000,000 this year. Additionally, Cooks earned a $7,000,000 signing bonus and a $17,000,000 option bonus when he signed the new contract. Per Over the Cap.com, that calculation for Cooks 2020 salary cap his is $16,800,000 this year.   The calculation is that the Rams are on the hook for the salary and roster bonus, totaling $12,000,000. Plus the Rams are allocating that $24,000,000 bonus money when the contract was signed, over the life of the contract. That five-year extension of the $24 million equals $4,800,000 per year.

So the Rams cap hit in 2020 is $12 million now, plus a $4.8 million from the past.  So what is the pre-June-1 or post-June-1 dates? Well, that is where it becomes accounting timing.  The NFL allows only two players to receive a June-1 designation. So far the LA Rams have used the designation on running back Todd Gurley.

The June 1 designation allows the player to be cut or traded, but gives a team the opportunity to carry that contract until the new “fiscal year”.  That allows the penalty of accelerating bonus allocations to be spread into next season.

How that works in the Brandin Cooks contract is that if the team designates him as a post-June-1 cut, the team pushes the bonus payments out into the 2021 salary cap year. In an out-and-out release, the Rams remain on the hook, albeit for the 2021 year only. But if the player is traded as a post-June-1, the new team becomes obliged to the terms of the contract. If Cooks is traded post-June-1, the LA Rams are on the hook for his 2020 bonus allocation. The new team becomes the payee of his salary and roster bonus for 2020. And the Rams push the remaining bonuses paid but not yet recognized into the 2021 salary cap.  In essence, the Rams will get 2020 cap savings of that $12 million, but get a dead cap number in 2021 of $13 million.

There is no magic involved in any of these designations. The Rams paid Cooks $24 million when he signed the new contract. $1.4 million was recognized in 2018. $4.8 million recognized in 2019, and again in 2020. The Rams will eventually need to show the full $24 million on their books.  In a pre-June-1 trade or cut, all monies fall in 2020.  In a post-June-1 trade or cut, just this year’s allocation hits in 2020, and the rest falls into 2020.

That’s a lot of accounting and salary cap mumbo-jumbo. Let’s summarize.
If the Rams cut Cooks?
Pre-June 1 – They must recognize everything in 2020 – all $29,800,000.
Post-June 1 – They must recognize all 2020 monies in 2020 – $16,800,000, and carry unrecognized money into 2021  – $13,000,000
If the Rams trade Cooks?
Pre-June 1 – They must recognize all paid bonus monies in 2020 – $17,800,000.  The new team must account for the salary and roster bonus of $12,000,000 in 2020.
Post-June 1 – They must recognize only 2020 bonus allocation- $4,800,000, and carry unrecognized money into 2021  – $13,000,000. His new team must account for the salary and roster bonus of $12,000,000.

I hope this helps. I won’t pretend to know all the ins and outs of the NFL salary cap rules and depended quite heavily on the folks at Over The Cap to decypher the contract terms for me. These same rules apply to any player.  But the LA Rams may only use the post-June-1 designation on two players.  With that designation already used in the Todd Gurley transaction, the Rams have just one more designation remaining.