Financial Impact of the Ray Rice Situation

USATSI_7633471_160074578_lowresWith new video surfacing amidst the Ray Rice domestic violence saga, it’s looking more and more like the best case scenario for the Baltimore Ravens will be to cut ties with the once All-Pro running back. We’ll take a look from the financial side of things how this might turn out for both parties.
 

The Current Ray Rice Contract

2014 marks year three of his 5 year $35 million contract with the Ravens. The deal contained $15 million in initially guaranteed money which came entirely in the form of a signing bonus (paid in 2012). Last season, a $7 million option bonus was exericsed. To date Rice has been paid $25M of the $35M associated with this contract.

The 2-game suspension cost Rice $470,588 from his $4 million 2014 base salary, a figure that is subtracted for both cash and cap purposes this year. This leaves $9,529,412 in remaining salary to be earned from 2014-2016 – NONE of which is guaranteed.
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Implications For Releasing Rice

Should the Ravens bite the bullet and release Ray Rice in the coming days, as it currently stands they would be on the hook for $14,250,000 in un-allocated cap dollars from the signing and option bonuses. This dead money would be split up as $4,750,000 in 2014 and $9,500,000 in 2015. Keep in mind these figures represent salary cap only – not cash to be paid to Rice. These bonuses have both been paid in full as of last season.

The remaining room for wiggle comes from the $15 million signing bonus paid in 2012. Article 4, Section 9 of the current CBA allows teams the option to recoup a portion of a player’s bonus money should they commit a “forfeitable breach” to their current contract (by way of retirement, suspension, etc.). However, this only applies to the Signing bonus – NOT the option bonus (one of the reasons less teams are utilizing option bonuses in their recent contract extensions).

The CBA states that the Ravens can recoup up to 25% of the unallocated dollars for a given season. With Rice currently suspended just two games, mathematically this means 2/17th of his $3 million pro-rated signing bonus for 2014 – or $352,941. Again, this isn’t a required pay-back, simply an option the Ravens have (and will most likely exercise).

 

Ravens Salary Cap Going Forward

Accounting for the dead cap releasing Ray Rice will incur, the Ravens will clear the $3,529,412 in salary from their 2014 salary cap. The $9.5M added to the 2015 salary cap is an increase of $1.75M to Rice’s current 2015 cap figure – a tough pill to swallow. The Ravens’ 2016 salary cap will not incur any charges, meaning the $7.75M currently allocated to Rice will be removed in its entirety.

Regardless of what happens in the coming days, Rice has already earned $28,194,000 on the field in with the Ravens, a figure that may be a final total for his NFL career going forward.

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Article by: Michael Ginnitti

Managing Editor of Spotrac