Reports are swirling that once the the NFL league year begins, Case Keenum will be traded to the Washington Redskins. In the reported deal, the Redskins will give up a sixth-round pick in exchange for Keenum and a seventh-round pick.
A while back we discussed the upcoming Joe Flacco trade to the Denver Broncos and the impact that could have on Keenum’s future in Denver.
If Denver trades Keenum they will off-load all of Keenum’s salary for 2019 to the new team from a cash and cap perspective but will take a dead money salary cap hit of $3 million (half of his two year signing bonus proration). The new team would be responsible for Keenum’s full 2019 salary of $18 million (including the $7 million guaranteed) from both a cash and salary cap perspective….
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By trading for Flacco and trading Keenum, the Broncos salary cap hit and its cash expense both increase by $500,000 for 2019.
However, the fact that Keenum’s contract was restructured to make it possible to trade him changes the cap impact for both teams.
Restructured contract
Instead of an $18,000,000 salary with $7,000,000 of that guaranteed for 2019, the restructured salary is now $7,000,000, with all of it guaranteed. However, Keenum will also receive a $500,000 bonus which will be paid by the Broncos for agreeing to the contract restructure. And, the Broncos will also pay half of the $7,000,000 guaranteed salary, or $3,500,000. Washington will only be responsible for the other $3,500,000 of Keenum’s 2019 salary.
Impact to the Broncos
From the Bronco’s perspective, they absorb an additional $4,000,000 cap and cash hit ($3,500,000 salary and $500,000 restructure bonus) for Keenum (in addition to his $3,000,000 signing bonus cap hit).
For Keenum, based on this reported trade, the Broncos 2019 cap hit will be $7,000,000, instead of the $3,000,000 it would have been if they had been able to trade Keenum without restructuring his contract.
However, if they instead released Keenum, the Broncos would have been responsible for a cap hit of $10,000,000 including the $7,000,000 in guaranteed salary (which also would have been a cash hit) and the $3,000,000 signing bonus cap hit.
Versus a release, the Broncos save $3,000,000 in 2019 from both a cash and cap perspective, but they now have a cap and cash hit of $4,000,000 more than they would have had if they were able to complete a trade without a restructure. Clearly there was no trade market for Keenum at his prior salary.
The question becomes why the Broncos would not just keep Keenum as a backup if they were willing to pick up half of his guaranteed salary in a trade, leaving only $3,500,000 more for his team in 2019 to pay. However, it’s quite possible that Keenum would not have agreed to restructure his contract with the Broncos to be a backup quarterback, in which case the Broncos would have had to pay him the full $18,000,000 salary for 2019 or release him.
Impact to the Redskins
From the Redskin’s perspective, they pick up a quarterback that could potentially win the starting job in camp, or be a reasonably priced backup, as the Redskins cap and cash hit will only be the remaining guaranteed $3,500,000 of his 2019 salary.