Ryan Clady was one of the best draft picks Mike Shanahan made in his final season with the Denver Broncos. He remained steady through the two years Josh McDaniels coached the team and was off to a good start under John Fox, before a Lisfranic injury cut his 2013 season short. He wasn’t the same player in 2014 and hopes for him to bounce back in 2015 didn’t materialize after he tore his ACL.
He now enters 2016 with a $10.1M cap number, which is too much for a player who has missed so many games in the past three seasons. Clady has indicated he would be open to restructuring his contract, saying he wants to spend the rest of his career with the Broncos. We know that restructuring doesn’t always mean “pay cut,” but it’s clear if Clady is to stick around in 2016, his cap number must be reduced.
There are two ways for the Broncos to accomplish this that go beyond just asking him to take a pay cut in 2016, although each will require him to take less money for the coming season.
* Convert the final two years to one year of fully guaranteed money in 2016 and a team option in 2017. This allows the Broncos to evaluate Clady for the 2016 season and decide if he’s worth keeping for another year. If he plays at a high level, he could be retained. If not, the Broncos can decline the option and Clady becomes an unrestricted free agent. This is a tactic the Patriots have utilized with the likes of Vince Wilfork and Jerod Mayo, giving them a chance to net a compensatory pick if/when the player signs elsewhere (as happened with Wilfork).
* Extend the contract by one year while reducing the base salaries in 2016 and 2017, but making 2016 fully guaranteed and perhaps making 2017 an injury-only guarantee (although that may not be likely). A one-year extension allows the Broncos to convert more money into a signing bonus and spread out the cap hit over three seasons. It could still give the Broncos flexibility if Clady doesn’t improve and allow them to get out of the deal after 2016.
I think any restructuring for Clady will have to include making the 2016 salary reduced but fully guaranteed to get him to agree to this. Of the two options I’ve suggested, I think the first option is the better one. The Broncos could still convert a small portion of his salary into a signing bonus because his current dead money charge for 2017 is just $600,000, so pushing a small amount to 2017 wouldn’t compromise the Broncos’ cap situation that year.
With that in mind, here’s how I would restructure the deal.
2016: Reduce Clady’s $9.5M salary to $6M, with $2M in a signing bonus and $2M in a roster bonus to be paid at a later date during the 2016 season. The remaining $2M goes into his base salary. All the money is fully guaranteed.
2017: Leave his base salary at $10M, but as a team option. If the Broncos exercise the option, the money becomes fully guaranteed. If they decline the option, they owe him nothing for any reason and Clady becomes an unrestricted free agent.
This essentially turns the remainder of his contract into a two-year, $16M deal. It would reduce Clady’s cap charge for 2016 to $5.6M and free up $5.5M in cap space. His total cap charge would be $11.6 in 2017, but if he plays at a high level, the Broncos might be OK with him sticking around. If not, his dead money charge from declining the option would be just $1.6M.
One other point to consider is this: When Clady says he would like to spend the rest of his career with the Broncos, it’s possible he could be thinking about retiring in the next year or two. Although he didn’t play in Super Bowl 50, he gets a ring because players on injured reserve are considered part of the team, just not part of the active roster. So he doesn’t necessarily have the incentive to get a ring any longer. He may be thinking about whether or not it’s worth continuing to play football well into his 30s, but would do it for a couple more seasons as long as it’s with the Broncos. Clady’s remark about finishing his career with the Broncos, in other words, does not necessarily mean he expects another lengthy extension that goes well beyond 2017.
Regardless, I believe the two-year restructure makes the most sense. Because the Patriots are using similar contract restructures, there’s no reason for the Broncos to not try it themselves. At the worst, they have paid Clady $6M in cash, which is fine for a left tackle who has talent but wouldn’t be considered the best at his position at this point.