Baltimore Ravens

Financial ramifications of Ravens terminating Ray Rice's contract

The Ravens' decision to cut star running back Ray Rice after a video surfaced of him punching Janay Palmer in an elevator at an Atlantic City casino carries major financial ramifications.

Because the Ravens terminated Rice's contract, they no longer owe him a $3.529 million nonguaranteed salary for this year and have gained that approximate sum against the salary cap for this fiscal year.


The net effect for the Ravens' salary-cap situation, having shed Rice's five-year, $35 million contract that included $22 million in guaranteed money already paid to him through a $15 million signing bonus and a $7 million option bonus, is they're now $6.864 million under the NFL salary-cap limit of $133 million.

Next year the Ravens will absorb a $9.5 million hit in dead money against the salary cap. Through the timing of his release, Rice has essentially been designated as a post-June 1 cut with the impact of his pro-rated salary-cap figures divided between this year and next year.


Rice had remaining nonguaranteed base salaries of $3 million in 2015 and 2016 that have now been eliminated. The Ravens don't owe him any more money.

Rice has also been suspended indefinitely by NFL commissioner Roger Goodell, and his future in the league is now in doubt.

"The Ravens ripped the scab off financially by cutting Ray Rice," said former NFL sports agent Joel Corry, who covers the business of football for National Football Post. "The public-relations aspect of this crushes Ray and the league, and I can imagine [Ravens owner] Steve Bisciotti and Roger Goodell had lengthy discussions about what needed to happen, but at least it eliminates the distraction from the team.

"Ray could get blackballed. We may have seen the last of him. He's essentially radioactive at this point. This doesn't compare to Aaron Hernandez or Rae Carruth, but it's a very ugly situation. In any other job and you do something like this, you're getting fired."

Whether Rice plays in the league again will depend largely on the discretion of Goodell, whether an NFL team wants to take him on and absorb the public-relations fallout and how much and how effective Rice is at rehabilitating his image.

Rice previously said he and his wife were going to become advocates to help domestic violence groups at the appropriate time. The Ravens recently announced a partnership with the House of Ruth organization.

How the NFL and the Atlanta Falcons handled an ugly situation involving quarterback Michael Vick is instructive.

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In 2007 while Vick was playing for the Falcons, he pleaded guilty to federal charges involving the murder and torture of dogs through his involvement in a massive dogfighting ring. He was suspended indefinitely, served time in a federal prison and was released by the Falcons in 2009.


Vick was also required to reimburse the Falcons for $19.97 million of his $37 million bonus after an arbitrator ruled that Vick had breached his contract, agreeing with the Falcons' argument that the NFL star had known he was engaging in illegal conduct and used the bonus money to fund the dogfighting operation.

Vick was released by the Falcons in 2009, was released from prison that year and was then mentored by former Indianapolis Colts coach Tony Dungy. He then signed a contract with the Philadelphia Eagles and was reinstated by the NFL.

Vick later became involved in supporting the Humane Society and has remained out of trouble since the dogfighting episode, going a long way to upgrade his image.

"Ray's going to have to do something from a public-relations standpoint to rehab his image," Corry said. "He needs to work with a domestic-violence organization and do the equivalent of what Michael Vick has done. There's always going to be a segment of society that will never forgive Michael Vick, but Ray needs to become an advocate for battered women to have a chance to get back in the NFL."