Breaking news on the Aaron Hernandez front, the former Patriots tight end has been indicted on two counts of first degree murder from July 2012. Hernandez allegedly drove up alongside the two victims at a stop light and opened fire. You can read about the story at the Boston Globe by clicking this link.
In a harrowing reminder of the full situation, Hernandez went on to play ten games during the 2012 season, catching 51 passes for 483 yards and 5 touchdowns.
To keep this focused on the impact with the Patriots, and less about the overarching devastation, we can look to the contract implications.
There was language in the August 2012 contract extension with Hernandez that specified that protected the Patriots in case Hernandez had done anything prior to signing the contract that would prevent him from being available during the football season; as Hernandez committed these acts prior to signing this contract, he is in clear violation of his contract and the Patriots should be allowed to recooperate some of their contract money.
This is important because Hernandez is worth over $7.5 million in dead cap space for 2014, or nearly 75% of all the dead money on the salary cap.
The potential fallout from the indictment would likely allow the Patriots to carry the $7.5 million regained in dead space into the 2015 NFL season. This is similar to the Jonathan Fanene cap scenario, where the free agent defensive tackle didn't disclose a preexisting medical condition which prevented him from playing in New England. The grievance was reviewed and decided in 2013, and the Patriots were issued a cap credit for the current 2014 season.
The below is per NFL Agent Joel Corry of CBS (emphasis mine):
If Hernandez is charged in connection to the July 2012 double murder in Boston -- before him signing his extension -- language in his contract should give the Patriots grounds to recoup his entire signing bonus and end his grievance. Hernandez's contract contains a clause where he represents and warrants that there weren't any existing circumstances when he signed his deal that would prevent his continued availability throughout the contract. Committing or participating in a double murder should meet this standard. There's another clause explicitly stating that the Patriots wouldn't have entered into the contract except for Hernandez's representations. At a minimum, the Patriots would gain $3.25 million in cap space from the unpaid signing bonus installment. Any additional cap relief would come only from money that was recovered from Hernandez, which may not be any given his circumstances.
My interpretation is that there is language stating the Patriots wouldn't have entered the contract if Hernandez had misrepresented anything, and even if he is acquitted of these crimes, any association counts as violation per the contract.
For the sake of setting precedence (stare decisis), the NFL Players Association will likely push back and say that nothing can be recooperated until final judgment has been passed. They don't want indictments to be enough to count as contract violations, no matter how heinous the alleged crimes (which is fair). This is just the start of the resolution.