The Panthers were about $16 million over the salary cap when general manager Dave Gettleman was hired last January.

A little more than a year later, the Panthers sit nearly $16 million below the projected $126.3 million cap for 2014. The $16 million figure includes the $11.6 million the Panthers will carry over in unused cap space from 2013.

On the surface, the Panthers appear to be much in better shape – until you factor in the Kraken Situation.

The Kraken is the make-believe sea creature Panthers defensive end Greg Hardy has adopted as his alter ego. But Hardy’s pending free agency presents a very real issue for the Panthers.

Hardy is coming off a 15-sack season that tied the franchise’s single-season record set by Kevin Greene in 1998. Hardy wants to be paid like one of the game’s best pass-rushers. To this point, the Panthers have given little indication they plan on doing that.

Nearly half of Hardy’s sack total in 2013 came during a seven-sack barrage in the final two regular-season games against New Orleans and Atlanta. Hardy was shut out in the playoff loss to San Francisco when the 49ers turned their protections to him.

The Panthers could slap the franchise tag on Hardy at a cost of about $12 million, but that would eat up most of their available cap space. In a tag-and-trade scenario, the Panthers could net more draft picks – or at least a higher pick – than the third-round compensatory selection they’d likely receive if Hardy leaves as a free agent.

With huge deals on the horizon for quarterback Cam Newton and middle linebacker Luke Kuechly, and potentially defensive tackle Star Lotulelei, the Panthers can’t afford to have a ton of money tied up in two pass rushers.

A year after losing Julius Peppers to free agency before the 2010 season, the Panthers gave defensive end Charles Johnson the most lucrative deal in franchise history – six years and $78 million.

Hardy will be looking for more than that, and could get it from a team in need of an elite pass rusher, including two from the NFC South in Atlanta and Tampa Bay.

New Bucs coach Lovie Smith was in Chicago when the Bears made Peppers a $91 million man. Smith and new Tampa Bay defensive coordinator Leslie Frazier have made it clear improving the pass rush is a priority.

“He’s asking for Charles Johnson money,” Joel Corry, a former NFL agent who writes for cbssports.com, said of Hardy. “Pass rushers are always paid a premium. If you get a young one like him on the open market with a team with an abundance of cap room like Oakland ...”

Losing Hardy – especially to a division rival – would be tough for the league’s second-ranked defense. But keeping him at an exorbitant cost could hamstring the efforts by Gettleman to get the Panthers’ salary cap in order in the next two years.

Gettleman navigated the cap mess last year by cutting several defensive starters (Chris Gamble, James Anderson and Ron Edwards) and restructuring the contracts of a number of veterans. This time, Gettleman may not have many restructuring cards to play.