Salary Cap – Myths, Misconceptions, FAQs (Part Two)
This is a follow-up to my post from a few days ago, where I set out some of the more important current issues with the salary cap and how the special rules as the NFL heads towards an uncapped year will affect the Jets. Once again, thanks must go to Jason from the excellent nyjetscap.com website for his assistance.
After the jump, I address some of your queries from the comments and via e-mail.
First, a minor correction from Part One. I originally stated the following:
[In order to sign a free agent with a cap number of $3m in the first year, which would match that of an outgoing free agent] the Jets could, theoretically, make a long contract with a modest signing bonus. For example, a six year deal with a $6m signing bonus and maximum salary increases each year would see him receiving $8m in the first year and $10m in the last year, but an average of approximately $5m per year over the middle four years.
My maths failed me slightly here. In order to escalate to $10m, it would have to be a SEVEN year contract (which was the original example I planned to use). Anyway, the numbers are still almost correct (it would instead be $7.4m in the final year), but it was just an example, which indicates that the Jets are unlikely to be able to able to sign a UFA with a contract as big as Julius Peppers, or even Calvin Pace, but might be able to put together the sort of deal that got them Damien Woody or Kenyon Coleman, an important point which bears repeating. The actual numbers are not that important because it was a very crude example.
Moving onto your questions…
Ferraro41 via e-mail asks…
Had a question regarding the uncapped year, and your comments about how a cap is likely to return, so teams will still likey be reluctant to sign huge, long term deals.
However, couldn’t teams use this to re-sign their own players to big contracts, and just front load them? For example, let’s say Mangold wants a new deal worth $30 million over 5 years. Couldn’t the Jets give him that deal, only make the first year of the contract worth $20 million (in the uncapped year), then spread the remaining $10 million across the last 4 years of the contract, years in which there is likely to be a cap?
It would appear so. That’s what I was talking about when I said this…
you can re-sign your own free agents without any restrictions, which might be the smartest way a team like the Jets can spend its money, especially since the uncapped year affords teams an opportunity to lock up talent into the future, but minimize cap hits in future years.
Will teams go to such extremes? I don’t know. There’s still a financial/commercial consideration in paying someone more money up front and bear in mind that with the proposal you suggested, there’s nothing really to stop Mangold from kicking up a fuss in a few years because he has a low salary compared to other centers or the rest of his linemates. However, the team will definitely give consideration to using this to make the future cap hits lower than what they otherwise would have been. Maybe they will throw in a few roster bonuses towards the end to give them some leverage.
Tom Curley, also via e-mail, asks…
Big office debate here and hoping you can help — is it possible to circumvent the NFL Salary cap through signing bonuses?
No. Signing bonuses do still count against the cap. Where they can be useful in salary cap planning is that, although the money is paid upfront, the salary cap hit is spread out over the life of the contract, so the bonuses can be used to affect the timing of when a payment made to a player is going to count against the cap.
In a simple example, lets assume that Player X receives a 5 year, $15m contract where he receives a signing bonus of $10m and a salary of $1m each year. Although he will receive $11m in year one, the bonus counts against the cap $2m per season, so the cap hit in year one is only $3m ($1m being his salary and $2m being 1/5 of his signing bonus). If he was cut before the contract ran out, the salary for the remaining years does not have to be paid, but rest of the bonus, having already been paid, will count in full against the cap.
Of course, that’s in a normal year. The uncapped year and final eight rules mentioned in part one have muddied the waters somewhat. Essentially though, the salary cap limits what you can pay a player, whether it be in salaries or bonuses.
niko1677 asked in the comments…
I am interested to find out more about how the Completion Bonus works and how it differs from the Option Bonus.
I don’t know much about this, but Jason explained it for me in a recent e-mail…
This past year there were some teams that were able to avoid the 30% rule by utilizing something called a completion bonus. Jon Vilma had it. Whereas the CBA specifically worded that option bonuses would be used in 30% rule calculations … they did not do that for this completion bonus, which can be guaranteed for both skill and injury. I have a feeling that is the mechanism the Jets would use with no fights from the NFL. Basically they would give Peppers that 3 million up front in 2010, a raise of 900K per year in salary, and a huge bonus due something like 370 days after the signing date of the contract. The reason for having it due more than 1 year rather than the customary first week of March 2011 is because the Jets are prohibited from renegotiations with any free agent signings for 1 full year from the date the deal is signed. Rather than paying a 30 million dollar bonus to Peppers they would probably want to reduce a large portion of it and rework the entire deal to fit in better with their cap structure.
niko also asked…
Also, is it posssible for the Jets to try and trade for a franchised player using picks rather than signing him to an offer sheet, much like the reports were that the Pats were trying to work out with Peppers last year … I realize the Jets are restricted from trades involving players that are not under contract but I was wondering if this is a possibility assuming Peppers is franchised.
Unfortunately not. This would still seem to come under the definition of trading for a player they “otherwise could not sign as a free agent”.
AKA…Drew said…
When it comes to the cap I have 1000% trust that Mr T knows what he can do and will everything to make this team be ready to roll come September.
I have nothing to add.
The NYC Parking Expert asked in the comments…
You wrote “Okay, so the Jets want to sign Peppers to a long term deal with a cap number of less than $3m in the first year.” and “For example, a six year deal with a $6m signing bonus and maximum salary increases each year would see him receiving $8m in the first year and $10m in the last year, but an average of approximately $5m per year over the middle four years.” I must be missing something, but it looks like in this scenario Peppers would be receiving $8m in the first year although I thought that his max number was $3m in the first year. Does the $8m = $2m cap plus $6m signing bonus?
Jason again answered this in the comments, but I am reproducing his response here in case anyone else was similarly confused.
To make the numbers work you only have to have cap numbers that are equal. In Bent’s example a 6 million dollar SB over 6 years counts a 1 million in cap money per year. So Peppers gets 8 million in actual cash during his first year, but the cap hit would only be 3 million and thus be a valid contract.
Igs commented that…
It’s restricting as all hell.
I’m not sure I agree. Part of the reason for the post was to highlight that the media were making it out to be a lot more restrictive than it actually was. Jason doesn’t agree either, based on this comment he made in a recent e-mail to me:
Bottom line is that I don’t think we are nearly as restricted as some people believe. Its just a question of how do the Jets best utilize their draft choices for RFAs, carefully craft transition players deals and do contract structures for free agents if the cap returns in 2011 or beyond.
Jimmy Shnoogen asked…
If the Jets don’t resign three of their own players, who are UFA, and they all sign with another team, instead of the Jets signing three other UFA to replace them, can the combined cap total from the three other players, be combined, and used for the Jets to sign one big UFA? For example (not to be considered probable contract offers):
Wayne Hunter signs, and earns $2 million in year 1
Marques Douglas signs, and earns $3 million in year 1
Tony Richardson signs, and earns $4 million in year 1Instead of the Jets going out and getting three guys that will earn the same amounts as each the three above, can they go out and sign ONE guy that in year one will earn $9 million, which is the total of what those three guys are earning in year one?
Obviously they lose the privilege of signing two additional UFA, but if this is possible, and they can sign a guy like Peppers, then it’d be awesome.
Brendan resolved this in the comments, but again I am reproducing his response here in case anyone else had the same thoughts after reading part one:
In the Peppers case study from above: “It should be noted that you cannot accumulate the cap numbers of outgoing UFAs to make a bigger number for matching with a UFA signing – it is a one-for-one calculation.”
Sackdance99 asked…
Do you know when the dead money comes off the cap? The Jets still have nearly $12 million in “dead money” with the bulk related to Chad, Kenyon Coleman and Coles. Once that money gets cleared, the Jets will be even farther under the cap.
That dead money counts against the cap for the 2009 year, which is, for all intents and purposes, done with. Any “the Jets are $X under the cap for 2010″ projections will already have excluded that dead money.
Harvlis asked…
What I want to know is, if they came up with all these convoluted rules, and both sides agreed to all of this, why couldn’t they finish the new collective bargaining agreement? The thought of a strike gets me sick.
These rules would have been agreed to when the old CBA was signed and I guess there was just as much give and take as for the rest of the agreement. The new agreement will have to have similar contingencies for when that deal is set to run out. Also, there isn’t going to be a strike, but there could be a lockout. (Semantics, I know). Let’s keep our fingers crossed for neither, especially now the Jets look set to be in the playoff hunt.
WOJF asked…
It does not appear there are any restrictions on trades?
Can we trade a second round pick for a big contract player like Peppers. He re-signs first, then we trade for him?
To clarify, I am asking Peppers signs a brand new spanking deal with this current, or another team, could the Jets then trade for him and circumvent the rules?
Again, I think this falls squarely within the rules of trading for a player that you “couldn’t otherwise sign as a free agent” and this particular rule was designed to prevent teams from circumventing the final eight rules. Using a third team as a conduit is an interesting idea, but I don’t think the league would like it. It would also create problems with the contract moving between teams when the player is traded. Sign and trade moves don’t usually make a lot of sense because the team trading the player will get a big cap hit, but in an uncapped year, it is something that I have been wondering if it could be useful in certain situations (but not the one suggested above).
As ever, I cannot guarantee 100% accuracy with the above information, but I have made every effort to be as accurate as possible and will be happy to correct any errors if directed. If there are still any further questions, I will try to answer them in the comments.
14 Responses to Salary Cap – Myths, Misconceptions, FAQs (Part Two)
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Bkkilla says:
so your sayin there’s a chance
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NamVetJet says:
I am beginning to think that Mr. T and Bent are one in the same person. Has anyone ever seen them together?
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Bent says:
Quit yo’ jibber jabber. I ain’t goin’ on no plane, you crazy fool.
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Just wanted to add again, Bent, that you did a great job with this stuff. I think it will be an interesting offseason for the team.
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brightfuture says:
Great job on explaining all this it was extremely helpful also a way around all this final”8″ nonsense could b trading kerry for osi and a 4th any thoughts
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I know there has been this rumored KR for Osi deal, but would KR really fit in with the Giants plan? He just does not seem like the type that would fit in with the coaching staff on the Giants team. They also are way high on Kenny Phillips and assuming he is going to be back from injury I think they would rather go with him than Rhodes. Id see if the Vikes or Bears were interested in him.
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StvDoe says:
As far as the idea of loading the majority of a contract’s dollars during an uncapped year and spreading the rest over the duration I can’t imagine any businessman would entertain such a foolish notion.
Should a player get the 20M of the example in year one and the additional 10M in years 2-5 he’d lose nearly all monetary incentive to play the game. He’d bitch and moan about being underpaid as time wore on. It’s just human nature. Ugly recriminations and hold-outs would ensue. Just a terrible idea for management even if you assume the player remains healthy. Shoud the player’s health become a problem, the idea gets considerably worse.
Essentially, you’re talking about guaranteed contracts.
(You know, like the ones that are helping to ruin basketball and baseball. I’d say they’re ruining hockey, but I know nothing about hockey. And hasn’t that horse left the barn long ago anyway? I mean, what sucks worse than hockey? Is that even a sport? They hit each other with sticks fer crissakes. But I digress.)
I’m all for creative ways to fudge the cap. But paying players long before they’ve actually played seems like a terrible one to me, Ya gotta be able to cut players instead of paying them when necessary.
(Oh my god, don’t tell Hank I said this. He hates this. He thinks you should always pay out the full contract regardless of circumstances. Wow. Now that I think of it Hank must love the whole “guaranteed contracts” thing from baseball and basketball. Just another reason that Football Rules!)
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A lot of solid players will be cut this season to take advantage of the no salary cap. There will be plenty of solid players for us to sign.
btw, everyone watch out for Reggi Bush going to New England.
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niko1677 says:
Great job, as usual…much appreciated Bent.
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Brendan says:
I agree with Jason. Tom Coughlin is a no-nonsense guy so I doubt he’s going to want to take on a headache when he’s already got plenty of his own.
Osi isn’t doing himself any favors by demanding to start or quit football, though.
As for the acquiring players issue, Bent has mentioned this before many times and I believe the same thing, there will be a LOT of veteran cuts this offseason. Each year there’s a few head-scratchers in terms of cuts, so this year should be even more interesting. The Jets will be free to sign a guy like Joey Porter (if he gets cut) and probably find some steals in terms of depth here.
I don’t believe this offseason will be as boring for the Jets as most people will lead you to believe.
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WOJF says:
Osi belongs on the Raiders, let him burn in silver and black hell.
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JEFFDOLFINI says:
I think we need to sign Dunta Robinson guys. I was all for drafting a young corner to start opposite, but the more I think about it, the more I like the idea of signing Dunta, a proven above average corner, to play opposite of Revis. I would be willing to pay him an average of about 5 million a year. The we could focus on a pass rusher and depth in the draft.
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Jeff,
That’s going to be very hard though, no? He’s an UFA so we’ll have to work one of those miracle “Peppers deals” (alluding to the ones mentioned by Bent in this post) to get him I think. He’s good, but he’ll probably want a big payday. I would rather go after a guy like the kid from Boise State and use the money on someone more deserving.
so damn confusing…
i almost didnt understand anything…
*sigh*