NFL contracts related to cap room (1 Viewer)

[ghostguy123]

Man I really don't know jack about NFL contracts, and don't understand at all why teams do what they do.

Apparently Romo restructured his contract to open up 13 million in cap room for the cowboys, yet he isn't taking any sort of paycut at all.

Color me crazy, but wouldnt it make sense for teams to do this for more of their players more often?

I realize you can't just give all kinds of guaranteed money to everyone on the team otherwise they will slack off, but teams know the players who can be trusted in this capacity.

 

[amnesiac]

Man I really don't know jack about NFL contracts, and don't understand at all why teams do what they do.

Apparently Romo restructured his contract to open up 13 million in cap room for the cowboys, yet he isn't taking any sort of paycut at all.

Color me crazy, but wouldnt it make sense for teams to do this for more of their players more often?

I realize you can't just give all kinds of guaranteed money to everyone on the team otherwise they will slack off, but teams know the players who can be trusted in this capacity.

my understanding in a general sense is that restructuring contracts in this manner pushes the cap hits forward. which works in the short term but eventually screws the team over in the long term.

apparently New Orleans is in that situation with Brees at this point from what i've read.

 

[ghostguy123]

Man I really don't know jack about NFL contracts, and don't understand at all why teams do what they do.

Apparently Romo restructured his contract to open up 13 million in cap room for the cowboys, yet he isn't taking any sort of paycut at all.

Color me crazy, but wouldnt it make sense for teams to do this for more of their players more often?

I realize you can't just give all kinds of guaranteed money to everyone on the team otherwise they will slack off, but teams know the players who can be trusted in this capacity.

my understanding in a general sense is that restructuring contracts in this manner pushes the cap hits forward.which works in the short term but eventually screws the team over in the long term.

apparently New Orleans is in that situation with Brees at this point from what i've read.

Possibly. But things like incentive clauses are exempt from the cap hits...............I think.

Like I said, I have no clue. Every time I think I know something about how the cap works, I come to find out I was wrong.

 

[amnesiac]

Man I really don't know jack about NFL contracts, and don't understand at all why teams do what they do.

Apparently Romo restructured his contract to open up 13 million in cap room for the cowboys, yet he isn't taking any sort of paycut at all.

Color me crazy, but wouldnt it make sense for teams to do this for more of their players more often?

I realize you can't just give all kinds of guaranteed money to everyone on the team otherwise they will slack off, but teams know the players who can be trusted in this capacity.

my understanding in a general sense is that restructuring contracts in this manner pushes the cap hits forward.which works in the short term but eventually screws the team over in the long term.

apparently New Orleans is in that situation with Brees at this point from what i've read.

Possibly. But things like incentive clauses are exempt from the cap hits...............I think.

Like I said, I have no clue. Every time I think I know something about how the cap works, I come to find out I was wrong.

from what i can tell, nothing is exempt from the cap except coaching salaries. all player salaries count against the cap, the only question is when.

 

[GregR]

Pretty much any money paid to a player has to hit the team's cap.

Let's say a player has a $17m salary this year, and $5m for each of the next 2 years. If he doesn't have anything else like a signing or workout bonuses, then he's a $17m cap hit this year, and $5m the next 2 years.

Or the team can go to him and say, "hey, instead of us paying you that $17m in 17 weekly checks during the season, how about we make $15m of it a signing bonus and give it all to you now and you start earning interest on it?" The player of course says ok, and now the $15m is spread for cap purposes over the 3 years. So this year he'd have a $7m hit (remaining $2m salary plus 1/3 of $15m) and the next 2 years he'd have $10m hits ($5m salary plus 1/3 of the $15m).

It all still hits the cap. And if he's traded or cut next offseason after they make the $15m a signing bonus, the remaining $10m that didn't hit the cap yet still hits their cap. Either in one big $10m chunk next year, or there are ways to split it over 2 years. But it still hits the cap because it was paid to him.

 

[NightStalkers]

Man I really don't know jack about NFL contracts, and don't understand at all why teams do what they do.

Apparently Romo restructured his contract to open up 13 million in cap room for the cowboys, yet he isn't taking any sort of paycut at all.

Color me crazy, but wouldnt it make sense for teams to do this for more of their players more often?

I realize you can't just give all kinds of guaranteed money to everyone on the team otherwise they will slack off, but teams know the players who can be trusted in this capacity.

Actually it is done by cash against the cap. Romo's contract probably has a options in it that allow the cowboys to give him his salary as a bonus just like he got a bonus for signing. This counts against the cap over the life of the contract and saves cap room this year.

The Cowboys and Redskins routinely do this. They are flush with cash and design the contracts to allow this. Problem arises when the player gets too old, not effective, injured etc... You can kick the can down the road but at some point the team faces the issue. In a sense Romo's cap hit is building up as time goes by but QB is the one of the longest careers in the NFL if you are a real good one so the pain can be put off for a while...

 

[Kool-Aid Larry]

yeah, I think it's all already been covered here pretty well, but while the actual details of capology can be somewhat complicated, the principles of it are very simple, and a lot of teams already do what you are suggesting they do on a routine basis.

there's basically 2 ways to pay a guy --- regular salary gets counted in the year it gets paid, so romo's 17m 2015 salary (or whatever) prior to the restructure counts against the 2015 cap.

the other form of payment involves money that gets paid today, but spread across several years for cap accounting purposes.

a signing bonus would be an example of that --- guy gets a 20m signing bonus on a 4 yr deal which is counted at 5m per year against the cap, so that teams aren't discouraged from paying big lump sums.

that's pretty much it, although I won't get into incentive bonuses as they tend to be a little more complicated, but there's still 2 types that can fall into either of the above categories.

anytime you hear about a guy 'restructuring' is just a situation where the team is converting payment from one type to another to shuffle cap room, and teams do this all the time --- borrowing cap from tomorrow to use today, and players are happy to accommodate them, as you'd rather get paid your annual salary in a lump today than wait on weekly checks.

as mentioned, the saints are notorious for that to the point where brees has a similar 30m, or whatever, dead cap figure as romo does due to restructures.

none of this is free cap, or creating cap out of thin air, it's all simply borrowed from the future, just as if you were living off a credit card, to use the popular comparison.

 

[Buddy Ball 2K3]

Love this site for Cap numbers

 

[GregR]

Love this site for Cap numbers

I've recently changed from using them, to using http://overthecap.com/.

 

[Phenomena]

Man I really don't know jack about NFL contracts, and don't understand at all why teams do what they do.

Apparently Romo restructured his contract to open up 13 million in cap room for the cowboys, yet he isn't taking any sort of paycut at all.

Color me crazy, but wouldnt it make sense for teams to do this for more of their players more often?

I realize you can't just give all kinds of guaranteed money to everyone on the team otherwise they will slack off, but teams know the players who can be trusted in this capacity.

It's a horrible, terrible, awful cap move. You will never see a responsible team do this with any player's contract.

Converting base salary to signing bonus amortizes the cap hit across the life of the contract (up to 5 years). So you're spreading out the current cap hit across multiple years. What's the problem then??? Load up a stacked team, pro-rate everyone's salaries, and win the Super Bowl this year!!!!

That's the thought. Unfortunately none of the teams that do this actually win the Super bowl, and since they mortgaged the team's future for the current year, they now have much less money in future years to do any moves. On top of that, if a player doesn't work out (say Romo does not win the Super Bowl this year then gets hurt) - the cap hit from the signing bonus conversion STAYS on the team's cap for the next 5 years.

The point being you are borrowing from tomorrow to pay today, which is grossly irresponsible.

You will never see the Packers make this kind of move, and that's one reason they are always competitive. I mean, they won half their games with Matt Flynn when Rodgers was out because the roster is so strong. They beat Dallas, if you remember. That's because they take care of the future, and when you take care of the future, the future takes care of the present.

 

[Phenomena]

Love this site for Cap numbers

I've recently changed from using them, to using http://overthecap.com/.

OTC is by far the best cap site. Not only immaculate numbers but the analysis is fantastic. I visit it every day... it's a sick obsession.

 

[Kool-Aid Larry]

speaking of otc, this was an interesting article on the ellerbe trade

Last weekend the Dolphins and Saints agreed to a trade for linebacker Dannell Ellerbe, provided that Ellerbe was willing to restructure his contract for the cap starved Saints. According to Joel Corry he did just that, except most of the restructure is being paid out by the Miami Dolphins.