Salary Cap: LTBE loophole (1 Viewer)

[JAA]

This was taken from the Eagles message board for obvious reasons [forwarded 6.5 mil to 2006 season]. Can anyone conforim or deny this information?Thanks

I know there has been some question on this board about this. The Eagles ended 2005 with $6.5M of cap room. The cap guru with the numbers as a screen name reported that he had confirmed from a good source that the Eagles were able to forward that $6.5M to the 2006 cap using the LTBE loophole that most of the people who have any concern about the cap are familiar with by now. I don't know exactly who his source was but I have also confirmed this. Good chance my source is the same. Any of you who frequent the KFFL.com message boards will be familiar with AdamJT13. He works in some front office capacity in the NFL. This is not a rumor, or his own boastings, this is a fact.He sent me along with other people interested in the cap of their respective teams, the following e-mail:It appears that 18 teams used the LTBE loophole to push unused cap room from 2005 into 2006 by adding an unreachable incentive to a player's contract in December.Here are the teams, the player(s) and the amount --Arizona -- Jeremy Bridges $800,000Atlanta -- Dwayne Blakley $500,000 (also got a $1,000 raise)Baltimore -- Aaron Elling $750,000Chicago -- Gabe Reid $600,000Cleveland -- Ray Mickens $1,570,431 and John Owens $635,000Detroit -- Jared DeVries $240,000Green Bay -- Craig Nall $1,600,000Houston -- Corey Bradford $2,000,000Jacksonville -- Quinn Gray $2,800,000Kansas City -- Tony Richardson $3,682,000Minnesota -- Joseph Echema $1,909,000New Orleans -- Terrence Melton $1,668,845NY Giants -- Frank Walker $1,175,000Oakland -- James Adkisson $571,804Philadelphia -- Jack Brewer $6,500,000San Diego -- Reche Caldwell $500,000St. Louis -- Dwaine Carpenter $2,820,000Washington -- Rock Cartwright $1,151,425

 

[Orange Crush]

at Arizona and New Orleans pushing those rinky dink $'s into 2006. Like their cheapskate owners are going to come close to using all of the much larger salary cap next year.

 

[SSOG]

If LTBE stands for "Likely To Be Earned", then I can confirm that it is, indeed, possible to save unused cap dollars for future seasons. In fact, I've always wondered why teams didn't do this, but I guess the answer is that they DID, I just never heard about it.In NFL contracts, there are a whole bunch of different designations for bonuses and incentives. There's signing bonuses, which a player gets just for signing his name, there are roster bonuses, which are awarded just for being on the roster, and there are incentives that can be triggered just by reaching certain playing-time or performance levels. Incentives are what we're concerned about here. Incentives come with two designations- "Likely to be Earned", and "Unlikely to be Earned". What makes a bonus Likely or Unlikely isn't common sense- sometimes an RB rushing for 5 yards is an unlikely to be earned bonus, or a DB making 10 interceptions is a likely one. All designations are based on the previous year's performance. If a player performed the feat last year, then the bonus is considered "Likely to be Earned", and if he didn't, then it's "Unlikely to be Earned". So, for instance, Indy could have built an incentive into Peyton Manning's contract that would pay him $10 million if he threw 49 TDs this season, and it would be considered "Likely to be Earned".The difference between the two designations is entirely one of accounting. All LTBE bonuses count against this season's salary cap, no matter what. All UTBE bonuses do NOT count against the cap, unless they're actually achieved. So why would anyone use LTBE bonuses if they're going to count against the cap wether they're met or not? The answer is very simple- if you have a LTBE bonus, and it is not met, you get a credit against NEXT YEAR's cap for the amount of the bonus. This means that teams can approach a player coming off of a career season (let's say Manning and the 49 TDs), and put in a LTBE bonus for if they match that career season. The players agree, because it's no-lose. Either they fail to reach the mark, and nothing happens, or they meet the mark, and they get extra money. Theoretically (or at least, as far as I knew), teams with extra cap space could renegotiate existing contracts very late in the season, once it became clear that certain levels were beyond a player's reach, and add in a bunch of LTBE bonuses, simply to convert unused cap space this season (which every team carries so they can sign free agents to replace injured players) into extra cap space next season.As for the actual numbers... I can't confirm any of them. Sorry.

 

[AB in DC]

FYI, this won't work next year unless there is a CBA extension. No cap in 2007 = not allowed to use this loophole in 2006.

 

[jeff_eaglz]

If LTBE stands for "Likely To Be Earned", then I can confirm that it is, indeed, possible to save unused cap dollars for future seasons. In fact, I've always wondered why teams didn't do this, but I guess the answer is that they DID, I just never heard about it.

In NFL contracts, there are a whole bunch of different designations for bonuses and incentives. There's signing bonuses, which a player gets just for signing his name, there are roster bonuses, which are awarded just for being on the roster, and there are incentives that can be triggered just by reaching certain playing-time or performance levels. Incentives are what we're concerned about here. Incentives come with two designations- "Likely to be Earned", and "Unlikely to be Earned". What makes a bonus Likely or Unlikely isn't common sense- sometimes an RB rushing for 5 yards is an unlikely to be earned bonus, or a DB making 10 interceptions is a likely one. All designations are based on the previous year's performance. If a player performed the feat last year, then the bonus is considered "Likely to be Earned", and if he didn't, then it's "Unlikely to be Earned". So, for instance, Indy could have built an incentive into Peyton Manning's contract that would pay him $10 million if he threw 49 TDs this season, and it would be considered "Likely to be Earned".

The difference between the two designations is entirely one of accounting. All LTBE bonuses count against this season's salary cap, no matter what. All UTBE bonuses do NOT count against the cap, unless they're actually achieved. So why would anyone use LTBE bonuses if they're going to count against the cap wether they're met or not? The answer is very simple- if you have a LTBE bonus, and it is not met, you get a credit against NEXT YEAR's cap for the amount of the bonus. This means that teams can approach a player coming off of a career season (let's say Manning and the 49 TDs), and put in a LTBE bonus for if they match that career season. The players agree, because it's no-lose. Either they fail to reach the mark, and nothing happens, or they meet the mark, and they get extra money. Theoretically (or at least, as far as I knew), teams with extra cap space could renegotiate existing contracts very late in the season, once it became clear that certain levels were beyond a player's reach, and add in a bunch of LTBE bonuses, simply to convert unused cap space this season (which every team carries so they can sign free agents to replace injured players) into extra cap space next season.

As for the actual numbers... I can't confirm any of them. Sorry.

Nice analysis SSOG. Had not heard of the loophole but it does make perfect sense. I bet they do something with that before 2007 (if they work out a cap at all).

 

[DeadStroke]

FYI, there is another loophole that teams have started to use to move money into the future. It has to do with Special Teams bonuses. Any and all special teams bonuses are deemed LTBE, no matter if the mark was reached the prior year or not.I know the Vikings did it with one player (I can't remember who it was), but it was around $7M. I believe Philly has done it as well, as they have always been good at moving money from year to year. There have been others, and I'm going from memory as I can't find the actual article.Last season, Shaun Rogers signed an 46M extention that includes an 11M Special teams bonus, that basically says that if he plays on 95% of the special teams, he will get a bonus in 2006 or 2007 (I can't remember which year). He plays on the FG Blocking special team, but that is it and will never reach that bonus. So, since all special teams bonuses are LTBE, the Lions will recognize the bonus in the year that it is due and when he doesn't reach it, they will get an 11M credit in the following year.As stated earlier though, if the CBA isn't extended, this will be moot.

 

[reg]

Conspiracy theorists around here will tell you that Red used to do this with contracts to get to the NFL minimum spending for a current year (ie salary cap figure goes up in year x then goes back down in x+1, where he just switches to another player).