With an Uncapped Year Looming . . . (1 Viewer)

[David Yudkin]

I'm asking because I don't know, but couldn't teams plan for an uncapped year and the potential to do away with the salary cap by signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

Similarly, couldn't teams just redo existing deals and make contract extensions to push salary cap hits past this year, thus freeing up a ton of money for the 2009 season in terms of salary cap hits?

Are there guidelines to prevent these types of shennigans?

 

[Postradamus]

Don't expect Mike Brown to shell out any more cash than he has to. This would only benefit teams with competent GMs/owners.

 

[Holy Schneikes]

I'm asking because I don't know, but couldn't teams plan for an uncapped year and the potential to do away with the salary cap by signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?Similarly, couldn't teams just redo existing deals and make contract extensions to push salary cap hits past this year, thus freeing up a ton of money for the 2009 season in terms of salary cap hits?Are there guidelines to prevent these types of shennigans?

I've been wondering about that as well.Things is though, assuming there is at least a decent chance that there WILL be a cap in 2010 (via a new agreement), you could TOTALLY hose your team by doing this (having to release a ton of talented players because you can't make your cap in 2010).Then there is the fact that quite a few teams probably aren't dying to spend way more money than the cap "allows" them to spend anyway. I think with the current state of the economy (even the NFL economy) most owners are probably very content to stay within the cap.All in all, probably not worth the risk for most teams to do anything drastic. That doesn't mean they aren't at least thinking about it though.

 

[massraider]

Are there guidelines to prevent these types of shennigans?

I am pretty sure those moves would just be doing usual cap business, not shenanigans.

 

[Chicago Hooligan]

signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

If a player signed a contract like that, what's to stop the team from cutting him after a cheap 2009 if there's no "dead" money hitting the cap?

 

[Hooper31]

The "spend it all and spend some more" strategy isn't really working for the NY Yankees, and I certainly don't think its going to work in the NFL. Further, all the NFL teams are working off an equal revenue stream because they share the TV money. This is WAY different than the NY Yankees because the Yankees get to keep all their TV money to themselves. For the most part, all NFL teams are working with the same amount of profitability. I doubt any of the owners are going to start shelling out their own money knowing they aren't going to be seeing a proportional return on their investment.

 

[GregR_2]

signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

If a player signed a contract like that, what's to stop the team from cutting him after a cheap 2009 if there's no "dead" money hitting the cap?

This is what I was going to say as well. Why would the player agree to a contract with low starting money and a lack of guaranteed money if he knows he can then be cut to avoid the bulk of his payment?And personally I think there will be a salary cap, even if it comes after a work stoppage. I don't think players will accept the alternative... if they don't reach agreement on a new CBA then players won't become unrestricted free agents until their 6th year. I don't think that's a situation they will be willing to accept compared to the 4 years it takes now to become a UFA.

 

[David Yudkin]

signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

If a player signed a contract like that, what's to stop the team from cutting him after a cheap 2009 if there's no "dead" money hitting the cap?

This is what I was going to say as well. Why would the player agree to a contract with low starting money and a lack of guaranteed money if he knows he can then be cut to avoid the bulk of his payment?And personally I think there will be a salary cap, even if it comes after a work stoppage. I don't think players will accept the alternative... if they don't reach agreement on a new CBA then players won't become unrestricted free agents until their 6th year. I don't think that's a situation they will be willing to accept compared to the 4 years it takes now to become a UFA.

In my scenario, teams could still spend big and give big bonuses but finagle the cap hit later on with limited downside. For example, let's say a guy is really worth a 4 year, $30 million deal with half up front. Why not give a guy a 7 year deal worth $70 million (on paper) paying the same $15 million up front (when everyone knows he won't play for 7 years or get all the money). Then they could back end the deal, take a minimal hit on the signing bonus, and both sides come out the same in terms of actual payout for this year (even next), but at some point down the road with no salary cap no one would care about the paper trail and how cap hits were accounted for.

 

[stevegamer]

The "spend it all and spend some more" strategy isn't really working for the NY Yankees, and I certainly don't think its going to work in the NFL. Further, all the NFL teams are working off an equal revenue stream because they share the TV money. This is WAY different than the NY Yankees because the Yankees get to keep all their TV money to themselves. For the most part, all NFL teams are working with the same amount of profitability. I doubt any of the owners are going to start shelling out their own money knowing they aren't going to be seeing a proportional return on their investment.

A few counterpoints...1. Owners have different profitablity based on leases, concessions & the like. While they do share the TV money, if all owners were working on roughly the same profitability, they would all roughly spend the same in total. And they don't do that. Also they have different main revenue streams outside football - look at Tampa Bay's owners with Manchester United.2. Some owners have gone crazy signing guys in the past, and ended up in cap problems, or close to it. Other owners spend a lot less, and constantly move money to count against future years.3. Winning means you can increase ticket prices, get more concessions revenue, etc. For a team like the Cardinals, this run helped them a lot. with fanbase. Imagine a team that doesn't sell out suddenly going on a run deep into the playoffs. Home games in the playoffs are basically $$$ in the team's pocket.

 

[Sweet Love]

signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

If a player signed a contract like that, what's to stop the team from cutting him after a cheap 2009 if there's no "dead" money hitting the cap?

This is what I was going to say as well. Why would the player agree to a contract with low starting money and a lack of guaranteed money if he knows he can then be cut to avoid the bulk of his payment?And personally I think there will be a salary cap, even if it comes after a work stoppage. I don't think players will accept the alternative... if they don't reach agreement on a new CBA then players won't become unrestricted free agents until their 6th year. I don't think that's a situation they will be willing to accept compared to the 4 years it takes now to become a UFA.

I agree, but Stephen Davis did sign a 100mm contract back in 2000...after that, I lost all hope in that these clowns know what they are doing when they are not tackling/blocking/scoring TDs.

 

[Carver]

I'm asking because I don't know, but couldn't teams plan for an uncapped year and the potential to do away with the salary cap by signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

Similarly, couldn't teams just redo existing deals and make contract extensions to push salary cap hits past this year, thus freeing up a ton of money for the 2009 season in terms of salary cap hits?

Are there guidelines to prevent these types of shennigans?

In short... yes. However, most owners seem to understand the damage it would cause to the long-term landscape of the league if they were to exploit an uncapped season, so im sure it will be frowned on. There are certain guidelines that must be followed which apply to the '09 season and how a particular salary must be structured.

 

[Phurfur]

signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

If a player signed a contract like that, what's to stop the team from cutting him after a cheap 2009 if there's no "dead" money hitting the cap?

This is what I was going to say as well. Why would the player agree to a contract with low starting money and a lack of guaranteed money if he knows he can then be cut to avoid the bulk of his payment?And personally I think there will be a salary cap, even if it comes after a work stoppage. I don't think players will accept the alternative... if they don't reach agreement on a new CBA then players won't become unrestricted free agents until their 6th year. I don't think that's a situation they will be willing to accept compared to the 4 years it takes now to become a UFA.

and people seem to forget that the cap minimum will go away too.

 

[Jason Wood]

The elephant in the room is that the majority of teams are NOT financially better off today than they were a few years ago. Where this next labor negotiation gets tricky is that there's going to be as much contention between the 'have' and 'have not' owners as there will be between ownership and the NFLPA. Remember, the vast majority of the 'rich' teams have gotten that way thanks to sweetheart financing on new stadiums, tax credits, and rising advertising/sponsorship revenues. Not only have all three of those factors worsened, they've become tangible risks. I would bet dollars to donuts that a number of NFL owners are already in violation of their debt covenants, and would be hard pressed to refinance their debt without significant hits to their cash flow.

 

[Godsbrother]

Pretty sure I read that if the owners opt out of the CBA there is a rule that kicks in that prohibits a player's salary from rising more than 30 percent a year from his base salary for the 2009 season.

Also while there may be teams that decide to exceed the cap in 2010 the other side of the coin is that there will be no salary floor, meaning teams could spend significantly less.

 

[GregR_2]

signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

If a player signed a contract like that, what's to stop the team from cutting him after a cheap 2009 if there's no "dead" money hitting the cap?

This is what I was going to say as well. Why would the player agree to a contract with low starting money and a lack of guaranteed money if he knows he can then be cut to avoid the bulk of his payment?And personally I think there will be a salary cap, even if it comes after a work stoppage. I don't think players will accept the alternative... if they don't reach agreement on a new CBA then players won't become unrestricted free agents until their 6th year. I don't think that's a situation they will be willing to accept compared to the 4 years it takes now to become a UFA.

In my scenario, teams could still spend big and give big bonuses but finagle the cap hit later on with limited downside. For example, let's say a guy is really worth a 4 year, $30 million deal with half up front. Why not give a guy a 7 year deal worth $70 million (on paper) paying the same $15 million up front (when everyone knows he won't play for 7 years or get all the money). Then they could back end the deal, take a minimal hit on the signing bonus, and both sides come out the same in terms of actual payout for this year (even next), but at some point down the road with no salary cap no one would care about the paper trail and how cap hits were accounted for.

I think the short answer to your question is that CBA has provisions that if the CBA is not extended, the salary cap rules change. And those rules don't allow you to do what you are saying. For example:The 30% rule: The CBA, if not extended, imposes a rule on how much a player's salary can increase or decrease from one year to the next. Your non-signing bonus salary cannot change from one year to the next by more than 30% of what you were paid in the final capped year (2009). You can see that part of the CBA here, scroll down to page 133 and look at Section 8: 30% rules.

Just that rule already makes your example impossible. To have a 7 year contract with $55m in salary requires a minimum of a $4.1m 2009 salary, but would pay $24m over the first 4 years of the contract instead of the $15m you wanted to pay. You can try to get fancier, pay $5.4m in 2009 and then pay the min you can in 2010 and 2011 and then start increasing again, but to pay exactly $15m in the first 4 years you can only get those late salaries up to a total of $36m... and they may not be high enough the player will agree to pad on the extra years since some of them are reasonable salaries you might keep him at.

Signing Bonus Proration rule changes

It used to be that teams could prorate signing bonuses over 6 years. With the CBA not having been extended, that drops to 5 years. So even though you're talking about tacking on 3 more years, that really doesn't help you that much in spreading out the cap bonus. It doesn't help any more than making it a 5 year contract would.

Though one thing I'm not clear on is what exactly it means having to prorate a cap bonus into a year if the year is uncapped. I've seen some people on the net say some things about all prorations suddenly hit you in 2009 but that doesn't seem to be the case from what we see in contracts. So I'm guessing here, but I think the NFL is figuring they will get a new CBA and there will be a cap and you don't want to screw yourself by having too much money prorated in the hopes there is no cap when it hits so it doesn't matter. But that's a guess.

 

[Enforcer]

The "spend it all and spend some more" strategy isn't really working for the NY Yankees, and I certainly don't think its going to work in the NFL. Further, all the NFL teams are working off an equal revenue stream because they share the TV money. This is WAY different than the NY Yankees because the Yankees get to keep all their TV money to themselves. For the most part, all NFL teams are working with the same amount of profitability. I doubt any of the owners are going to start shelling out their own money knowing they aren't going to be seeing a proportional return on their investment.

A few counterpoints...1. Owners have different profitablity based on leases, concessions & the like. While they do share the TV money, if all owners were working on roughly the same profitability, they would all roughly spend the same in total. And they don't do that. Also they have different main revenue streams outside football - look at Tampa Bay's owners with Manchester United.2. Some owners have gone crazy signing guys in the past, and ended up in cap problems, or close to it. Other owners spend a lot less, and constantly move money to count against future years.3. Winning means you can increase ticket prices, get more concessions revenue, etc. For a team like the Cardinals, this run helped them a lot. with fanbase. Imagine a team that doesn't sell out suddenly going on a run deep into the playoffs. Home games in the playoffs are basically $$$ in the team's pocket.

I understand there are other smaller revenue streams, but do you have some actual numbers to share? I was under the impression that all the other sources of revenue outside of the TV contracts are peanuts by comparison. Am I off base there?

 

[Marvelous]

The "spend it all and spend some more" strategy isn't really working for the NY Yankees, and I certainly don't think its going to work in the NFL. Further, all the NFL teams are working off an equal revenue stream because they share the TV money. This is WAY different than the NY Yankees because the Yankees get to keep all their TV money to themselves. For the most part, all NFL teams are working with the same amount of profitability. I doubt any of the owners are going to start shelling out their own money knowing they aren't going to be seeing a proportional return on their investment.

A few counterpoints...1. Owners have different profitablity based on leases, concessions & the like. While they do share the TV money, if all owners were working on roughly the same profitability, they would all roughly spend the same in total. And they don't do that. Also they have different main revenue streams outside football - look at Tampa Bay's owners with Manchester United.2. Some owners have gone crazy signing guys in the past, and ended up in cap problems, or close to it. Other owners spend a lot less, and constantly move money to count against future years.3. Winning means you can increase ticket prices, get more concessions revenue, etc. For a team like the Cardinals, this run helped them a lot. with fanbase. Imagine a team that doesn't sell out suddenly going on a run deep into the playoffs. Home games in the playoffs are basically $$$ in the team's pocket.

I understand there are other smaller revenue streams, but do you have some actual numbers to share? I was under the impression that all the other sources of revenue outside of the TV contracts are peanuts by comparison. Am I off base there?

I don't have any figures, but the unshared revenue is not peanuts. For example, revenue from luxury boxes is not shared. So one goal of any owner is to have lots of luxury boxes in their new stadium, preferably paid for by taxpayers.

 

[David Yudkin]

signing free agent players to contracts with hardly any money paid out in 2009 and the huge core of money paid out in 2010 and beyond?

If a player signed a contract like that, what's to stop the team from cutting him after a cheap 2009 if there's no "dead" money hitting the cap?

This is what I was going to say as well. Why would the player agree to a contract with low starting money and a lack of guaranteed money if he knows he can then be cut to avoid the bulk of his payment?And personally I think there will be a salary cap, even if it comes after a work stoppage. I don't think players will accept the alternative... if they don't reach agreement on a new CBA then players won't become unrestricted free agents until their 6th year. I don't think that's a situation they will be willing to accept compared to the 4 years it takes now to become a UFA.

In my scenario, teams could still spend big and give big bonuses but finagle the cap hit later on with limited downside. For example, let's say a guy is really worth a 4 year, $30 million deal with half up front. Why not give a guy a 7 year deal worth $70 million (on paper) paying the same $15 million up front (when everyone knows he won't play for 7 years or get all the money). Then they could back end the deal, take a minimal hit on the signing bonus, and both sides come out the same in terms of actual payout for this year (even next), but at some point down the road with no salary cap no one would care about the paper trail and how cap hits were accounted for.

I think the short answer to your question is that CBA has provisions that if the CBA is not extended, the salary cap rules change. And those rules don't allow you to do what you are saying. For example:The 30% rule: The CBA, if not extended, imposes a rule on how much a player's salary can increase or decrease from one year to the next. Your non-signing bonus salary cannot change from one year to the next by more than 30% of what you were paid in the final capped year (2009). You can see that part of the CBA here, scroll down to page 133 and look at Section 8: 30% rules.

Just that rule already makes your example impossible. To have a 7 year contract with $55m in salary requires a minimum of a $4.1m 2009 salary, but would pay $24m over the first 4 years of the contract instead of the $15m you wanted to pay. You can try to get fancier, pay $5.4m in 2009 and then pay the min you can in 2010 and 2011 and then start increasing again, but to pay exactly $15m in the first 4 years you can only get those late salaries up to a total of $36m... and they may not be high enough the player will agree to pad on the extra years since some of them are reasonable salaries you might keep him at.

Signing Bonus Proration rule changes

It used to be that teams could prorate signing bonuses over 6 years. With the CBA not having been extended, that drops to 5 years. So even though you're talking about tacking on 3 more years, that really doesn't help you that much in spreading out the cap bonus. It doesn't help any more than making it a 5 year contract would.

Though one thing I'm not clear on is what exactly it means having to prorate a cap bonus into a year if the year is uncapped. I've seen some people on the net say some things about all prorations suddenly hit you in 2009 but that doesn't seem to be the case from what we see in contracts. So I'm guessing here, but I think the NFL is figuring they will get a new CBA and there will be a cap and you don't want to screw yourself by having too much money prorated in the hopes there is no cap when it hits so it doesn't matter. But that's a guess.

I understand what you are saying, but theoretically, if there is no CBA do the rules go out the window or do they keep the existing rules in force until a new CBA is reached? I understand the 30% rule, but is that the default or at some point does that get tossed as well?At this stage, I'm not sure the players or the owners want the salary cap (maybe better stated not "as is"), so the question becomes what happens if the CBA expires (above and beyond the no salary cap issue).

 

[stevegamer]

The "spend it all and spend some more" strategy isn't really working for the NY Yankees, and I certainly don't think its going to work in the NFL. Further, all the NFL teams are working off an equal revenue stream because they share the TV money. This is WAY different than the NY Yankees because the Yankees get to keep all their TV money to themselves. For the most part, all NFL teams are working with the same amount of profitability. I doubt any of the owners are going to start shelling out their own money knowing they aren't going to be seeing a proportional return on their investment.

A few counterpoints...1. Owners have different profitablity based on leases, concessions & the like. While they do share the TV money, if all owners were working on roughly the same profitability, they would all roughly spend the same in total. And they don't do that. Also they have different main revenue streams outside football - look at Tampa Bay's owners with Manchester United.

2. Some owners have gone crazy signing guys in the past, and ended up in cap problems, or close to it. Other owners spend a lot less, and constantly move money to count against future years.

3. Winning means you can increase ticket prices, get more concessions revenue, etc. For a team like the Cardinals, this run helped them a lot. with fanbase. Imagine a team that doesn't sell out suddenly going on a run deep into the playoffs. Home games in the playoffs are basically $$$ in the team's pocket.

I understand there are other smaller revenue streams, but do you have some actual numbers to share? I was under the impression that all the other sources of revenue outside of the TV contracts are peanuts by comparison. Am I off base there?

I don't have any figures, but the unshared revenue is not peanuts. For example, revenue from luxury boxes is not shared. So one goal of any owner is to have lots of luxury boxes in their new stadium, preferably paid for by taxpayers.

I can try and track down numbers, but I'd start by looking at the following quickly - ticket revenue for teams that draw poorly vs well, and where ticket prices are different.Here's an article:

http://www.cleveland.com/browns/index.ssf/...es_soaring.html

Team Marketing Report also measures what it calls a fan cost index, an estimate for what it would cost a family of four to attend an NFL game at each stadium. Included are the total cost for four average-priced tickets, parking, two game programs, two small beers, four pops, four hot dogs and two caps.

The game experience ranged from $596 in New England to $299 in Buffalo. The league average was $396, while the fan cost index in Cleveland was $324.

You can see that teams have quite aleeway in pricing tickets & other things - of course cities may have different deals with percentage of concession revenue, etc., but the fact is that the new stadia are goldmines for these teams.A team in an old facility with few luxury boxes means lower seat prices, and also possibly less attendance. That start to effect the bottom line.

I don't think any of the NFL teams are in anything close to financial trouble, however, there are richer and poorer teams.

 

[GregR_2]

...

I think the short answer to your question is that CBA has provisions that if the CBA is not extended, the salary cap rules change. And those rules don't allow you to do what you are saying. For example:

The 30% rule: The CBA, if not extended, imposes a rule on how much a player's salary can increase or decrease from one year to the next. Your non-signing bonus salary cannot change from one year to the next by more than 30% of what you were paid in the final capped year (2009). You can see that part of the CBA here, scroll down to page 133 and look at Section 8: 30% rules.

Just that rule already makes your example impossible. To have a 7 year contract with $55m in salary requires a minimum of a $4.1m 2009 salary, but would pay $24m over the first 4 years of the contract instead of the $15m you wanted to pay. You can try to get fancier, pay $5.4m in 2009 and then pay the min you can in 2010 and 2011 and then start increasing again, but to pay exactly $15m in the first 4 years you can only get those late salaries up to a total of $36m... and they may not be high enough the player will agree to pad on the extra years since some of them are reasonable salaries you might keep him at.

Signing Bonus Proration rule changes

It used to be that teams could prorate signing bonuses over 6 years. With the CBA not having been extended, that drops to 5 years. So even though you're talking about tacking on 3 more years, that really doesn't help you that much in spreading out the cap bonus. It doesn't help any more than making it a 5 year contract would.

Though one thing I'm not clear on is what exactly it means having to prorate a cap bonus into a year if the year is uncapped. I've seen some people on the net say some things about all prorations suddenly hit you in 2009 but that doesn't seem to be the case from what we see in contracts. So I'm guessing here, but I think the NFL is figuring they will get a new CBA and there will be a cap and you don't want to screw yourself by having too much money prorated in the hopes there is no cap when it hits so it doesn't matter. But that's a guess.

I understand what you are saying, but theoretically, if there is no CBA do the rules go out the window or do they keep the existing rules in force until a new CBA is reached? I understand the 30% rule, but is that the default or at some point does that get tossed as well?At this stage, I'm not sure the players or the owners want the salary cap (maybe better stated not "as is"), so the question becomes what happens if the CBA expires (above and beyond the no salary cap issue).

Here's what I'm seeing just from skimming what look like relevant sections. Granted, I'm not a lawyer and haven't read the whole thing cover to cover. Using link I gave above to pdf of the CBA.Page 240, Duration of the agreement says it lasts through 2012 unless terminated earlier by either the NFLPA or the Management Council (which happened). Under Section 4: Effect of Early Termination on Player Contracts: "Contracts executed or renegotiated after any notice of early termination of this Agreement... shall be governed by the then-existing Salary Cap rules, taking into account the consequences of any such early termination (e.g. the conversion of 2009 to the Final Capped Year and the conversion of 2010 to an Uncapped Year).

I would think this means that the CBA rules would be in effect on any contract, extension, or renegotiation made during the 2009 or 2010 league years. Once we hit 2011, then I don't think that any CBA rules would apply. And that's when things would really get dicey maybe and a lockout or strike occur. But that's just my take on it, haven't seen a good media report on that far into the future.