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To me, one of the most important yet least talked about changes to the Collective Bargaining Agreement that was signed in 2011, is the ability for teams to rollover any unused salary cap from one year to the next.
What this means is that if your favorite team is $5 million under the salary cap, they can notify the NFL that they want to take that amount and add it to the following year’s salary cap. Your most hated team only has $1 million in cap space and chooses to roll it over to the next year. Therefore, your team has $4 million more available to spend next year than your opponent. So you can see the benefits of being frugal already, right?
But let’s talk about why this even happened in the first place. In negotiating the current CBA, both owners and players were looking for compromises that would benefit them the most. This was a compromise that both parties agreed to willingly because it serves a benefit for each.
The players loved the idea because previously any unused cap space would go to waste when the NFL calendar changed seasons. That meant money that could have been paid to the players, wasn’t. The ability for teams to rollover unused cap space meant a more likely chance that the money would actually find the pockets of the players and not just end up as the angel’s share.
For teams, this was a better and easier way to manipulate the salary cap to their liking. Teams don’t HAVE to rollover unused cap space. They can choose to let it disappear at the end of the year if they choose to. This provides front offices with some flexibility. Front offices had the ability to manipulate the team’s cap number in the last CBA, but on a much smaller scale and with a lot more work.
In the old CBA, contract incentives fell under 2 categories: “likely to be earned” (LTBE) or “not likely to be earned” (NLTBE). LTBE incentives counted towards the cap for that season. NLTBE incentives did not count against the cap. However, should a player have a LTBE incentive in his contract that was not reached, then that cap space was “refunded” as an addition to the following year’s salary cap. This is how teams were able to manipulate the cap.
Teams could negotiate LTBE incentives into contracts late in the season that in reality would never be met. For example, with 1 game left in the season, the team would renegotiate with the backup QB (who had played zero snaps thus far) that if he threw 7 touchdowns in that season then he would get a $500,000 incentive. Seven touchdowns over the course of a season is an easy goal, and under the CBA, was considered “likely to be earned.” But as a practical matter, a backup QB with only 1 game left wasn’t going to throw 7 TDs. When the backup QB didn’t reach his incentive trigger, that $500,000 LTBE incentive would then be tacked on to the salary cap the next year. Confusing I know, but it worked.
The current rollover process just involves notifying the league office whether you wish or do not wish to rollover any unused cap space. Simple as that.
There is an unintended consequence to this new cap rollover element of the current CBA. There are far less late season renegotiations of contracts. Under the old CBA, because cap space was “use it or lose it,” teams tried to use it to effectively. In weeks 14-17, teams would really ramp up renegotiation efforts with players they wanted to re-sign. In the renegotiation, the team would add on additional salary to the current year, which used up cap space that would have been lost anyways. The player and agent would agree because it’s more money up front. But now, because teams aren’t losing that cap space, there isn’t any incentive to renegotiate and to pay players up front.
The current rollover situation provides teams flexibility in dealing with players, cash, and in cap space. However, there is one more log to throw in the fire. In 2013, the salary floor will be introduced. Basically, teams will have to spend at least 89% of the unadjusted salary cap number in 2013, and beyond. Remember that word “unadjusted.” It becomes very important in terms of the spending minimum in just a second.
The salary floor or “spending minimum” was introduced to make sure that teams couldn’t be overly frugal; i.e. CHEAP. Towards the end of the previous CBA, the NFL Player’s Association had begun to notice that some teams were taking advantage of all the spending room they had, while other teams (the Bucs are the first team to come to mind) were just fine with spending very little and fielding a non-competitive team.
The introduction of the spending floor is what will make the next few years under the current CBA interesting. The current salary cap is around $120 million. With an 11% differential between the cap and the floor, that means that teams only have about $13.2 million to play around with. I say ONLY $13.2 million because roster shuffling due to injuries and signings make that number a lot smaller than what it really is.
How a front office manages that 11% will likely mean the difference between a dynasty and a dumpster fire. The brightest general managers and salary cap managers will shine.
My first question when I heard about the ability to rollover any unused salary cap was, “Is it compounding?” Meaning, if we rollover $5 million this year and don’t use it next year, can we roll it over again? The answer is yes.
My next question was, “Is there a limit to how much you can rollover?” No, there isn’t. A team can continuously rollover as much as it wants and build up as much of a bankroll as it pleases.
A lot of fans may have a problem with a team being cheap for the first few years of this. But being “cheap” now, will allow them to be rich later. Much richer because the savings basically grow exponentially.
Say the Browns only spent 90% of the $120 million salary cap in 2013, giving them $12 million to rollover. For ease of calculation, let’s say in 2014 and beyond, the NFL keeps the salary cap at $120 million. This is the cap number that all teams are given to work with. That salary cap number is then adjusted to reflect any rollover cap from the previous year.
Remember when I said to remember that word, “unadjusted?” This is where it becomes important.
Even though the Browns were able to add $12 million to their salary cap number, the salary floor is still only 11% of the UNADJUSTED cap number. This means that the Browns have increased their ceiling, but the floor hasn’t moved. The Browns could still lowball and come in at 90% of the 2014 unadjusted cap number (again, $120 million) instead of the cap plus their adjusted $12 million.
Now the Browns have more cap space than anyone else in 2014 because they we so “cheap” in 2013. The first benefit to that is more flexibility because the gap between the floor and the cap is now a lot larger than other teams. The second benefit is that they can grow their cap space exponentially now. They can turn $12 million in 2013 into $24 million in 2014. If their cap usage is still only at 90% of the unadjusted cap, then the Browns will have $36 million EXTRA cap space in 2015.
Being able to spend $36 million more than most teams is quite the competitive advantage, isn’t it? If planned correctly, a team could position itself for a very long run of success simply because it has more resources to work with.
Now, extra spending ability is worth nothing if a team has a poor scouting system and spends that extra money on bad players. So while a team can be great with its money management, it can still be awful on the field.
It’s still necessary to continue thinking this through because if a team doesn’t it could cripple the organization financially for years.
Bank robbers are usually great at devising ways to get into banks. But the stupid ones only plan to get into the vault and don’t consider how they’re going to take that money out of the bank and get it to a safe place. They lack the exit strategy. For teams that consider going this route, I urge them to plan their exit strategy.
Returning to our previous example, if the Browns stack up $36 million in extra cap money they will obviously go spend it on players. Let’s say the Browns sign every major free agent on the market that year and eat up $32 million of that extra cap space in 2015.
So while the Browns are now paying out $152 million in salaries ($120M + $32M they just signed) they only had $4 million to rollover, which means their salary cap is only at $124 million. Oops. Now they have $28 million they have to get rid of. They can’t cut any of the guys they just signed because that will accelerate all the signing bonuses into that year which only exacerbates the problem. Instead, they have to then cut other players they wanted to keep just to get under the salary cap.
It’s important to note here that the league office would likely flag the big free agent contracts and report back to the team that by agreeing to this contract the team would be over the salary cap for next year. The league office almost never rejects these types of deals but will alert teams when they see something of issue. It’s also completely possible it could be overlooked (seen it happen).
This is why it’s so important to understand every word of the collective bargaining agreement, rulebook, etc. A team can make or break its success by knowing the accounting processes of the salary cap, which obviously has nothing to do with schemes, playbooks, or film.
Personally, I don’t think being completely cheap is the way to go. I do think a smart team will be tighter with its money this year and next to allow it some flexibility later on. This especially goes for younger teams that are a couple of years from developing into contenders. Those teams could use extra cap space in a couple of years to really make a run at the Super Bowl.
After crunching a few numbers, making a few educated estimations, and updating some old salary cap data one thing is clear: The Raiders can’t afford Nnamdi Asomugha.
The Raiders may only be able to afford Zach Miller or Michael Huff, and not both.
If the Salary Cap were in place in 2010, the Raiders total salary cap figure would have been $132 million.
As of January 13, the Raiders cap figure for 2011 was $85.8 million. This was prior to new deals for Stanford Routt, Richard Seymour as well as the franchise tender given to Kamerion Wimbley.
Based upon my calculations, the Raiders figure is between $118 million and $130 million for 2011.
The two methods deployed to come up with this range were using the $85.8 and adding the money committed in contracts after January 13. The second was utilizing the contracts page on Rotoworld.com and compensating for any guarantees the player may have.
Obviously both methods are flawed which is why the range is so large. $12 million could be the difference between signing two marquee players instead of one. Assume the higher figure is correct, because it utilizes known data and fewer estimations.
We don’t know what the salary cap will be and any true salary cap analysis and free agent speculation will have to wait until finite numbers are worked out.
What we know: NFL revenue in 2010 was $9.3 billion and is projected to rise 4%. The players share is rumored to be 48% of total revenue. Estimated salary cap 2011: $145 million per team.
If this is correct, the Raiders would have about $15 million to sign rookies and free agents. Approximately $5 million would be reserved for rookies.
That leaves just about $10 million in cap room. That’s just about enough for one or two free agents and filling out the rest of the roster.
Unlike in past seasons, not many Raiders players have huge base salaries that would equal huge cap savings if the player was cut. Teams are always able to move around money and Al Davis has been one of the best at doing it in the past. In this case there isn’t much flexibility.
If Zach Miller and Michael Huff each cut into the cap at around $5 million per year the Raiders would be rubbing right against the cap. This would make it difficult to fill out the rest of the roster with quality players.
Asomugha could count as much as $14 million against the cap. There just isn’t room for Asomugha unless the Raiders reshuffle the deck with trick cards. Even a long-term back-loaded contract isn’t going to equal huge cap savings.
The Raiders set themselves up the best they could, locking down players they wanted and will let the market determine if they can keep Michael Huff and Zach Miller.
As for Asomugha, it isn’t that the Raiders wouldn’t pay him if they could, it’s that they will now be limited by a salary cap that makes it near impossible.
Obviously, things are very fluid with the new collective bargaining agreement and can and likely will change. No guarantee can be made that the Raiders can’t work voodoo magic.
Breaking Down Fargas contract to find the hidden Raiders agenda and what it means for our cap situation going forward.
This means he is going to be paid $5.395 million in bonus money in 2008. Talk about a nice payoff.
2009: This is where it gets interesting. His base in 2009 will be just $2.5 million.
2010: $1.5 in base.
I’ve confirmed Fargas base salaries with the NFLPA. Rotoworld reports all $6 million of the guarantees will be in the first year. I can’t confirm this anywhere else.
This is a clear cut sign that Fargas contract is a three year deal that could be reduced to one or two if need be.
$6 million guaranteed in the first year ($605K of it being base) +$2.5 + 1.5 = $10.605. Where are we getting $12 from? How can he make all his guarantees in the first year and have those base salaries? Likely to be earned incentives could bridge the gap to $12 and unlikely could get the total to $14 I suppose. We don’t know what years the incentives kick in, but you can only make them if you are on the field.
In conclusion, Fargas deal can be cut down to one year or two easily. This ought to be a victory for the Raider fans still hoping for McFadden. The deal also works if we were to want to make Fargas the backup because he wouldn’t likely earn the incentives and wouldn’t likely cost more than his base salaries.
Also could be a large indicator they think Michael Bush is special.
Should be fun to watch either way.
I know defensive line might be our greatest need. From the poll results so far just about everyone is in agreement. However, the Giants may have ultimately screwed us. Here is how. The Super Bowl brought to light what a good defensive line can do for a team. The entire league is now thinking they need a better defensive line, even if they have a solid line to begin with.
Now the market is inflated and I wouldn’t be surprised to see Ellis go much earlier than previously anticipated. Also the price may skyrocket on players like Corey Williams and even our very own Tommy Kelly.
Are we completely screwed? No, because with the 3rd or 4th pick we can pick one of the top three. However, teams will be looking for any help they can get on the line and should we cut Warren, would be there to pick him up.
Here is something few people have mentioned as another hurdle in the race for a DT.
We have Sands and Warren at the position. Look unspectacular? On the field it does. In Al Davis’ wallet it might just have to look better. Sands and Warren combine for $8.5 million cap next season, $9.7 in 2009, and $13 in 2010. Warren’s is almost entirely base salary and could be cut, but being that he has been better than Sands, that doesn’t make any football sense. Cutting Sands would be a huge waste of cash and so we are likely to at least keep him for the next two seasons to get some production. If he doesn’t turn into an absolute stud by 2010, you cut him and his salary increase of $3 mil.
It looks like we are unlikely to cut either player for the reasons mentioned above. Because if that, do yu really want to invest another $5+ million per year to this position? That is a lot of cap for one position. Don’t be surprised if we go another direction if available to us.
For sake of spreading the cap around signing Fargas or drafting a top RB would make more sense.