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Who really understands the salary cap?


MojoMan
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Do you understand the NFL salary cap rules?  

45 members have voted

  1. 1. Do you?

    • Yes
      14
    • No
      15
    • Sorta (elaborate if you will)
      16


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I have a basic understanding of the idea. The parts where I get confused is when signing, performance, and other types of bonuses come into play as well as when a player gets traded or released, how that impacts the overall cap.

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Dan Snyder knows how to use loop holes in it.

 

 

See, you don't understand it.

 

There are no loop holes. Snyder doesn't use loop holes, he just pays players more money than other teams are willing.

 

It's very simple. A 7th grader with good grades in math could understand it.

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You should see the recalc/salary cap spreadsheet I have to put together each year for Cowboys & Indians :D

 

- Dynasty ten team league, rosters of 24 players

- Auction style with a salary cap, salary cap compliance required by July 31.

- Players are assigned contracts between 1 and 5 years when they are acquired (either through the auction or in free agency)

- Signing bonuses are required for each year you give a player beyond his first year and increase the longer term the contract (5% of the winning bid price per year after the first)

- Signing bonuses can be deferred (but don't have to be) so that they are NOT paid in the first year, but spread evenly across all the years but the first year

- Owners that cut players cut with outstanding deferred bonus amount are penalizes 150% of the remaining bonus amount against their current year salary cap

- Signing bonuses can be accelerated in the offseason, but any player that has his signing bonus accelerated must be retained through the first week of the season

- Salaries are recalculated each year with a formula based on their previous year's performance and their previous year's salary. The better a player performs within his position the higher his recalculation factor is and the higher his salary is the next year.

- Owners can extend any player in the final year of their contract for up to another 5 years. However, in this case the signing bonus is 10% per year after the first (instead of 5%). A 1 year extension is simply that player's fantasy performance the previous year * the recalculation factor.

 

That is quite a bit to keep up with ... but it has to be simplistic compared to the NFL's salary cap policies and procedures.

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You should see the recalc/salary cap spreadsheet I have to put together each year for Cowboys & Indians :D

 

- Dynasty ten team league, rosters of 24 players

- Auction style with a salary cap, salary cap compliance required by July 31.

- Players are assigned contracts between 1 and 5 years when they are acquired (either through the auction or in free agency)

- Signing bonuses are required for each year you give a player beyond his first year and increase the longer term the contract (5% of the winning bid price per year after the first)

- Signing bonuses can be deferred (but don't have to be) so that they are NOT paid in the first year, but spread evenly across all the years but the first year

- Owners that cut players cut with outstanding deferred bonus amount are penalizes 150% of the remaining bonus amount against their current year salary cap

- Signing bonuses can be accelerated in the offseason, but any player that has his signing bonus accelerated must be retained through the first week of the season

- Salaries are recalculated each year with a formula based on their previous year's performance and their previous year's salary. The better a player performs within his position the higher his recalculation factor is and the higher his salary is the next year.

- Owners can extend any player in the final year of their contract for up to another 5 years. However, in this case the signing bonus is 10% per year after the first (instead of 5%). A 1 year extension is simply that player's fantasy performance the previous year * the recalculation factor.

 

That is quite a bit to keep up with ... but it has to be simplistic compared to the NFL's salary cap policies and procedures.

 

 

That's its. Those are all the rules you have? I thought it would be more complicated than that!!! :D:bash::clap:

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I like to think I know the cap very well. I was a Sports Mngmt. Major in college with and emphasis on finance, at that time the goal was to be a "capologist" in the NFL.

 

 

That's pretty cool ... what are you doing now?

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I don't.

 

Was able to find a pretty informative article:

 

 

 

"How does the NFL's salary cap work?

 

 

In 1994, the owners' and players' associations of the National Football League approved a new collective-bargaining agreement. This agreement included a salary cap designed to keep player salaries from increasing at the rate they were at the time. The salary cap is essentially a set amount of money that each of the NFL's 31 teams is allowed to spend on player salaries for any given year. For the upcoming 2001 season, that amount is approximately $67.4-million, or 63% of the League's defined gross revenues (DGR) from last year divided by the 31 NFL teams.

At first glance, that amount of money may seem a lot. When you factor in an average of 57 players on an NFL roster during the season, that amounts to a salary of around $1.18-million per player. Again, a lot of money -- however, each team usually has a few big-money players, like a star quarterback or running back. Let's suppose a team has two star players, each with a salary of $8-million per year. This cuts the cap room to $51.4-million for 55 players, cutting the average salary of the remaining players by $245,000 each.

 

Because salaries have continued to grow at a rate outpacing the salary cap, teams have found ways to circumvent the cap. Signing bonuses don't count toward a team's cap for a given year. A player who receives a signing bonus gets more money for that year than his recorded "salary," leaving more room in the cap for the other players.

 

Say, for example, a player wants a seven-year, $60-million contract. Let's say that the owner decides to give that player an $11-million signing bonus, which is all paid out in the first year but gets factored into the cap as prorated over the course of the seven-year contract ($11-million / 7 years = $1.57-million per year). Most NFL contracts are "back-ended" -- most of the base salary is located in the last two or three years of the contract. If we suppose that our player's contract is structured so that he has a base salary of $2-million the first year, with higher base salaries in the final two years of the contract, the $13-million (base salary + signing bonus) paid out in the first year appears as $3.57-million to the cap! The advantage of signing bonuses for the owner is that he now has more money to spend under the cap. This is how the Washington Redskins ran up a total payroll of $92.41-million in the 2000 season when the cap was $67-million. The advantage for the player is that all signing-bonus money is guaranteed to be paid, whereas an NFL contract is not guaranteed.

 

There are drawbacks to signing bonuses for the owner, however. Because the bonus is guaranteed to the player, if the player is released, traded or waived, all of the bonus money that was being prorated throughout the length of the contract is accelerated to the present year. So, if our team released its star player after the third year of his contract (before June 1) for whatever reason, the entire remainder of the bonus, almost $6.3-million, will have to count toward the cap the next year (if the team releases the player after June 1, only the yearly $1.57-million will count the next year, and the remainder will count the subsequent year).

 

Some teams have gotten themselves in trouble using signing bonuses, running up huge portions of cap room taken up by players who haven't played for them in several years. With so much less money to spend than their rival teams, they have little chance of fielding a very competitive team for that year, as the best free agents usually go where the money is."

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You should see the recalc/salary cap spreadsheet I have to put together each year for Cowboys & Indians :D

 

- Dynasty ten team league, rosters of 24 players

- Auction style with a salary cap, salary cap compliance required by July 31.

- Players are assigned contracts between 1 and 5 years when they are acquired (either through the auction or in free agency)

- Signing bonuses are required for each year you give a player beyond his first year and increase the longer term the contract (5% of the winning bid price per year after the first)

- Signing bonuses can be deferred (but don't have to be) so that they are NOT paid in the first year, but spread evenly across all the years but the first year

- Owners that cut players cut with outstanding deferred bonus amount are penalizes 150% of the remaining bonus amount against their current year salary cap

- Signing bonuses can be accelerated in the offseason, but any player that has his signing bonus accelerated must be retained through the first week of the season

- Salaries are recalculated each year with a formula based on their previous year's performance and their previous year's salary. The better a player performs within his position the higher his recalculation factor is and the higher his salary is the next year.

- Owners can extend any player in the final year of their contract for up to another 5 years. However, in this case the signing bonus is 10% per year after the first (instead of 5%). A 1 year extension is simply that player's fantasy performance the previous year * the recalculation factor.

 

That is quite a bit to keep up with ... but it has to be simplistic compared to the NFL's salary cap policies and procedures.

 

 

Sounds a lot like GMX, only more complicated. :D The only reason we elected not to use the signing bonuses like you guys do is to keep people from backloading the bonuses, and then leaving the league. Have you guys seen any problems with that?

 

Oh and I have a decent understanding of the cap.

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See, you don't understand it.

 

There are no loop holes. Snyder doesn't use loop holes, he just pays players more money than other teams are willing.

 

It's very simple. A 7th grader with good grades in math could understand it.

 

 

 

No he supercedes the rules by deferring money so he actually pays more per year than is allowed. Then when the cap hit comes due he re-writes the contract so he can get away with going was over the cap number.

 

To me that's a loophole(a way to avoid adherring to the rule). The name I use may be wrong but when you have a cap of $100 million and one team pays out $150 million that and says they are under the cap that's a loophole.

 

"NFL teams can get away with big spending in the short term. For instance, of the $45.5 million the Redskins have spent on new signing bonuses this year, only $7.6 million is being charged against the 2004 salary cap of $80.6 million. They spent $20 million in signing bonuses on two free agents a year ago and were charged only $3 million against the 2003 cap.

 

So where did the $37.9 million in 2004 and the $17 million in 2003 that wasn't charged against their cap go? It went into future years, deferred through the proration of signing bonuses."

 

Later they re-write the contracts.

Edited by Randall
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Sounds a lot like GMX, only more complicated. :D The only reason we elected not to use the signing bonuses like you guys do is to keep people from backloading the bonuses, and then leaving the league. Have you guys seen any problems with that?

 

Oh and I have a decent understanding of the cap.

 

 

The league is going into its 3rd year. We have to replace 2 owners this year, salary cap is $500.

 

One owner $31.8 in unpaid bonuses, which equates to $12.5 per year. This team is currently under next year's cap by $154.60 (prior to any player cuts). This team has quite a few players with 4 years left on their contracts. Almost all of his signing bonus money is tied to McGahee ($18).

 

The other owner has $22.5 in unpaid bonuses, which equates to $$15.7 per year. This team is currently over next year's cap by $26.10 (prior to any player cuts). Obviously in 2007 this team will pay down most of its outstanding bonuses. This team only has a couple players with more than 3 years left on their contracts (only 2) as his strategy was to pay more for short term contracts and to defer his bonuses. The biggest chunk of signing bonus money is tied to Torry Holt ($7.6).

 

Unpaid signing bonuses due range from $8 (me) to $38.4 (Muck) with the average being almost $20.

 

Did that answer your question?

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"NFL teams can get away with big spending in the short term. For instance, of the $45.5 million the Redskins have spent on new signing bonuses this year, only $7.6 million is being charged against the 2004 salary cap of $80.6 million. They spent $20 million in signing bonuses on two free agents a year ago and were charged only $3 million against the 2003 cap.

 

So where did the $37.9 million in 2004 and the $17 million in 2003 that wasn't charged against their cap go? It went into future years, deferred through the proration of signing bonuses."

 

 

 

That is not superceding the cap, and that is writing contracts to fit exactly the way the cap works in the NFL.

 

If a team spent $20M in signing bonuses on 2 FAs and were only charged $3M against the 2003 cap for those bonuses, it means that the lengths of the contracts were such that the $20M was divided out by enough years that the average was $3M per year. For example, one of the 2 players may have signed a 7 year contract with a $14M signing bonus, meaning that $14M/7 yrs = $2M per year is charged against the cap. That would mean the other of the 2 players could have signed a 6 year contract with a $6M signing bonus, making his cap hit for the signing bonus $6M/6 yrs = $1M per year. So what you have is a total of $14M + $6M = $20M in signing bonuses, but you at the same time have a $2M/yr + $1M/yr = $3M/yr cap hit for 2003.

 

That not only does not supercede the salary cap, but is complete accordance with the Collective Bargaining Agreement (CBA) between the NFL Players Association (NFLPA) and the league. If the contract is renegotiated in later years, it will have to include the portion of the signing bonuses not yet paid to that point as well as the new agreement.

Edited by Bronco Billy
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That is not superceding the cap, and that is writing contracts to fit exactly the way the cap works in the NFL.

 

 

That not only does not supercede the salary cap, but is complete accordance with the Collective Bargaining Agreement (CBA) between the NFL Players Association (NFLPA) and the league.

 

 

 

That's the argument but teams do this never intending to fulfill the contract. That to me is a loophole and the FFL lets them get away with it.

 

Where in the Collective Bargaining agreement does it say that's OK?

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