Who really understands the salary cap?

[Bronco Billy]

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?

 

 

The CBA absolutely addresses this. It is also standard operating procedure in the NFL. Teams quite often "backload" contracts with both the team & the player knowing the team has little to no intention of paying the higher end salaried years at the end of the contract. NFL teams have a right to cut players at any time, which cancels the salaried portion of the contract and any legal obligations the team has to pay them. Sound really unfair to the player & a way to circumvent the cap and screw the rest of the league?

 

Think again.

 

Players understand this, so they negotiate (or at least their agents do) large signing bonuses to be paid before the player ever plays a down for the team. This is money that the players gets just for signing the contract - nothing more - and can not be recovered by the team in the future unless the players acts in bad faith (for instance, if in the past the palyer refused to play in a future year because he wants to be paid more - a "hold out". That was negated by the NFLPA in the latest extension, but a player still can lose signing bonus to insubordination or conduct detrimental to the team per CBA language). So if a team cuts that player, the remaing portion of that bonus immediately accelerates against the coming year's cap. For instance, if a players signed a contract that was an agreement for him to play for a team for 5 years, and his salary structure was the following:

 

Year 1 $500,000

Year 2 $750,000

Year 3 $1,000,000

Year 4 $5,000,000

Year 5 $6,000,000

 

and that contract also had a $10M signing bonus, the cap hit for each year from the player would be the following:

 

Year 1 $500,000 + $10,000,000/5 yrs = $2,500,000

Year 2 $750,000 + $10,000,000/5 yrs = $2,750,000

Year 3 $1,000,000 + $10,000,000/5 yrs = $3,000,000

Year 4 $5,000,000 + $10,000,000/5 yrs = $7,000,000

Year 5 $6,000,000 + $10,000,000/5 yrs = $8,000,000

 

Now, the team & the player both know that the team will most probably cut the player after the 3rd year, since there is such a huge jump between what his cap number is between year 3 & year 4. It may not happen, mind you, if the player turns out to be so valuable that the team is willing to take the $7,000,000 cap hit in year 4, but chances are that the team is actually negotiating a 3 year contract with the player and is paying $10M up front for that.

 

So let's say the team does cut the players after year 3. That means his salary cap number for year 4 and year 5 accelerates forward and the $4M from the divided cap number is charged against year 4 (assuming he is cut on June 1st or after - which is the new financial year for the team and why June 1st is such an important date in the NFL calander - if he were cut earlier, the $4M would accelerate against year 3). However, while the cap number of $4M accelarates forward, the team actually saves $3M, because if the team didn't cut him, they would have to pay him $7M for year 4 by contract. That's why you hear talk about saving money against the cap when a player is cut.

 

So the player knows & accepts $10M for what in reality a 5 year contract but is in essence a 3 year contract, meaning he knows his signing bonus actually works out to $3.33M/year instead of $2M/year, at which point he can shop himself again to the highest bidder (and if he isn't cut, he knows he'll be paid $7M in year 4 - which is a win-win for him), and the team complies with the cap while minimizing the player's cap number in the early years of his contract - which is also a win-win for the team. And all of this is well within the CBA and within cap language and parameters. In fact, if teams do not play this way, they are getting screwed - but by their own stupidity, not by other teams in the league.

 

Now, this is really a very simple example and does not account for higher cap numbers in future years that may cause the player to think he is underpaid in year 3 or the team to be able to easily afford him in year 4, and it also doesn't address obtainable incentives and such. It also doesn't address financial concepts such as the time value of money, which makes the signing bonus worth more than what is actually paid up front over the course of the contract, but it does show how both sides benefit with this type of relationship.

Edited January 24, 2007 by Bronco Billy

[rbmcdonald]

New England

[Ursa Majoris]

Do I really have to re-hash the details again about how each of the two years in question were not the Vikings fault?

 

Go ahead.....this should be good. I'm a fan of half-assed excuses.

[fitzkek]

That is because when they read the rules on their computers, there is no glare from any Lombardi trophies to obstruct their view.

 

Damn you!!!

[Muggsy]

Muggsy and other "yes" voters,

 

Have the actual rules changed in recent years or just the overall cap number?

 

 

The number changes yearly but the rules of the cap can only be changed when a new CBA is negotiated

[Bronco Billy]

The number changes yearly but the rules of the cap can only be changed when a new CBA is negotiated

 

 

Agreed. The only change in the CBA extension just signed that I know of other than the percentage of gross revenues dedicated to the players (which bumped up the cap number substantially) is the one I alluded to earlier regarding a team's ability to recover portions of a signing bonus for a hold out, which teams can't recover any longer.

[Ziachild007]

Did that answer your question?

 

 

Pretty much.