An uncapped year discussion

[signbabybrady]

I was always under the idea that the uncapped year and its restrictions were put in place to force the Owners and the PA to get a deal done. Meaning the restrictions were bad for both sides so they would both be willing to negotiate.

Many on here have been going by the assumption next year will be uncapped and are trying to use the uncapped year to spend Krafts money in ways we don't know he would.(like paying off all of Wilforks bonus in 2010 so its off the books for future years)

I think it is a bad assumption by many to think next year will be uncapped and I think it is even worse to think Kraft will spend a ridiculous amount of money in the uncapped world....He might spend more than most but I can't see him spending much more than he usually does.

Also dont forget it is a labor issue so barring a renegotiating of the CBA we are likely looking at bad things (lockout or strike) not good things (uncapped spending spree).

 

[AzPatsFan]

You are under a misapprehension. Signing a key player like Sey or Wilfork wil incur an enormous cost in real money, in year one for the "Signing Bonus" or a huge "Roster Bonus/Salary".

The sums of money are the same in an uncapped year. The only difference is the accounting. In one case its amortized/depreciated, in the same year, (roster bonus/salary); in the other case its amortized/depreciated over several years, (singing bonus). Most business prefer rapid depreciation schedules, and actually a single year depreciation.

It behooves the Pats to change the way the contract refers to the sum of money if they believe that a CAP will return or not. It changes not a wit, the actual outgo.

 

[NEGoldenAge]

I was always under the idea that the uncapped year and its restrictions were put in place to force the Owners and the PA to get a deal done. Meaning the restrictions were bad for both sides so they would both be willing to negotiate.

Many on here have been going by the assumption next year will be uncapped and are trying to use the uncapped year to spend Krafts money in ways we don't know he would.(like paying off all of Wilforks bonus in 2010 so its off the books for future years)

I think it is a bad assumption by many to think next year will be uncapped and I think it is even worse to think Kraft will spend a ridiculous amount of money in the uncapped world....He might spend more than most but I can't see him spending much more than he usually does.

Also dont forget it is a labor issue so barring a renegotiating of the CBA we are likely looking at bad things (lockout or strike) not good things (uncapped spending spree).

I think a salary cap is necessary in all professional sports. Even one single uncapped year will let a lot of teams get out of a mess that they got themselves into... The Jests are a perfect example.

I'll be pissed if we get an uncapped year, but I think, with the passing of Mr. Upshaw, that an uncapped year is what we will see. I don't believe they have replaced him yet.

 

[Brettlax3434]

I think a salary cap is necessary in all professional sports. Even one single uncapped year will let a lot of teams get out of a mess that they got themselves into... The Jests are a perfect example.

I'll be pissed if we get an uncapped year, but I think, with the passing of Mr. Upshaw, that an uncapped year is what we will see. I don't believe they have replaced him yet.

wouldn't Upshaw want an uncapped year?

 

[NEGoldenAge]

wouldn't Upshaw want an uncapped year?

I don't know. But I do know that negotiations won't be happening until he is replaced.

 

[signbabybrady]

wouldn't Upshaw want an uncapped year?

There are restrictions to the players in an uncapped world....there would be tons of players in the 3rd-6th years that wont be happy to be restricted instead of unrestricted for example.

You are under a misapprehension. Signing a key player like Sey or Wilfork wil incur an enormous cost in real money, in year one for the "Signing Bonus" or a huge "Roster Bonus/Salary".

The sums of money are the same in an uncapped year. The only difference is the accounting. In one case its amortized/depreciated, in the same year, (roster bonus/salary); in the other case its amortized/depreciated over several years, (singing bonus). Most business prefer rapid depreciation schedules, and actually a single year depreciation.

It behooves the Pats to change the way the contract refers to the sum of money if they believe that a CAP will return or not. It changes not a wit, the actual outgo.

Oh I understand what your saying but you are the one with misapprehension....the reason for doing this would be to pay him all at once to free up money for the cap in later years so at some point you will be spending money that you don't know Kraft would want too....it winds up more than just creative accounting to take advantage of it....And don't get me wrong I think Kraft would have the Pats take advantage to some extent but he isnt going to go all stienbrenner....and as a football fan I would rather see labor peace than an uncapped year.

 

[Deus Irae]

Well, I haven't done a lot of research on this because I figure it's not worth the time, but I would imagine that smart, wealthy teams would try to front-load contracts if at all possible. That would price out the Green Bays of the world and lessen the cap hit in future years when the CBA finally does get negotiated.

 

[spacecrime]

I was always under the idea that the uncapped year and its restrictions were put in place to force the Owners and the PA to get a deal done. Meaning the restrictions were bad for both sides so they would both be willing to negotiate.

But neither side wants to negotiate.

I think it is a bad assumption by many to think next year will be uncapped.

How do youk figure there will be a CBA if neither side is interested in talking about one, let alone hammer one out and sign it?

Also, you mention that Kraft will not spend a lot of money. Why do you say that? He is one of the teams that has the capital to do so if he wants to. He seems like a guy who enjoys winning superbowls. You think he will cheap out, save a few million and not be a world chmapion? By being world champ, he has increased the value of his team. It would be good business to win more superbowls. Saving a few million may be necessary for Ralph Wilson and Irsay to survive, but it is penny wise and pound foolish for Kraft, Snyder, Jones, Allen, and the rich owners. None of whom got to where they are by being pound foolish.

Also dont forget it is a labor issue so barring a renegotiating of the CBA we are likely looking at bad things (lockout or strike) not good things

You are looking at it from your viewpoint, not the viewpoint of the principals. If the players want to go on strike, it is not a bad thing in their mind. To them it is what they want to do. Ditto a lockout. If they owners think it is in their best interests, they will lock out the players.

I hope it doesn't come to that, but it may.

 

[signbabybrady]

But neither side wants to negotiate.

How do youk figure there will be a CBA if neither side is interested in talking about one, let alone hammer one out and sign it?

I heard the PA will vote on a new leader this weekend. Also there has to be some posturing there... no side wants to blink but at some point they will be back at the table (may not work out but they will negotiate more). And as I said the uncapped world and its restrictions were put in place to make both sides want to avoid it.

Also, you mention that Kraft will not spend a lot of money. Why do you say that? He is one of the teams that has the capital to do so if he wants to. He seems like a guy who enjoys winning superbowls. You think he will cheap out, save a few million and not be a world chmapion? By being world champ, he has increased the value of his team. It would be good business to win more superbowls. Saving a few million may be necessary for Ralph Wilson and Irsay to survive, but it is penny wise and pound foolish for Kraft, Snyder, Jones, Allen, and the rich owners. None of whom got to where they are by being pound foolish.

I am not trying to say Kraft wont be smart about and he may open up his wallet but I think a lot on here have presumed alot about how they might work deals with guys like Wilfork, Mankins, Seymour, and the other FA next year with Krafts money assuming he will just throw it around like crazy paying all these guys in an uncapped year to free up ridiculous sums.

You are looking at it from your viewpoint, not the viewpoint of the principals. If the players want to go on strike, it is not a bad thing in their mind. To them it is what they want to do. Ditto a lockout. If they owners think it is in their best interests, they will lock out the players.

I hope it doesn't come to that, but it may.

No, any work stoppage is bad from both sides because no one is making money but sometimes either side feels its the only way to get what they feel they deserve. If they dont come to an agreement and an uncapped year comes there will be players and owners who get screwed and watch other players and owners take advantage of it and it could be real ugly. I hope they take care of things and don't let it get there.

 

[solman]

1. There will be no strike or lockout in 2010. The CBA prohibits it. Players could probably get around this by decertifying the union but they won't because:
A) The union has always maintained that no cap would be good for the players
B) An uncapped year is unquestionably better than a labor stoppage for the players and
C) They would look like the bad guys, and they can ill-afford to alienate the public.

2. You are absolutely right about Kraft be restrained in his 2010 spending. Kraft is a leader amongst the owners. He will be under pressure to set a good example by not overspending. He is also a businessman first. It is not at all clear that going Dan Snyder in 2010 would be a good investment.

3. I don't agree with the assertion that the uncapped year is intended never to happen. An uncapped year gives both sides the opportunity to observe just how large the actual difference is between player salaries in a capped and an uncapped world. If the two sides are unable to reach an agreement, observing the uncapped world will at least allow them to better agree on the financial consequences of the cap.

4. I absolutely think we are heading into an uncapped year. The owners NEED to recover some of the revenues that they gave to the players. The financial consequences of an actual labor stoppage are very asymmetric. They owners will be looking to reduce the player's share by about 2%. This represents between 10 and 20% of the owner's profits, but just 2% of the player's take home pay. The new union leadership can't afford to look weak, and they will have difficulty accepting such a reduction unless they are on the very precipice of a work stoppage.

5. In my opinion, an uncapped 2010 in which player salaries increase by very little is likely to be a decisive factor in convincing them to accept a haircut (But I still expect them to push things to the last minute or even further before agreeing to a deal.)

 

[solman]

Well, I haven't done a lot of research on this because I figure it's not worth the time, but I would imagine that smart, wealthy teams would try to front-load contracts if at all possible. That would price out the Green Bays of the world and lessen the cap hit in future years when the CBA finally does get negotiated.

There are serious drawbacks to signing a long term deal with a huge portion of the money guaranteed up front. Many players have serious character and motivation issues. You would never see a team give a Terrel Owens or an Albert Haynesworth a huge chunk of money up front because of the strong likelihood that they will misbehave and/or underperform after pocketing the up front money.

:confused3:

OK, you would never see an intelligently managed team do something like that.

 

[NEGoldenAge]

1. There will be no strike or lockout in 2010. The CBA prohibits it. Players could probably get around this by decertifying the union but they won't because:
A) The union has always maintained that no cap would be good for the players
B) An uncapped year is unquestionably better than a labor stoppage for the players and
C) They would look like the bad guys, and they can ill-afford to alienate the public.

2. You are absolutely right about Kraft be restrained in his 2010 spending. Kraft is a leader amongst the owners. He will be under pressure to set a good example by not overspending. He is also a businessman first. It is not at all clear that going Dan Snyder in 2010 would be a good investment.

3. I don't agree with the assertion that the uncapped year is intended never to happen. An uncapped year gives both sides the opportunity to observe just how large the actual difference is between player salaries in a capped and an uncapped world. If the two sides are unable to reach an agreement, observing the uncapped world will at least allow them to better agree on the financial consequences of the cap.

4. I absolutely think we are heading into an uncapped year. The owners NEED to recover some of the revenues that they gave to the players. The financial consequences of an actual labor stoppage are very asymmetric. They owners will be looking to reduce the player's share by about 2%. This represents between 10 and 20% of the owner's profits, but just 2% of the player's take home pay. The new union leadership can't afford to look weak, and they will have difficulty accepting such a reduction unless they are on the very precipice of a work stoppage.

5. In my opinion, an uncapped 2010 in which player salaries increase by very little is likely to be a decisive factor in convincing them to accept a haircut (But I still expect them to push things to the last minute or even further before agreeing to a deal.)

To me, this is a very convincing argument, but I'd rank below a novice at this sort of thing. Do you come from a finance, law or labor background? Where do you get your information?

 

[solman]

To me, this is a very convincing argument, but I'd rank below a novice at this sort of thing. Do you come from a finance, law or labor background? Where do you get your information?

Finance. Which part of the information?

 

[NEGoldenAge]

Finance. Which part of the information?

I was refering to the intent you implied about an uncapped, and also the specifics about what the owners are looking for. Basically, all the information provided that does not come directly from your finance knowledge, or the opinions expressed.

 

[NEGoldenAge]

I'm just hoping to educate myself a bit.... errr, with some of your help Thanks!

 

[upstater1]

You are under a misapprehension. Signing a key player like Sey or Wilfork wil incur an enormous cost in real money, in year one for the "Signing Bonus" or a huge "Roster Bonus/Salary".

The sums of money are the same in an uncapped year. The only difference is the accounting. In one case its amortized/depreciated, in the same year, (roster bonus/salary); in the other case its amortized/depreciated over several years, (singing bonus). Most business prefer rapid depreciation schedules, and actually a single year depreciation.

It behooves the Pats to change the way the contract refers to the sum of money if they believe that a CAP will return or not. It changes not a wit, the actual outgo.

+1

Exactly, this is how it works. Wilfork already has a number that he expects up front.

 

[upstater1]

There are serious drawbacks to signing a long term deal with a huge portion of the money guaranteed up front. Many players have serious character and motivation issues. You would never see a team give a Terrel Owens or an Albert Haynesworth a huge chunk of money up front because of the strong likelihood that they will misbehave and/or underperform after pocketing the up front money.

:confused3:

OK, you would never see an intelligently managed team do something like that.

Huh? Have you seen Albert Haynesworth's guarantees?

The only real question here is, how big is the signing bonus?

You ALWAYS have signing bonuses. The key is, what if you get the bonus to count for the first year?

 

[solman]

I was refering to the intent you implied about an uncapped, and also the specifics about what the owners are looking for. Basically, all the information provided that does not come directly from your finance knowledge, or the opinions expressed.

Intent is a difficult thing to reason about.

Gene Upshaw's threats prior to the last CBA (If we have an uncapped year, the cap is never coming back) suggest that in his mind a single uncapped year was not nearly as serious a threat as a future without caps.

I don't think there can be any doubt that the players union would prefer an uncapped year. They have long believed that removing the salary cap and salary minimum would substantially increase player compensation. Until this most recent CBA, that was almost certainly true.

But the salary cap has gone up almost 50% ($85.5M to $127M) in four years, the economy is weak, and many teams are either losing money or substantially break even ventures.


Ultimately, I don't really believe that intent matters much here. This is an economic argument between two parties who both have to agree or suffer greatly. A small negative change for one party can produce a huge positive change for the other party.

I'd guesstimate [source: my ass] that the median locked out player will lose over 25% of his career NFL earnings over the course of one lost season, but lose slightly more than 1% of his career NFL earnings by agreeing to what will likely be the owners' final offer. Compromises between rich and poor players, and the influence of agents will likely make the union negotiate as if they stand to lose around 13% of career NFL earnings from a locked out season and 1.5% from agreeing to the owners' demands [same source].

It is hard to predict what a lost season will do to franchise value, but a very modest reduction in the players' share will have a substantial positive impact on the owners' profitability and on franchise value. I think the owners have to be willing to risk a lockout to get this done.

 

[upstater1]

Let's give an example of how one take ADVANTAGE of an uncapped year. There seems to be some perception here that some are advocating that Kraft go wild in free agency by spending obscene amounts. Instead, we are counseling some creative accounting.

Mankins, Seymour, Wilfork are the big 3 for next year, with Mankins being less of a priority because of his position.

Let's just assume, for simplicity sake, that Wilfork will agree to a contract of $10 million per year for 4 years, but he wants half up front.

Normally, that would mean $5 million in bonus + salary counted against the cap each and every year, with the salary not rising more than 30%.

Now, if you're signing contracts in an uncapped year, you can guarantee the bonus as salary. This is what Wilfork's deal might look like.

He wants $20 million in the first year, right? So...

Year 1: $15 million salary + $5 million signing bonus
Year 2: $5.7 million salary
Year 3: $6.7 million salary
Year 4: $7.7 million salary

Cap impact:

Year 1: uncapped
Year 2: $7.4 million
Year 3: $8.4 million
Year 4: $9.4 million

You've essentially saved yourself $10 million of cap space in later years.

 

[solman]

Huh? Have you seen Albert Haynesworth's guarantees?

The only real question here is, how big is the signing bonus?

You ALWAYS have signing bonuses. The key is, what if you get the bonus to count for the first year?

The confused smiley was supposed to indicate my impression of Haynesworth's contract.

But its still a valuable point. Guaranteed or upfront money can prove disastrous if the player fails to perform. Dan Snyder is a moron for signing the Haynesworth deal. The risks of him going to jail (from one of his many automotive escapades); getting injured (on the field or off); getting kicked out of the league (for conduct on or off it); or just plain slacking off (Because he has little financial incentive moving forward) are enormous. Add to that the ever present possibility that his skills diminish, and signing this deal was flat out unintelligent.

Many owners, Kraft included, are not going to give huge upfront money to the many players who can't be trusted to live up to it.