Questions re: Salary Cap and Performance-based Contracts

[GoWhalers]

As I'm reading about Moss' 1-year contract, which has some considerable incentives in it, I'm confused about how this type of contract works within the salary cap.

If you have players that have performance-based clauses in their contracts, how does that affect their cap figure? If I sign Randy Moss at 3M for one year, with 2M in incentives, is his cap figure different if he achieves those incentives or not? If the number is different, do I have to allow room in my salary cap in case he does achieve those incentives?

 

[hughthehand]

Performance Based Clauses are categorized into two different types, Likely To Be Earned(LTBE), and Not likely To Be Earned(NLTBE).

If Incentives are LTBE they are counted towards this years Cap #. If they are NLTBE, they are not counted in this years Cap.

If LTBE Incentive is reached, no changes are made.
If LTBE Incentive is not reached, the amount of the Cap used is refunded for next season.

IF NLTBE Incentive is reached, it is deducted from Next Years cap.
If NLTBE Incentive is not reached, there is no change made.

This is my understanding of it. All comments and input welcome.

 

[GoWhalers]

Thanks Hugh! Very interesting.

Do you know who makes the determination between likely and not likely?

 

[PatsFanInVa]

Good summing up Hugh (to my own primitive understanding, anyway.) This is where Miguel comes in... everytime I say something on the subject, not having read the CBA, I get it wrong.

I do know that in the past, teams have called something really difficult to attain "Likely to be earned". What happened then -- according to my own imperfect understanding -- is that the team would essentially get to say "oh look! That running back surprisingly did not rush for 1500 yards, which we thought he was likely to do! Why, that means we have 500K we never spent!" And the 500K against the cap would become available the next season. (The incentive can be anything, but this "loophole" seems to have been exercised by virtue of the team and the player signing a contract designating the incentive as LTBE.) Teams "pushed" money into the following season via this loophole.

Incentives can be anything from those yardage plateaux to playing time, to pro bowl selections and playoff/super bowl appearances. Whatever you want to write in the contract and both sides agree to. You could have an incentive based on how many times you fart on the sidelines, if both sides agree to it, and if it's not somehow, well, wrong (for example, building in breaking and enterings would not be a valid contract.)

Okay, now:
1) I don't know that I have the LTBE "loophole" right (Capologists?)
2) I don't know if the most recent extension of the CBA changes this, assuming my description bears any resemblance to the fact.

So, here's a buncha maybe information awaiting confirmation!

PFnV

 

[ctpatsfan77]

Good summing up Hugh (to my own primitive understanding, anyway.) This is where Miguel comes in... everytime I say something on the subject, not having read the CBA, I get it wrong.

I do know that in the past, teams have called something really difficult to attain "Likely to be earned".

Actually, IIRC, the rule is a relatively simple one:

If a particular incentive was reached the previous season, it's LTBE. If it wasn't, it's NLTBE.

So, for example, if Tom had an incentive for throwing at least 16 TD passes, it'd be considered LTBE, as would an incentive for Brett Favre if he throws at least 16 INTs.

 

[PatsFanInVa]

Actually, IIRC, the rule is a relatively simple one:

If a particular incentive was reached the previous season, it's LTBE. If it wasn't, it's NLTBE.

So, for example, if Tom had an incentive for throwing at least 16 TD passes, it'd be considered LTBE, as would an incentive for Brett Favre if he throws at least 16 INTs.

Ohhhhh gotcha. So if, for instance, 3 guys all have heavily incentivized receiver contracts, based on playing in a spread offense, you'd be likely to have some likely to be earned incentives which are unlikely (based on the previous-year rule).

I don't know for sure that you can say that on the Pats' team, taking incentives in the narrow sense to mean situations akin to Moss'.... but I'll look at M's page on contract details after work today. It might be enlightening. But then again given last season, almost all Moss' incentives would be unlikely to be earned.

PFnV

 

[Isaac]

One other point, after some deadline within the season, all incentives in new or renegotiated contracts are classified as LTBE. This is the loophole that allows team to push money forward. So, for example, when Koppen renegotiated they included a sizable incentive for catching like 3 INTs or something, which counted against the 2006 cap as a LTBE. He didn't, thus they got a credit on the 2007 cap.