Salary cap for 2008 looking rosey

[solman]

Alternatively, if Asante resigns he may get a lot of his money hitting the cap the first year. That would eat up the excess too, and might salve his ego as well. Why not give him a lowball contract in total value, a big bonus, and a big first-year salary, thus assuring he'll get every penny of the eventual contract -- and also giving him a huge collection of checks for this year?

There are several reasons why the Pats should be wary of granting Asante too much upfront or guaranteed money.

1. Giving Asante guarantees makes him safe, but it hangs the Patriots out to dry in case he stops performing. As discussed before, the Pats can insure themselves against the possibility of a career ending injury, but there is nothing they can do about diminished on field performance (whether caused by an injury or by "getting paid").

2. If the money counts during the first year, it is roster bonus and not signing bonus, and is essentially untouchable in future years if Asante is suspended, or otherwise unwilling to play.

3. If vast sums of money are paid out to Asante this year, then we may be subject to downward cap adjustments at the end of the season (depending on whether the league as a whole spends more or less on players than the targeted 59% of total revenues).

So, while I acknowledge that Asante will give us a discount in exchange for a huge guarantee:

1. That guarantee comes at a cost, potentially a greater cost than the discount he would give us.

2. Even if we wanted to give him a huge guarantee, a first year roster bonus has significant draw backs.

3. There are better ways to move our extra cap space into the future (like fake LTBEs) which don't involve all of the risks I have discussed.

 

[Wotan_the_Wanderer]

Yes, though not about salary. It is about signing bonus.

Deferred signing bonuses are just like charge cards. You owe the money you charged regardless.

Think of it like next year's vacation. You spent $400 on non-refundable airline tickets for a vacation next year, reserved another $800 in motels (cancelable without penalty), plan to spend another $1000 on vacation food and incidentals, and plan to buy $600 in theme park admissions.

Now you want to spend the money on a new car.

The $400 non-refundable airline tickets are like Colvin's signing bonus. It is dead money if you cancel the trip.

The $2400 is like Colvin's salary. You get that money back if you cancel the vacation.

You need a new car, and the trip you planned isn't looking so good anyway. Cancel the trip and save $2400. That is cutting Colvin. The $400 is dead money. Should you spend $2400 you don't want to spend just so the $400 isn't wasted?

Thanks, but I actually understand all that though I admit, my head starts to hurt when we get into issues of "likely to be earned bonus" and other fine details associated with cap management.

Also, don't mean to nitpick but a ratio of 24:4 is hardly 7.3:1.8.

 

[solman]

The title of this thread is "Salary cap for 2008 looking Rosey."


Now you want to cut the guy?

1. I lower cased Rosey just now.

2. My point isn't that we should cut him. My point is that we have enough cap space in 2008 (although we no longer have vast gobs of it). Colvin is just one of many potential sources of cap space, and is probably the least significant of the source I mentioned.

3. I think that an extension which lowers his cap hit in 2008 and retains him long term for substantially less than $5.5M per is a realistic possibility. Rosey has one more big pay day coming, and I'm sure he'd be happy to get it from the Patriots. (I'm just not sure if he would accept the Patriot discount.)

 

[solman]

Thanks, but I actually understand all that though I admit, my head starts to hurt when we get into issues of "likely to be earned bonus" and other fine details associated with cap management.

When I say fake LTBE, I mean this:

1. Suppose we have $5M in cap space that we want to move from 2007 to 2008.

2. We modify Watson's contract (provided he consents) to pay him $5M if Brady rushes for 10,000 yards in 2007.

3. The CBA says

Any incentive bonus based upon another player’s performance automatically will be deemed “likely to be earned.”

4. Since the $5M is considered LTBE, it counts against the Patriot's 2007 cap.

5. Brady will not rush for 10,000 yards in 2007, so the incentive is never earned.

6. Since the $5M counted against the 2007 cap, but was never paid, the 2008 cap is increased by $5M.

Effectively, the Patriots have moved $5M in cap space from 2007 to 2008.

There are several other ways to achieve the same result.

 

[Fencer]

There are several reasons why the Pats should be wary of granting Asante too much upfront or guaranteed money.

1. Giving Asante guarantees makes him safe, but it hangs the Patriots out to dry in case he stops performing. As discussed before, the Pats can insure themselves against the possibility of a career ending injury, but there is nothing they can do about diminished on field performance (whether caused by an injury or by "getting paid").

2. If the money counts during the first year, it is roster bonus and not signing bonus, and is essentially untouchable in future years if Asante is suspended, or otherwise unwilling to play.

3. If vast sums of money are paid out to Asante this year, then we may be subject to downward cap adjustments at the end of the season (depending on whether the league as a whole spends more or less on players than the targeted 59% of total revenues).

So, while I acknowledge that Asante will give us a discount in exchange for a huge guarantee:

1. That guarantee comes at a cost, potentially a greater cost than the discount he would give us.

2. Even if we wanted to give him a huge guarantee, a first year roster bonus has significant draw backs.

3. There are better ways to move our extra cap space into the future (like fake LTBEs) which don't involve all of the risks I have discussed.

I was accounting for #1.
I was forgetting about #2. Thanks.
#3 is news to me, although it rings just the vaguest of bells. Please explain?!

 

[Miguel]

Re: Salary cap for 2008 looking rosy

Things that are not mentioned.
1.) tenders to the ERFAs and RFAs
2.) escalators to Wilfork/Watson/Hill/Warren
3.) the likelihood that the 32 NFL teams will underspend this year which will cause an increase in the 2008/2009/2010/2011 caps
4.) the likelihood that players like Moss/Gaffney/Faulk/Colvin will reach their NTLBE incentives

 

[solman]

#3 is news to me, although it rings just the vaguest of bells. Please explain?!

Each season the NFL players are entitled to a targeted percentage of total league revenues. It starts at 59% of total revenues and winds up at 60% of league revenues.

At the end of each year, all monies paid to players during that year are added up. Signing bonuses (and everything else) count when they are paid, not when they hit the cap.

If the total paid is beneath the threshold, then the salary cap for all 32 teams is increased by enough to compensate for the short fall. Last year, total player compensation was more than $21M under the threshold, so for the next five seasons, each team will receive an extra $134K in cap space. (5*32*0.134=21.44) All teams receive the same advantage.

If the total paid is ABOVE the threshold, only those teams which paid more than their share will be penalized (and they will be penalized in proportion to how much they over spent). The penalty is again prorated across the remaining capped seasons under the CBA. In a worst case scenario (where every single NFL team over spends) teams would lose cap space on a dollar for dollar basis for each dollar by which they over spend. A $10M signing bonus would, in addition to counting against the cap, also reduce the cap by an equal amount in future years. In reality, some teams will underspend and some teams will over spend, so the penalty for overspending will likely be a small fraction of the amount by which the team has overspent.

Miguel has just stated (in the thread which draws the wrong conclusion about how rosey our 2008 salary cap is) that he expects the league to underspend again in 2007. I think he is right, but I don't think this is a foregone conclusion. Teams have done a surprisingly good job of getting rid of their cap space this year and paying signing bonuses, plus teams carried over a substantial amount of cap space from last year. If the League goes over its target threshold, and the Patriots exceed 1/32th of the threshold, we will lose salary cap space in future years.

 

[solman]

Re: Salary cap for 2008 looking rosy

1.) tenders to the ERFAs and RFAs

I'm counting this in the $5.7M for three roster spots segment. (Of course it is likely to be for more than three spots due to unanticipated injuries, cuts and retirements, but any cuts or retirements will open up additional cap space.)

2.) escalators to Wilfork/Watson/Hill/Warren

How much of a hit do you estimate this will be?

3.) the likelihood that the 32 NFL teams will underspend this year which will cause an increase in the 2008/2009/2010/2011 caps

I'll be following this with interest. As I just wrote in my other post, I agree that it is likely, but I do not believe it is a foregone conclusion. Even if it is true, I think it is unlikely that an adjustment of greater than $1M will occur (equivalent to teams underspending by $4M on average.)

4.) the likelihood that players like Moss/Gaffney/Faulk/Colvin will reach their NTLBE incentives

I have neither included a hit from NLTBEs nor a bonus from LTBEs. (Except for $3.75M from Tom Brady's restructuring flowing into 2008 via LTBEs. [I've also included a negative $1.25M adjustment in 2008 from this same restructuring resulting in the net $2.5M adjustment I showed in my original post.])

Do you believe that the net N/LTBE adjustment will be less than the amount attributable to TB's restructuring? Do you have any idea what this adjustment will be?

I would have guessed that it would be HIGHER than $3.75 (absent some unexpected event).

 

[Miguel]

Re: Salary cap for 2008 looking rosy

I'm counting this in the $5.7M for three roster spots segment. (Of course it is likely to be for more than three spots due to unanticipated injuries, cuts and retirements, but any cuts or retirements will open up additional cap space.)

OK

How much of a hit do you estimate this will be?

No clue. But it should be mentioned ithat Watson could earn $2.8 million, Wilfork - $4 million, Warren - $5.6 million in salary increases for the 2008 season and that Hill, Hobbs, and Kaczur could also have their 2008 salaries increaed

I'll be following this with interest. As I just wrote in my other post, I agree that it is likely, but I do not believe it is a foregone conclusion. Even if it is true, I think it is unlikely that an adjustment of greater than $1M will occur (equivalent to teams underspending by $4M on average.)

Every bit helps.

I have neither included a hit from NLTBEs nor a bonus from LTBEs. (Except for $3.75M from Tom Brady's restructuring flowing into 2008 via LTBEs. [I've also included a negative $1.25M adjustment in 2008 from this same restructuring resulting in the net $2.5M adjustment I showed in my original post.])

Do you believe that the net N/LTBE adjustment will be less than the amount attributable to TB's restructuring? Do you have any idea what this adjustment will be?

I would have guessed that it would be HIGHER than $3.75 (absent some unexpected event).

No clue. The Pats have about 7 to 8 months to make cap moves. All I can say that the Patriot players have reached between 2 to 4 million in NTLBE incentives each year that I have been following that stat.

 

[DaBruinz]

We appear to be in good salary cap shape for 2008.

$13.4M - Initial cap space per Miguel
$05.5M - Cutting Stallworth*
$05.5M - Cutting Washington*
$05.5M - Cutting Colvin*
$02.5M - Presumed Effects of recent Brady restructuring**
$02.3M - Presumed Effects of next year's Brady restructuring***

That's $34.7M with 36 Players signed. With that money:

1. We have to sign 2007 and 2008 draft picks. Figure 9 players for less than $6M (unless SF stinks). Now we have $28.7M with 45 players signed.
2. We need to replace or re-sign our receiving corps. Figure $8M on two players in addition to our draft picks. ($20.7M with 47 players).
3. We need to replace or re-sign Colvin and Bruschi. Figure $8M for two players. ($12.7M with 49 players).
4. We need to replace Asante's contribution to our secondary. (I figure that Gay and Wilson can be replaced via the aforementioned new draftees. If we lose Harrison, his loss will also provide us with additional cap space.) Figure $7M for one player.

That leaves us with $5.7M and three roster spots, a perfectly responsible place to be heading into the 2008 season.

NONE of this involves any backloaded Indy style contracts, so we could easily manufacture an additional $10-$20M if we were willing to pay for it in future seasons. (Brady's cap hit over the final two seasons of his contract [if not extended] would be $13.5M per, which is probably underpaying for two years of Brady at his prime. Compare to Peyton's hit over the same period of $20.0M per.)



* Its just a curious coincidence that these three different contracts all result in the same cap savings.

** Assumes that $5M of $6M salary turned into bonus, and that left over cap space from this year is rolled into next year via LTBE loophole.

*** Assumes that $3M roster bonus and $4M of $5M salary turned into signing bonus. After these two restructurings, the final two years of Brady's contract would carry cap hits of $14.4M and $12.6M instead of $10.6M and $8.9M

How do you figure that Brady's restructuring this year (which pushes money into 2008 and 2009 and 2010 is going to SAVE money on 2008? It doesn't work like that. Also, how can you pre-sume that Brady will again restructure his contract to push more money into 2009 and 2010?

Now, the problem with assuming that Moss, Stallworth and Washington are gone (and the assumption that Washington even makes the team) is that it would leave the receiving corp back to its 2006 days. And none of us want to see that.

The other issue is that we have no idea what affect Asante's contract (if he gets more than a 1 year deal) is going to have on the 2008 cap. It will, more than likely, cut into that 13.4 million that was mentioned. And cut into it by a healthy amount ($7-$9 million).

Then, as mentioned in the other thread, you have the 1.5-2 million in rookie salary cap hits that will apply.

PLUS you will have any LTBE and NLTBE debits and credits from 2007. Plus any escalators that players like Watson, Wilfork, Seymour, etc, earn.

 

[Wotan_the_Wanderer]

There are several other ways to achieve the same result.

Which goes back to my original point that there are many ways to get the team under the cap if needed without having to cut Colvin.

Look, I really don't mean to take away from all the work and thought invested in your informative post. It's just that I'm compelled to object to any scenerio that involves cutting Colvin.

 

[solman]

How do you figure that Brady's restructuring this year (which pushes money into 2008 and 2009 and 2010 is going to SAVE money on 2008? It doesn't work like that.

First, we have to suppose that I am correct about the Brady restructuring, that he took $5M in 2007 salary and turned it into a signing bonus prorated over the final four years of the contract.

If so, then at the end of 2007, our cap hits will be modified as follows:

2007: -$3.75M
2008: +$1.25M
2009: +$1.25M
2010: +$1.25M

The Patriots will then use an LTBE incentive to move the -$3.75 to 2008. That leaves us with:

2007: $0
2008: -$2.5M
2009: +$1.25M
2010: +$1.25M

As of the start of the 2008 league year, the net effect of the restructuring on the 2008 cap will be +$2.5M.

As you can see, if they do this every year (which they will unless they run into cap trouble or Brady again restructures or signs an extension) the end result after three LTBEs is:

2007: $0
2008: $0
2009: $0
2010: $0

In other words, as long as we don't run into cap trouble, the Brady restructuring is an accounting gimmick and nothing more.

Also, how can you pre-sume that Brady will again restructure his contract to push more money into 2009 and 2010?

If we don't need him to, he won't. If we ask him to he will because:

1. It guarantees the accelerated money before the season even starts.
2. He gets paid sooner. 6 months interest on $4M is more than many forum members make in a year.

Now, the problem with assuming that Moss, Stallworth and Washington are gone (and the assumption that Washington even makes the team) is that it would leave the receiving corp back to its 2006 days. And none of us want to see that.

I don't assume that they are gone. I know that IF they are gone, we will save $0, $5.5M and $5.5M respectively on our 2008 cap numbers. We can spend our money on retaining these players, or on getting other players. I EXPECT that neither Stallworth nor Washington will be retained unless they restructure their contracts.

The other issue is that we have no idea what affect Asante's contract (if he gets more than a 1 year deal) is going to have on the 2008 cap. It will, more than likely, cut into that 13.4 million that was mentioned. And cut into it by a healthy amount ($7-$9 million).

I said we would spend $7M in 2008 cap on one secondary player (in addition to draft picks and continuing players) That may or may not be Asante.

Then, as mentioned in the other thread, you have the 1.5-2 million in rookie salary cap hits that will apply.

I said we will spend $6M in 2008 cap on 2007 and 2008 rookies. Unless SF sucks, I think that is conservative. (Of course, I just assumed we actually keep all of our picks, which I don't actually believe).

PLUS you will have any LTBE and NLTBE debits and credits from 2007. Plus any escalators that players like Watson, Wilfork, Seymour, etc, earn.

I expect LTBE and NTBE credits to work in our favor.

I simply forgot about the escalators, and that could be a problem. Even Miguel doesn't know how much of a hit we're looking at there.

 

[solman]

Which goes back to my original point that there are many ways to get the team under the cap if needed without having to cut Colvin.

Look, I really don't mean to take away from all the work and thought invested in your informative post. It's just that I'm compelled to object to any scenerio that involves cutting Colvin.

I don't think we need to cut Colvin.

I do seem him as a rich source of potential cap space.

(I also think that one or two of Samuel, Moss, Stallworth and Washington will be on the team next year [but with a new contract]).

I'd like to see Colvin sign an extension this year.

If he does not, then he is part of the 2008 salary cap equation.

Right now I think his influence on that equation is fairly neutral. If $5.5M is too much, its only a little bit too much.

His play this year can change my mind in either direction.

More importantly, it can change BB's mind in either direction.

 

[Fencer]

Thanks for the explanation!

As for actual projections -- I think we should assume that the Pats spend considerable cap dollars keeping 2-3 of Moss/Stallworth/Washington/Caldwell/Gaffney past next season.

Also, don't sleep on the need for at least one significant CB after Samuel (hopefully) and Hobbs, be that Gay, a moved and re-signed Wilson, or whomever.