Understanding the Salary Cap

[1960Pats]

I've never been much of a salary cap guy but I've been hearing some things lately that piqued my interest. One thing I heard is that the Pats have been below the average for cap spending. Is that true?

Another thing I heard, and I don't know how anyone would know this information, is that Kraft gives Belichick a maximum figure to deal with for the football operation and that includes the player and coach salaries.

I also heard that Belichick's salary is much higher than any other HC/GM and is also part of the budget that Kraft gives him to work with. If true, that would seem to indicate that Bill's salary affects the salaries of players on the field.

Anyone have any thoughts or info on any of that?

 

[Hammer of Thor]

I've never been much of a salary cap guy but I've been hearing some things lately that piqued my interest. One thing I heard is that the Pats have been below the average for cap spending. Is that true?

Another thing I heard, and I don't know how anyone would know this information, is that Kraft gives Belichick a maximum figure to deal with for the football operation and that includes the player and coach salaries.

I also heard that Belichick's salary is much higher than any other HC/GM and is also part of the budget that Kraft gives him to work with. If true, that would seem to indicate that Bill's salary affects the salaries of players on the field.

Anyone have any thoughts or info on any of that?

All I can say is that coaching budgets are outside of the NFL salary cap. So it doesn’t matter if BB makes $1m or $25m, the Patriots can spend the same amount on players regardless.

If the Patriots choose to spend less on the players, it would be voluntary, and entirely Kraft’s doing.

 

[zimmy]

there is a difference between cap and cash spending. Pats have been close to the cap almost every year but have spent less cash recently (as this is paid up front but divided over the life of the contracts for cap purposes). BB's contract has no bearing on cash spending or the cap.

The question this year for Kraft is if BB wants to go on a spending spree, Kraft will have to pony up on all those signing bonuses. Let's say we sign Hunter Henry, Allen Robinson and Leonard Williams (I know unlikely...), Kraft will be signing off some fat checks to be cashed immediately.

 

[Sciz]

I feel like a lot of these "Pats are cheap" arguments center around cash spending (not cap), which really tells you more about future cap hits since signing bonuses are paid entirely that year but spread over many years for cap purposes. Other than this year when the cap room opened up well after the top free agents had already signed elsewhere, the Patriots have always spent to within a few million dollars within the cap:



As for the budgeting, we don't know for sure but there's zero indication that any internal limitations have ever prevented them from using available cap space. They spend plenty of money.

 

[moosekill]

Yes, this is one of those questions that people who don't pay much attention and love to ***** about the Patriots often bring up. This year is an oddity. They had basically no cap room at all during the free agency period. They had a bunch of dead cap money on the books for this year, Brady and Brown to start with. Then Covid struck and the Pats had the most players of any team in the league decide to take the year off. This gave the Patriots lots of cap room, after most all of the free agents had been signed. So yes they have lots of cap room this year, but no they aren't cheap.

 

[notex]

Miguel would be the best guy to opine on this...realistically its not even his opinion but his ability to run the numbers.

I've heard some guys on radio (Felger in particular) say that Pats are in bottom half in CASH spending despite using the salary cap. I don't understand how that really works as any salary that is structured as a bonus ends up getting spread out over the life of contract.

Funny thing is, I work in finance and have an accounting background, but I am not sure how it is possible to spend to the cap but not be at top of league in cash spending?

Not sure if this is correct but I assume that bad contracts would increase your cap spending but lower your cash spending, for example, Tom Brady cap hit? Would love some clarification as well but maybe just at a high level.

All of that said, if one team spends within $500k of the Salary Cap and another spends within $3m that doesn't signal to me that one team is "cheap" because that ~$2.5m could just be result of dead cap hits or overpaying a player or two...

 

[bresna]

The players contract with the NFL requires a certain amount of spending. No team can "cheap out" on the players.

 

[DropKickFlutie]

Is the OP talking about an unofficial cap for Patriot total staff salary spend by the owner, and not the NFL salary cap for players ?

 

[luuked]

I've never been much of a salary cap guy but I've been hearing some things lately that piqued my interest. One thing I heard is that the Pats have been below the average for cap spending. Is that true?

No. The Patriots under BB historically spent close to each years salary cap.

Another thing I heard, and I don't know how anyone would know this information, is that Kraft gives Belichick a maximum figure to deal with for the football operation and that includes the player and coach salaries.

Who cares ? The only number that matters is the salary cap and they are very close to maxing it out almost every year.

I also heard that Belichick's salary is much higher than any other HC/GM and is also part of the budget that Kraft gives him to work with. If true, that would seem to indicate that Bill's salary affects the salaries of players on the field.

Again, who cares how much BB makes. It doesn't affect anything but Kraft's pocket.

You should turn off the radio shows that are just a minefield of disinformation and moronic takes and actually inform yourself instead through resources like OverTheCap or Spotrac. If you want to go deep the old blog of Miguel will also do a wonderful job.

 

[Sciz]

Miguel would be the best guy to opine on this...realistically its not even his opinion but his ability to run the numbers.

I've heard some guys on radio (Felger in particular) say that Pats are in bottom half in CASH spending despite using the salary cap. I don't understand how that really works as any salary that is structured as a bonus ends up getting spread out over the life of contract.

Funny thing is, I work in finance and have an accounting background, but I am not sure how it is possible to spend to the cap but not be at top of league in cash spending?

I think the biggest problem is that reconciling cash and cap requires looking forward by four years, which nobody is doing. For example, the Texans led the NFL in cash spending this season in part because they gave big (and long) contracts to Watson, Tunsil, and Cunningham. The cash paid in 2020 for those three contracts alone will account for cap hits of $11 million in 2021-2023 and $7.8 million in 2024. That's over $40 million in 2020 cash paid that isn't hitting the 2020 cap.

The Saints are an even better example of this as they've gone all in on Brees' last couple of years, but I'm not going to try to decipher their mess. They've got a bunch of contracts that have prorated bonuses currently allocated to 2023 and 2024 that will actually accelerate into 2021 and 2022 when the contracts automatically void.

 

[Doctor DDS]

With the value of the franchise exceeding $4 Billion it would be financially stupid to worry about saving a few million if it had even the possibility of impacting wins and losses. I had not heard about the BB pay question until opening this thread but assume the local media have made this some sort of indictment on BB.

 

[DaBruinz]

I've never been much of a salary cap guy but I've been hearing some things lately that piqued my interest. One thing I heard is that the Pats have been below the average for cap spending. Is that true?

Another thing I heard, and I don't know how anyone would know this information, is that Kraft gives Belichick a maximum figure to deal with for the football operation and that includes the player and coach salaries.

I also heard that Belichick's salary is much higher than any other HC/GM and is also part of the budget that Kraft gives him to work with. If true, that would seem to indicate that Bill's salary affects the salaries of players on the field.

Anyone have any thoughts or info on any of that?

Not sure your source but none of what you posted makes ANY sense except for the VAGUE idea that BB has a budget for Football Operations. Even then, it wouldn't be inclusive of Player Salaries since that would have direct salary cap ramifications.

With the exception of this year, the Patriots have ALWAYS spent within 5M of the team's Salary Cap. Claiming that they are "below the average" in Cap spending is FALSE. You can verify this with @Miguel

There MIGHT be a Cash over cap limit that BB has, but that still directly affects that Salary Cap and I don't see Kraft handcuffing Belichick like that. Especially since Kraft has had a hands-off approach with very limited exceptions.

It's always been known that BB has been the highest paid GM/Coach. No one knows what that amount actually is.

 

[borg]

Every dollar listed in the cap column is money that was spent or needs to be accounted for according to the player contracts within that year

Categorizing "cash spending" depends entirely on the slice of time you are looking at.

NE has had an ability to negotiate and finalize big contracts that avoid massive lump sum initial payouts

NE has been adept at mildly kicking the "dead money can" down the road

 

[moosekill]

If they had decided to pay Brady enough, whatever that would have been, to keep him here this year, they would have been forced to kick his salary down the road again. Instead, by him leaving, they are stuck with the $13??? million they have to pay this year, but then his dead money is over and done with. That is how the cap kinda sorta works. You can keep pushing the cap hit down the road with signing bonuses and reworking contracts, but eventually that money has to be paid, it doesn't go away. Then there is some way you can take extra cap money and move it to next year, but that is well beyond my knowledge.

 

[203Pat]

All I know is it can be manipulated to a point but at some point lots of people have to go.

 

[1960Pats]

All I can say is that coaching budgets are outside of the NFL salary cap. So it doesn’t matter if BB makes $1m or $25m, the Patriots can spend the same amount on players regardless.

If the Patriots choose to spend less on the players, it would be voluntary, and entirely Kraft’s doing.

Like I mentioned, I don't follow the cap much, so let's just use some numbers to help me understand.

Say Kraft does give Bill a figure for a total budget, let's use 200 mil, and the salary cap is 175 mil and Bill spends 30 mil on costs other than player salaries. That leaves 170 mil for players, which is under the cap by 5 mil. Doesn't that make both Kraft and Bill responsible for not spending to the cap?

 

[1960Pats]

there is a difference between cap and cash spending. Pats have been close to the cap almost every year but have spent less cash recently (as this is paid up front but divided over the life of the contracts for cap purposes). BB's contract has no bearing on cash spending or the cap.

The question this year for Kraft is if BB wants to go on a spending spree, Kraft will have to pony up on all those signing bonuses. Let's say we sign Hunter Henry, Allen Robinson and Leonard Williams (I know unlikely...), Kraft will be signing off some fat checks to be cashed immediately.

Sorry to still be confused, but what exactly does cash spending represent? Are you saying that Kraft doesn't give Bill an amount to stay under, regardless of the cap?

 

[1960Pats]

I feel like a lot of these "Pats are cheap" arguments center around cash spending (not cap), which really tells you more about future cap hits since signing bonuses are paid entirely that year but spread over many years for cap purposes. Other than this year when the cap room opened up well after the top free agents had already signed elsewhere, the Patriots have always spent to within a few million dollars within the cap:



As for the budgeting, we don't know for sure but there's zero indication that any internal limitations have ever prevented them from using available cap space. They spend plenty of money.

I hope I wasn't giving anyone the impression that I think the Pats are cheap. I don't. I'm just trying to understand how they operate financially.

 

[1960Pats]

Yes, this is one of those questions that people who don't pay much attention and love to ***** about the Patriots often bring up. This year is an oddity. They had basically no cap room at all during the free agency period. They had a bunch of dead cap money on the books for this year, Brady and Brown to start with. Then Covid struck and the Pats had the most players of any team in the league decide to take the year off. This gave the Patriots lots of cap room, after most all of the free agents had been signed. So yes they have lots of cap room this year, but no they aren't cheap.

Yes I'm not that interested in the salary cap but your comment that people who don't pay much attention and love to ***** about the Patriots often bring up makes no sense without knowing the word or words that weren't fit to be printed. Why don't you clarify that.

 

[1960Pats]

Miguel would be the best guy to opine on this...realistically its not even his opinion but his ability to run the numbers.

I've heard some guys on radio (Felger in particular) say that Pats are in bottom half in CASH spending despite using the salary cap. I don't understand how that really works as any salary that is structured as a bonus ends up getting spread out over the life of contract.

Funny thing is, I work in finance and have an accounting background, but I am not sure how it is possible to spend to the cap but not be at top of league in cash spending?

Not sure if this is correct but I assume that bad contracts would increase your cap spending but lower your cash spending, for example, Tom Brady cap hit? Would love some clarification as well but maybe just at a high level.

All of that said, if one team spends within $500k of the Salary Cap and another spends within $3m that doesn't signal to me that one team is "cheap" because that ~$2.5m could just be result of dead cap hits or overpaying a player or two...

Once again the words being cheap are being brought into the discussion. I never implied that. All I was trying to understand is how the money is spent and what the difference is between cap spending and cash spending. You've helped in that regard.