Understanding the Salary Cap

[1960Pats]

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

There it is again. Who the heck is calling them cheap? I sure didn't.

 

[1960Pats]

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 ?

What I heard was that Kraft gives BB a total figure to spend and that includes all costs, including player salaries. Since I don't follow the cap at all I was looking for clarity on that. Some folks took that as an accusation that the Pats were cheap.

 

[Hyped]

To answer the question of the difference between cash spending and the cap #:

Say we sign a free agent to a 5 year 80M deal with a 20M signing bonus.

Cash spending would be:

Year 1: 32M
Year 2: 12M
Year 3: 12M
Year 4: 12M
Year 5: 12M

Cap accounting would be:

Year 1: 16M
Year 2: 16M
Year 3: 16M
Year 4: 16M
Year 5: 16M

So, we could be "cheap on cash spending" in years 2-5 because we wrote a check for 20M in year 1 and paid a salary of 12M. (signing bonuses are pro-rated over the life of the contract...and if a player is released...the remaining bonus hits the cap all at once...or is split if it's a post-June cut, IIRC).

 

[Hyped]

And the season ending amount on the cap is usually because we reserved some money for emergency signings during the season that we did not need.

 

[1960Pats]

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.

I brought it up because I never heard of it and wondered what it was about. I didn't trust the mediots either and thought I could get some info here.

 

[PatsWickedPissah]

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?

Why fabricate an answer to a hypothetical question that we have NO EVIDENCE exists?
Where are you "hearing" this baloney? Suggest stop listening to sports talk radio. Their task is NOT to inform but to enflame & drive ratings.

 

[moosekill]

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.

This year, the Patriots have a large amount of free salary cap. Some people on this site, and I assume other sites, who want to complain about BB have brought that up numerous times, without putting it into the context that the cap space was caused by the covid opt outs. The covid opt outs occurred after the free agency period was essentially over, so the Patriots didn't have anyone to spend it on.

Most of the people who bring this up, like you, are people who are trying to make BB look bad and show that it was Brady, not Bill who led the dynasty.

 

[DropKickFlutie]

What I heard was that Kraft gives BB a total figure to spend and that includes all costs, including player salaries. Since I don't follow the cap at all I was looking for clarity on that. Some folks took that as an accusation that the Pats were cheap.

Including player costs sounds weird since all teams have the salary cap. Since the Pats spend mostly to the cap limit, it basically puts a cap on total staff salaries. The Pats probably don't over spend here because Belichick is HC plus also de facto GM and I doubt they pay him what 2 people would make. But Belichick would be worth every penny. Best HC in a league that has to manage 53 players constantly changing. Spend more on Belichick and increase franchise value by $ billions over a decade.

 

[Aßßynormal]

Money not spent in a cap year is rolled over into the next cap year. If we have this scenario (as reported by Miquel):

2015 - $1,347,882
2014 - $5,258,054

that means all of 2014 unspent money was spent in 2015. 2015's surplus will be spent in 2016.

All of this years surplus will be added to 2021's cap. The cap is complicated and shouldn't be left to "talking heads" to summarize anything. BB's salary has absolutely nothing to do with the cap. Further, Miquel's work shows this rollover effect has been continuous.

 

[jmt57]

I brought it up because I never heard of it and wondered what it was about. I didn't trust the mediots either and thought I could get some info here.

I have never heard of that before, but it wouldn't surprise if they did have some type of budget. Most businesses do, certainly ones of this volume of dollars. That being said, it would also not surprise me if there was no hard, fast budget either; that Kraft would only say something to BB if the expenses/non-player salaries began to get out of hand.

Around the league, I am confident a team like Cincinnati - notorious for being known for having a disdain to spend money - has a budget on both football and non-football operations.

The lack of stadium revenue in 2020 could theoretically cause many teams to pull back on their expenditures in 2021. I just don't think that is going to be the case in terms of salaries. @Hyped provided an excellent example above about how cash spending versus cap spending works. Over time they (cash vs cap) even out.

There is a salary cap floor in addition to the salary cap ceiling, and cap dollars not used one season may be pushed forward to the next. I don't know of any team simply letting those unused dollars disappear, rather than rolling them over to the next season.


Bottom line is that I very seriously doubt there is a budget that constricts Belichick on player salaries. The fourth post in by @Sciz proves that has not historically been the case, via the tweet by Miguel.

 

[Ring 6]

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?

No these are not true. If you look at the history the patriots always spend to the cap or close enough for cushion. In any year they do not it rolls over and gets used the next year.
I would not be surprised if there were some type of target for coaching salaries but given the small chunk it is of operating costs I doubt it would be set at a level that makes them non competitive.

 

[notex]

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.

Yes but this topic comes up on radio quite often in that context

 

[Ring 6]

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?

If I sign a player for 4 years at 10 mill a year and no signing bonus (pretending each salary is exactly 10 mill) BOTH my cash and cap cost are 10 mill each year.
If I sign the same guy but give him a 36 mill signing bonus and 1 mill a year salary my cap cost is 10 mill each year ( the signing bonus is spread equal over the contract in this case 36 mill/4 = 9 mill per year) but my cash cost is 37 mill year 1 and 1 mill each of the other 3 years. Make sense?

 

[notex]

Not sure the point on all this. Kraft spends a TON of money on stadium, staff, and spends to cap. Even relative to other owners. If BB has a “budget” I’m sure Kraft isn’t idiotic enough to mix coaching staff and player salaries into same expense line item...realistically I’d guess it’s “spend to cap and you have 50 million for coaching and support staff”

 

[Ring 6]

Not sure the point on all this. Kraft spends a TON of money on stadium, staff, and spends to cap. Even relative to other owners. If BB has a “budget” I’m sure Kraft isn’t idiotic enough to mix coaching staff and player salaries into same expense line item...realistically I’d guess it’s “spend to cap and you have 50 million for coaching and support staff”

The guys just asking a question. What has destroyed this board is that people can’t make a post without the assumption they are implying things between the lines because so many posters actually communicate in that way.

 

[One-If-By-Sea]

Great posts all around.

1. The salary cap only applies to player salaries and is its own budget item. The salary cap total = the total players salary cost per year. Everything outside of player salaries is a separate budget item. The salary cap is established by the players union contract with the NFL. The contract states that each team has to spend a minimum amount on players salaries, and can chose to spend up to a maximum amount. The maximum amount is the "salary cap limit" or "salary cap maximum" as agreed in the players' union contract. We say "salary cap" for short.
2. Each team has to pay the minimum salary cap each year plus all of the other operating costs that are not players salaries. Players salaries are the highest cost for a NFL team. Each owner can chose to pay whatever they want for costs outside of the salary cap costs. Stadium costs, or transportation costs, or coaches salaries are dependent on each team, and are completely separate from the players' costs within the salary cap.
3. The salary cap and cash spent equal each other. Over time, on average, they are the same thing. Over time higher salary cap spending but lower cash spending is not possible.
4. So why do both the salary cap and cash spending exist if they are the same thing? As other posters have highlighted, the salary cap and cash spent can be different in any one year due to the players' contract conditions, but overall over time the salary cap = the cash spent. If someone says Kraft's cash outlay was the lowest in the NFL this year, that is meaningless. It only means Kraft spent more previously or will spend more in the future because over time the salary cap = cash spent.
5. The Pats spend the maximum amount of the salary cap allowed by the players' union contract, not the minimum. Most teams do the same thing. If the team spends the minimum salary cap they are at a disadvantage so teams do not do that. So Kraft, averaged over time, spends the most allowed on players salaries.
6. Kraft can chose to spend as much as he likes on everything outside of the players salaries (outside the salary cap). I have no idea how much he spends versus other teams. But he bought two planes and hired crews to fly them so he is not cheap.
7. As other posters noted it is almost impossible to spend exactly the total maximum salary cap amount each year without risking over running the limit, so the amount not spent one year, can be spent the next year. This is written into the union contract to allow and encourage the owners to spend to the maximum over time, even if they spent a little less in any one year, and not have to worry about being penalized for overspending.

I hope that helps. I hope it is not to simple. Any questions please ask.

 

[ctpatsfan77]

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.

For those unaware, there's no evidence the Patriots have ever pocketed any significant amount of cap money under Belichick.

It used to be, in the 2000s, that cap money did NOT automatically carry over. Instead, the only way to do it was to give a player a contract with a ridiculous incentive. Because it was added midseason, it was automatically deemed likely to be earned, and counted against the cap immediately. But because it was ridiculously implausible (e.g. a kicker catching 5 interceptions), it would then be credited back the next season. For example, back in 2006 they did this with fullback Kyle Eckel to move $5.6M into 2007, finishing the season with about $500 in cap space. (Yes, I had to look up the numbers. No, I didn't need to look up the player. )

Eventually both sides decided this was pointless and just allowed teams to fill out a form instead in the 2011 CBA.

 

[luuked]

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.

The only impression you are giving away is that you are implying that BB's salary is a reason we are allegedly not spending to the cap. Which is total ********.

 

[luuked]

Each team has to pay the minimum salary cap each year plus all of the other operating costs that are not players salaries.

That is not true. The salary floor just means that 89% of the salary cap needs to be spend over a 4 year period and not every year.

 

[Triumph]

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 Pats spend right up there every season.

Any unused cap money can be added to the next seasons cap surplus.

NFL player salaries by team 2023 | Statista

During the 2022/23 season, the Los Angeles Rams had the highest player payroll among the 32 teams competing in the National Football League (NFL) with approximately 330 million U.S.

www.statista.com