Understanding the Salary Cap

[Miguel]

Cash spending does not equal cap allocation.

The main reason the Patriots have been below average in cash spending was Tom Brady.

The focus on cash spending does not provide all of the cap allocation context for a team like the Patriots who uses incentives and active roster bonuses. For example, if a player does not earn his LTBE incentives and his LTBE active roster bonuses the Patriots would not have spent the cash after having allocated cap space on that player.

In 2017 Pats had to pay back 4.5M in borrowed cap space. Teams were allowed to borrow cap space in 2011/2012 as part of the transition to the new CBA. $4.5M gets you a couple of players. That $4.5M was not cash spending.

 

[1960Pats]

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

I have to admit that I did turn on the radio that morning. That doesn't happen often.

 

[1960Pats]

While we're here, I've seen many references to other teams going into cap hell, but it doesn't seem to end up happening on the field. Is that because those teams, unlike the Pats, aren't as deep and are able to carry the highly paid players?

 

[DaBruinz]

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.

Brandon Gorin was also the recipient of one of these LTBE "bonuses"..

 

[DaBruinz]

While we're here, I've seen many references to other teams going into cap hell, but it doesn't seem to end up happening on the field. Is that because those teams, unlike the Pats, aren't as deep and are able to carry the highly paid players?

The term "Cap Hell" has become a misnomer and almost cliche. Over the course of the previous CBA, the league saw historical profits. That turned into historical jumps in the Cap. Added to that, as mentioned by others, unused cap space was automatically carried over to the following year. The new CBA mademuch easier for teams to add "VOID" years to a player's contract (as the Pats did with Brady last year and with DMac this year). All the "wink wink" 5 year contracts that were really just 3 year ones went away. The new CBA also made it easier for teams to turn Salary into signing bonus to spread that salary over remaining years.

At least, it was up until this year and the fact that the cap is likely to drop from a base of $198M to $175M. Prior to Covid, the 2021 Cap was being projected from $210-$215M. So, it's actually a $35-$40M drop.

A team that is in Cap Hell is the Eagles. With the projected cap of $175M and their Carry-over, they are still looking at being $70M OVER the Cap. If they TRADE Wentz they are looking at an ADDITIONAL $8.4M in dead cap. And that is with 53 players signed. I did a rough estimate on the numbers and I could not find a way for them to convert Salary to Signing bonus for them to clear $68M never mind $78M.

Looking at Over the Cap.com they project Green Bay, Atlanta, Minnesota, New Orleans ($95M OVER), Rams, Pittsburgh, Houston, and KC to be over next year's cap at the start of the league year. A lot can change between now and then, but there are likely to be some veteran cuts that teams with lots of space (Pats, Colts, Jags, Jetes) will be able to add without having to worry about Compensatory picks.

New Orleans will only save 22.5M by cutting Drew Brees. I'm not sure they can restructure his current salary into signing bonus and push it into years that have already voided. It's a great question for @Miguel

It's going to be imperative for New Orleans to get Lattimore, Ramczyk, and Alexander under new long-term contracts or trade them to free up cap space. But they'll definitely be using the Salary to Signing bonus maneuver A LOT as well.

 

[One-If-By-Sea]

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.

Thanks Luuked. I thought it was every year but it makes more sense over 4 years.

 

[pazrul72]

While we're here, I've seen many references to other teams going into cap hell, but it doesn't seem to end up happening on the field. Is that because those teams, unlike the Pats, aren't as deep and are able to carry the highly paid players?

Thing about cap hell is if you take your medicine and suck for one year you can clear the books and be out of it. Patriots actually did that this year. Part of how they could afford Brady was they kept kicking 10-14 million of his salary down the road. He got paid as soon as he signed the contract so he didn’t care but for accounting purposes it was like getting him at half rate every year. That ended this year when the bill came due but just on the cap. For cash spent purposes, I.e when Kraft actually paid it, that was two years ago, so if you looked at that year the Pats were probably on the higher end of the league, then you get to this year where their cap was 14 million less, I.e dead money, because even though Brady was in Tampa he counted against the Salary cap. They also had I think 9 million for AB and Ghost was another couple of million if memory serves.

When 10% of your cap is tied up in players no longer on your team you are unlikely to be competitive. That’s all people mean when they say Cap Hell is that for one year a large percentage of your money will be given to players not on your roster. It ends up being a huge cycle, because the year after now that you have cleared the books you have a ton of cap space, but no good players that you are paying. So you sign the biggest free agent to stupid money as the only reason they would come to a team with no talent. They don’t produce enough to make it worth what you are paying them, you cut them in year 3 of a 5 year contract with lots of dead money, rinse and repeat. The Jete have been doing this for 50 years and counting because they suck.

This is why I hope BB does NOT go after the top 2-3 best free agents on the market. The exceptions of FA that are worth the money are more notable then when another one bombs. Gilmore is the only Patriot that comes to mind as even being a conversation if he was worth every penny. More often you get Afailius Thomas or Rosie Colvin. I want to see 10-15 of the talented but cut middle class vets signed to 2 year good deals they can’t get anywhere else in this cap strapped COVID year. They don’t work out, oh well, but the 3-4 that do fill one of 10 holes currently on the roster

 

[mgteich]

While we're here, I've seen many references to other teams going into cap hell, but it doesn't seem to end up happening on the field. Is that because those teams, unlike the Pats, aren't as deep and are able to carry the highly paid players?

The references to teams going into cap hell (almost every year) are often by posters who don't understand the cap.
===========
Primarily because of the lower than normal caps, teams will indeed be in "cap hell' on this coming off-season.

 

[mgteich]

Thing about cap hell is if you take your medicine and suck for one year you can clear the books and be out of it..

Yes, you can lower your cap responsibility by not bothering to have a QB on the roster being paid much more than minimum. You may also have to cut 2-3 more of your top players. That way you have the glory of saving cap money, ruining your team, with the hope of starting over and being competitive in 2-3 years.

 

[pazrul72]

Yes, you can lower your cap responsibility by not bothering to have a QB on the roster being paid much more than minimum. You may also have to cut 2-3 more of your top players. That way you have the glory of saving cap money, ruining your team, with the hope of starting over and being competitive in 2-3 years.

Did you not read the rest of my post? The Jete do this on a 4 year cycle you can predict like clockwork. The Pats haven’t done it in nearly 20 years, they were due for a down year. I think BB actually set the team up nicely for next year if he brings in a very large FA class of middle grade vet cuts that won’t get more then the min anywhere else due to the salary cap going down. Just like 2001, but with significantly more Patton’s, Comptons, and My Man Otis Smiths on the market. I could see 5-7 holes on the roster being plugged by vets like that if 15 are brought in on good value deals which they have the money this year to give BECAUSE they sucked it up and had a down year this year. Yes that includes taking a shot at Cam and not having a QB. Still need to find the future at the position but I expect the base talent level of the team to be significantly improved next season and that will help whoever they have at QB next year.

 

[1960Pats]

Did you not read the rest of my post? The Jete do this on a 4 year cycle you can predict like clockwork. The Pats haven’t done it in nearly 20 years, they were due for a down year. I think BB actually set the team up nicely for next year if he brings in a very large FA class of middle grade vet cuts that won’t get more then the min anywhere else due to the salary cap going down. Just like 2001, but with significantly more Patton’s, Comptons, and My Man Otis Smiths on the market. I could see 5-7 holes on the roster being plugged by vets like that if 15 are brought in on good value deals which they have the money this year to give BECAUSE they sucked it up and had a down year this year. Yes that includes taking a shot at Cam and not having a QB. Still need to find the future at the position but I expect the base talent level of the team to be significantly improved next season and that will help whoever they have at QB next year.

After reading through this and many of the other posts I'm more confident that, with the lower cap and more space, the Pats will be able to turn it around quickly. It was great to have Brady for all these years, and I still would have liked to see him finish his career here, but I don't think an elite QB is a necessity for winning a SB. Many average QB's have done it but with other talent around them.

 

[PatsWickedPissah]

Another cap factor not obvious in the pure $ number posted is how many starters and key players are already signed for the upcoming season. A team could have a seemingly high cap $ number but could need to re-sign N out of M expensive key contributors (or draft or sign in FA their replacements), while another team with a lower $ number was in a better position to fill less holes and less expensive ones.
There are other factors too like the strategy of extending existing key contributors before their term is up and they hit FA or UDFA.

 

[ctpatsfan77]

Did you not read the rest of my post? The Jete do this on a 4 year cycle you can predict like clockwork. The Pats haven’t done it in nearly 20 years, they were due for a down year. I think BB actually set the team up nicely for next year if he brings in a very large FA class of middle grade vet cuts that won’t get more then the min anywhere else due to the salary cap going down. Just like 2001, but with significantly more Patton’s, Comptons, and My Man Otis Smiths on the market. I could see 5-7 holes on the roster being plugged by vets like that if 15 are brought in on good value deals which they have the money this year to give BECAUSE they sucked it up and had a down year this year. Yes that includes taking a shot at Cam and not having a QB. Still need to find the future at the position but I expect the base talent level of the team to be significantly improved next season and that will help whoever they have at QB next year.

It'll be interesting to see what happens.

 

[mgteich]

Did you not read the rest of my post? The Jete do this on a 4 year cycle you can predict like clockwork. .

I stopped after this. The jets are not capable of having any strategy that they can follow regularly for regularly for many 4 years cycles.

 

[mgteich]

If revenues are expected to be back to normal, there will be a big cap increase in 2022 and 2023. Almost all teams will sign contracts with low 2021 compensation, deferring the real money into the future. Many teams will have no choice other than this strategy or cutting several of their top players.

So, while I do believe that the market will be much lower than normal, I suspect that it won't be as low as folks may think. I agree with pazrul72' s
suggestion that we might do very well in signing midlevel veterans. In some years, these guys are expensive; this year, not so much.

 

[mgteich]

Some review for me.

1) How do guarantees affect the current cap.

For example, if there are no bonuses and salaries of $5M, and $25M all guaranteed. Is the current hit $5M?

2) Are there rules about how much salaries can increase?

 

[denverpatsfan]

I am not a salary cap guru, but I find it hard to believe that the NYFL will let franchises such as the Eagles to be so negatively affected by a smaller cap. I expect some changes to happen or some creative accounting to occur. Anything that would benefit the Pats will be addressed by this league. The NYFL does the Pats no favors.

That being said I am looking forward to some new additions to the team. Hopefully Hunter Henry and a NT or two.

 

[PatsWickedPissah]

I am not a salary cap guru, but I find it hard to believe that the NYFL will let franchises such as the Eagles to be so negatively affected by a smaller cap. I expect some changes to happen or some creative accounting to occur. Anything that would benefit the Pats will be addressed by this league. The NYFL does the Pats no favors.

That being said I am looking forward to some new additions to the team. Hopefully Hunter Henry and a NT or two.

In one of the new cap contract agreements there was special language that gave the NYJ and the NYJ alone substantive cap relief.

 

[Tottie]

Very interesting thread, ty OP. I think the league will find a way to not severely cripple any of their franchises. It's going to be interested to watch the Eagles and Saints in the offseason.

 

[Triumph]

While we're here, I've seen many references to other teams going into cap hell, but it doesn't seem to end up happening on the field. Is that because those teams, unlike the Pats, aren't as deep and are able to carry the highly paid players?

Cap Hell does happen.

Do you recall the Saints a few years ago post Super Bowl? The had to cut and let go a bunch of players due to salary cap limitations. Guess what? The Saints are back at Cap Hell crossroads again in 2021. NFL 2021 Salary Cap Tracker