Belichick Clarifies Cap vs. Cash Spending Comments

[Rob0729]

I think Belichick did really miss out of the increase in cap from the next TV deals. The cap is now growing so fast that deals that were shocking even last year will be average deals in two or three years. I do believe the people who say "The Cap is Crap" are overstating it a bit, but the new TV deals along with some of these new marketing deals really did create a window where the cap is irrelevant.

Many team were able to pay huge deals to top talent because as the cap continues to go up exponentially, they still have a lot of players on deals at well below market deals because they signed contracts before the salary jump. The longer we get into the new deal, the fewer players teams have under contract under the old salary pay scale.

The time to strike was last year and this year. The Pats won't be able to strike until next year and they will still have to sign a lot of players under the new salary structure just to get to the 53 man roster.

 

[RobertWeathers]

The 49ers have made a lot of aggressive moves to build their team from trading for Lance to trading for McCaffrey. They don’t go crazy with the spending, but they have mortgaged the future in other ways.

Correct. They question was about top tier QBs. The Tits and Ravens have spent lavishly on other players as well. So have the Patriots.

 

[RobertWeathers]

The Titans haven't been competitive for 6+ years, the Ravens have a top tier QB in Lamar Jackson and also haven't been competitive for 6+ years considering they sink whenever he's injured and the 49ers have also been up and down during that timeframe (6-10 in 2017, 4-12 in 2018, 13-3 in 2019, 6-10 in 2020, 10-7 in 2021 and 13-4 in 2022). To remain consistently competitive year in and year out for a long period of time, high level QB play is a requirement.

Your definition of competitive and mine are different. Look back to 49ers in the early 2010s

Titans were competitive from 2016-2021.

Jackson is not a top-tier passer.

 

[RobertWeathers]

Its folklore to think every roster that went to the conference finals had no 'warts on the roster"

2006, 2011, 2013, 2015 all ring bells of years where they made it to the conference finals with sub-par rosters. you take brady off those teams they probably don't sniff the playoffs let alone the conference finals.

Please find an NFL team with the perfect roster and post it here.

 

[One-If-By-Sea]

Do you all think Belichick shies away from cash spending too much?

If the NFL team spends to the cap, then the cash spend is the same over time. The cash might be higher or lower in a year or two, but will swing back and over time the cash spent equals the cap spent. If any GM spends to the cap limit, they are also spending all the cash allowed.

BB spends to the cap limit, so BB spends all the cash allowed under the collective bargaining agreement. BB is not shying away from spending cash.

 

[One-If-By-Sea]

And for anyone confused about cash spending vs. cap spending, there's an easy example here: the Jets are spending 310 million dollars on their 2023 team, the Patriots are spending 218 million on theirs. Both teams are perfectly cap compliant. Not saying the Patriots should be doing what the Jets are doing, just showing how much of a gap in spending is possible even within the constraints of the cap.

That is a one year window. If both teams spent the whole cap, that means the Patriots spent or will spend $92M more (310 - 218 = 92) in prior or future years. Over time the cash spent averages out to equal the cap.
There are minor exceptions, but those are small.

 

[moosekill]

People get all worked up about the cash, because they listen to talk radio and they have to call Kraft and Bill cheap so idiots will listen to their shows and agree. The cash doesn't matter, it is all about the cap.

 

[RobertWeathers]

People get all worked up about the cash, because they listen to talk radio and they have to call Kraft and Bill cheap so idiots will listen to their shows and agree. The cash doesn't matter, it is all about the cap.

100% correct.

The only real argument is in order to close the deal, the team may need to offer a ton of guaranteed money up front. Doing that lands the player but in turn the team needs to spread the hit in future years.

With 2024 looking like the team will have $100m in space, you could argue he could have done more at LT this offseason.

Whatever.

 

[One-If-By-Sea]

I think Belichick did really miss out of the increase in cap from the next TV deals. The cap is now growing so fast that deals that were shocking even last year will be average deals in two or three years.

You can not miss out on future cap years. BB did not spend future cap dollars yet, but he can spend the money in 2024 and 2025. It is the same thing as having a savings account - the bank does not take your money away. The Pats have always spent the whole cap and Kraft has repeatedly said he is committed to spending the whole cap. This comment is awful.

I do believe the people who say "The Cap is Crap" are overstating it a bit, but the new TV deals along with some of these new marketing deals really did create a window where the cap is irrelevant.

Completely and totally wrong. Just WOW!

Many team were able to pay huge deals to top talent because as the cap continues to go up exponentially,

The cap is not going up exponentially. You must not be a math guy.

they still have a lot of players on deals at well below market deals because they signed contracts before the salary jump. The longer we get into the new deal, the fewer players teams have under contract under the old salary pay scale.

Salaries are always going up. No different than any other time in history when new TV deals are signed. Remember when a McDonalds hamburger was 35 cents?

The time to strike was last year and this year. The Pats won't be able to strike until next year and they will still have to sign a lot of players under the new salary structure just to get to the 53 man roster.

There was no need to strike a deal last year or this year. The cap is not changing. BB can sign deals and spread the cap dollars anytime or any year. The Pats cap dollars are in a savings account waiting to be spent, and the Pats total cap dollars are the same as any other team.

 

[One-If-By-Sea]

100% correct.

The only real argument is in order to close the deal, the team may need to offer a ton of guaranteed money up front. Doing that lands the player but in turn the team needs to spread the hit in future years.

With 2024 looking like the team will have $100m in space, you could argue he could have done more at LT this offseason.

Whatever.

Yeah, there were only one or two LTs in FA I think, but he did not spend to bring one in. I think BB is trying to complete the rebuild next year but it would be nice to have a LT and T Brown over at RT.

 

[RobertWeathers]

Yeah, there were only one or two LTs in FA I think, but he did not spend to bring one in. I think BB is trying to complete the rebuild next year but it would be nice to have a LT and T Brown over at RT.

Yep. It was a choice. It would have been an incredibly expensive investment but would have (theoretically) solved a problem for years to come.

Bill decided Brown for ~$11m + roster/cap flexibility was more value than ~$75m in guarantees.

Drafting one would also been preferred but with nabbing Gonzo at 17 (CB also a major position of need) addressed a serious need.

 

[One-If-By-Sea]

Yep. It was a choice. It would have been an incredibly expensive investment but would have (theoretically) solved a problem for years to come.

Bill decided Brown for ~$11m + roster/cap flexibility was more value than ~$75m in guarantees.

Drafting one would also been preferred but with nabbing Gonzo at 17 (CB also a major position of need) addressed a serious need.

Yup. Can't plug all the holes at once. Of course if the wrong draft pick or free agent signing happens, the organization is set back again. That is why I prefer to draft BPA and plug the other holes over time.

 

[RobertWeathers]

Yup. Can't plug all the holes at once. Of course if the wrong draft pick or free agent signing happens, the organization is set back again. That is why I prefer to draft BPA and plug the other holes over time.

...and after the Smith and Agholor signings I can totally understand Bill being a bit conservative in the FA market.

I mean, I look at the 2023 picks. I don't really have a major issue with the logic/need behind each one. How they actually perform remains to be seen.

 

[40yrpatsfan]

I posted something similar earlier but this is more detailed.

The main reason there's a difference between cap charge vs cash spending is because of upfront bonuses. A typical deal is say $30m over 3 years, including a $15m bonus up front and salaries of $1m, $7m, and $7m.

The cap charge for the bonus is always spread equally over the term - $5m per year for 3 years in this case, so that:
- Cash spending is $16m in year 1 ($15m bonus + $1m salary), and it's $7m (all salary) in each of years 2 and 3.
- Cap charge is $6m in year 1 ($5m bonus proration + $1m salary), and $12m in each of years 2 & 3 ($5m bonus proration + $7m salary)
- each team has a "cap limit" each year, but not a cash spending limit.

In the above, you're spending $16m cash in year 1, but the cap charge is only $6m. Conversely in each of years 2 and 3 you're spending $7m in cash but the cap charge is $12m. The real cost is in between: $10 per year for 3 years.

Also, if you cut or trade a guy after say year 2, the cap is still charged the remaining $5m of the bonus proration for year 3 even though he's no longer on the team (but no salary is charged in year 3 unless it had been guaranteed which it usually isn't). That's what people are usually referring to when they talk about "cap hit".

If a team is approaching their cap limit, then they can extend a guy another year or two and "convert" his salary to a bonus. The example above has a year-3 salary of $7m and a year-3 cap hit of $12m. Prior to year 3, they could add a 4th year @ $10m/year, and basically do a new bonus/salary schedule for years 3 & 4 that creates cap space such as a $7m bonus with salaries of $1m and $9m. Bonuses to be prorated over 2 years are now $12m, so that's $6m/yr. The year-3 cap charge is now $7m (6m bonus proration + 1m salary), instead of $12m. But year 4's cap hit will now be $15m ($6m bonus proration + $9m salary). This is the discipline that BB talks about: not increasing your future year cap charges.

"Cash spending" is a just a function of how you structure the deal between bonus and salary - it's not really telling you anything about how aggressive or conservative a team is about getting a player. "Cap charge" is what the contract payments are actually totaling up to over the life of the contracts.

What would make everything better imo is get rid of up-front bonuses and spread them out over the term of the contract. So even if a guy is cut he still gets that unpaid bonus. Same math, just don't pay the bonus at signing, pay it in increments each year as another component of compensation. Then you wouldn't have a case like Gilmore claiming he was only being paid $6m or whatever, when in fact he was prepaid another $7m in his upfront bonus.

 

[ivanvamp]

I think Bill shies away from spending on the high end of any position. I think he wants to have median paid talent throughout his first string of the roster. Then I think he wants have a high end paid other 31 players on the roster. Not many players come out of a season unscathed.

Over his time here, he's spent huge dollars on plenty of players. He pays a ton for Slater (at his position, his price tag is huge). He's paid a lot for his TEs - Gronk, Jonnu Smith, Henry. He's paid a lot for corners - Gilmore and Revis. He paid a lot for Judon initially (whose cap hit in 2022, 2023, and 2024 were/are/will be: $14.3m (7th highest), $16.4m (9th highest), and $15.4m). He spent a lot on Gostkowski for a long time; he was always one of the highest paid kickers in the league.

He just picks and chooses and doesn't do this very often. But he will do it. But I think your general premise is fair.

 

[Bill Lee]

So when it comes to the "cap is crap" theory, are people referring to the obfuscation that can be done via cash spending?

As Andrew Brandt says, cap is accounting. You can almost always make the numbers work. If you want more cap this season, find a player who has a high salary and convert that to a bonus, now it becomes written off against the cap in five year installments. Doing this creates cap room equal to 80% of the bonus. The only down side to the team is paying it out in one lump sum instead of weekly game checks.

It is possible to get to the point where you can no longer do this, but those cases are the rare ones BB mentions: Rams, Bucs, Saints, etc.

Most of the league manages the cap so they rarely get into that situation, with the Saints being a notable exception of almost always being up against the cap. Rams seem to be willing to be near the edge. Bucs was a classic case of seeing their window open and putting all the chips on the table. It was fun while it lasted, and now they're paying back big-time.

 

[Bill Lee]

Cash is basically irrelevant to the owners. Let's just pretend they have unlimited amounts of cash, which for our sake is true. However they have a set amount of cap $$'s they can spend each year. They can't go over that amount. They are allowed to spread it out over the length of the contract. Then they can entend the contract or change the contract to make the players pay this year spread out over multiple years, even though the player got the cash this year. That is how they can make the cap less relevant, however, over time, that piper still needs to be paid.

Cash is irrelevant to MOST owners. Yes, they all have a billion dollar asset and gets many millions of dollars of TV money each year, but for some owners like Mark Davis and Dean Spanos, that's really all they have, and they have a lot of mouths to feed. Other owners such as Jerry Jones and Stan Kroenke are independently wealthy and don't really need to run their team at a profit, and probably aren't.

As mentioned earlier, guaranteed money for a given contract needs to be put in escrow right up front even if it is paid out in future years, which is why some teams avoid guarantees. Also, rich people don't like leaving tens of millions of dollars around doing nothing. It is a factor that helps keep guarantees lower than they could be.

 

[ivanvamp]

I've said this for a long time and will forever say it until proven wrong. But the GFIN mode that a lot of teams engage in (like the Rams and Bucs as @Bill Lee mentioned above) is a good and quick way to have a legit Super Bowl run for a short window, but then it ends and it's time for a massive overhaul, usually featuring numerous terrible, horrible years' worth of a rebuild.

The Pats rarely, if ever, do this. They continually build for the long haul, which allows them to remain competitive. But it also means that in any given year, there are several other teams that are in GFIN mode and surpass the Pats. Even in the great 20 year run, the Pats were always great, but other teams (i.e., the "field") won it a lot more than New England did.

 

[Vindicate]

Krafty Bob got to bill, told him to backtrack...if you don't realize this you have your head in the sand and think the Patriots will go 17-0 and win the tournament

Incredible analysis.

 

[Vindicate]

I posted something similar earlier but this is more detailed.

The main reason there's a difference between cap charge vs cash spending is because of upfront bonuses. A typical deal is say $30m over 3 years, including a $15m bonus up front and salaries of $1m, $7m, and $7m.

The cap charge for the bonus is always spread equally over the term - $5m per year for 3 years in this case, so that:
- Cash spending is $16m in year 1 ($15m bonus + $1m salary), and it's $7m (all salary) in each of years 2 and 3.
- Cap charge is $6m in year 1 ($5m bonus proration + $1m salary), and $12m in each of years 2 & 3 ($5m bonus proration + $7m salary)
- each team has a "cap limit" each year, but not a cash spending limit.

In the above, you're spending $16m cash in year 1, but the cap charge is only $6m. Conversely in each of years 2 and 3 you're spending $7m in cash but the cap charge is $12m. The real cost is in between: $10 per year for 3 years.

Also, if you cut or trade a guy after say year 2, the cap is still charged the remaining $5m of the bonus proration for year 3 even though he's no longer on the team (but no salary is charged in year 3 unless it had been guaranteed which it usually isn't). That's what people are usually referring to when they talk about "cap hit".

If a team is approaching their cap limit, then they can extend a guy another year or two and "convert" his salary to a bonus. The example above has a year-3 salary of $7m and a year-3 cap hit of $12m. Prior to year 3, they could add a 4th year @ $10m/year, and basically do a new bonus/salary schedule for years 3 & 4 that creates cap space such as a $7m bonus with salaries of $1m and $9m. Bonuses to be prorated over 2 years are now $12m, so that's $6m/yr. The year-3 cap charge is now $7m (6m bonus proration + 1m salary), instead of $12m. But year 4's cap hit will now be $15m ($6m bonus proration + $9m salary). This is the discipline that BB talks about: not increasing your future year cap charges.

"Cash spending" is a just a function of how you structure the deal between bonus and salary - it's not really telling you anything about how aggressive or conservative a team is about getting a player. "Cap charge" is what the contract payments are actually totaling up to over the life of the contracts.

What would make everything better imo is get rid of up-front bonuses and spread them out over the term of the contract. So even if a guy is cut he still gets that unpaid bonus. Same math, just don't pay the bonus at signing, pay it in increments each year as another component of compensation. Then you wouldn't have a case like Gilmore claiming he was only being paid $6m or whatever, when in fact he was prepaid another $7m in his upfront bonus.

Thanks for reposting this, but with more detail. I think after digesting what you all have contributed so far, I have a much easier time understanding the nuance upon which you've expounded.

It seems to me Belichick is very much about building a bulwark of middle-class players and will splurge when it's best for the team, and not just a unit. Granted, Hopkins could've been a good addition - but do the pieces around him maximize his value? Hopkins is tricky because we're not too sure about his true value right now, which is why I think Belichick and Co. are hesitant to bite.

Contrast this with a Gilmore or Judon... Already decent/strong units, where a splash puts the unit into a definable category that helps the team. BB has the infrastructure (players, coaches) right now to find and spend on defensive players. The offense is such an inconsistency/question mark, it's hard to feel confident into which unit you can invest to benefit the entire team. I think it starts with offensive-line at that point, as the trickle down from that unit overwhelming ripples throughout the entire offensive side.

Granted, I'm really just guessing as much as anyone else, but the combination of building for continuity/long-term and that kinda spending mentality can explain recent moves in FA/draft.

Thanks to everyone who has gone into detail thus far.