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Salary cap tactics questions

Discussion in 'Packer Fan Forum' started by adambr2, Apr 29, 2013.

  1. adambr2
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    adambr2 Cheesehead

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    Specifically I'm wondering about front-loading deals, which has been used by TT in the past.

    If I'm understanding the new CBA right, there is no longer any advantage to doing this at all, since any leftover cap can just be rolled into the next year. Unless there is a limit on how much you can do this.

    Example: Team A is $10M under the salary cap. They sign Player A to a 2 year, $15M dollar deal, with no signing bonus.

    I do not see any advantage to frontloading. If they give him $10M the first year to bring them up to the cap limit, he would only count $5M the next year. If they gave him $5M the first year, he would count $10M the 2nd year, but because of the $5M left over from the previous year, they can roll that extra $5M over anyway.

    Seems to me like you would always want to backload now to A) reduce risk, you can cut the player and save more money, and B) Future years should be more cap-friendly than present years.
  2. SpartaChris
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    SpartaChris Cheesehead

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    You are correct that the CBA allows any unused amount to be rolled over to the following year. I don't know if there is a limit to the amount or not.

    As for front loading contracts, it's usually a player thing, since they are looking to try to protect themselves against future injuries. The benefit to front loading a deal to the team is if they feel like they might need that cap space in future years. For example, we have a lot of guys with contracts expiring after this season. The more we're able to put into this cap year, the more we'll have to allocate to other players.
  3. cupacker
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    cupacker Cheesehead

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    When you backload you either have to A) restructure the contract before you get there or B) cut them. The problem is, players don't want to do that. Would you want to sign a contract that says:

    Year 1: $2 million
    Year 2: $3 million
    Year 3: $1.5 million
    Year 4: $12 million

    The player knows he will either get cut or have the deal restructured, so either way he's not getting that $12 million. That's why signing bonuses are so big, the player gets most of the money up front, and the team gets to spread the cap hit out over time.
  4. ThxJackVainisi
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    ThxJackVainisi Lifelong Packers Fanatic

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    The cap carryover definitely makes a difference but to fully "flesh out" the ramifications I think you have to use examples with signing bonuses and guaranteed money. For contracts such as the one in the OP, I agree - if there's no guaranteed money it doesn't matter except for the time value of money both to the player and the team.

    According to the linked article below, the Packers still have about $13.5M in cap room even after signing Rodgers and Matthews. Without the carryover rule I'll bet Thompson and Ball would have used more of this year's cap on Rodgers' deal.

    With regard to signing bonuses and "up front" money being important, don't forget about guaranteed money in the years beyond the first. IOW, guaranteed money is guaranteed money whether it's paid in year 1 or 3. As an example, take a look at Rodgers' contract: He receives $35M in guaranteed money this year plus a $9.5M roster bonus in both 2014 and 2015 and those bonuses, unlike most roster bonuses are "guaranteed against skill and injury". No matter what, he gets those payments.

    Here's an interesting aspect of Rodgers deal: His $35M signing bonus is only prorated over the first five years of the contract. IOW, if he is waived by the Packers after the 2017 season, he's owed no money and the cap hit is zero. I don't remember another contract in which the signing bonus isn't prorated over the entire term of the contract.

    BTW, the second page of the linked Press Gazette article details Rodgers compensation for each year of the deal.

    http://www.packersnews.com/article/...als-won-t-strain-Green-Bay-Packers-salary-cap
  5. Poppa San
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    Poppa San Pray daily and take the plunge for Eli Staff Member Moderator

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    From here: http://www.bloggingtheboys.com/2013...ion-amortization-cap-hits-dead-money-and-more
    • Informative Informative x 1
  6. ThxJackVainisi
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    ThxJackVainisi Lifelong Packers Fanatic

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    Good "catch" Pappa San, I didn't realize they put a 5-year cap on prorating signing bonuses. That doesn't seem to benefit either side unless the owners thought they needed to have some discipline imposed.
  7. HardRightEdge
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    HardRightEdge Cheesehead

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    Evidently the proration of signing bonus is for no more than 5 years by rule. I wasn't aware of this either. Same applies to Matthews: http://www.spotrac.com/nfl/green-bay-packers/clay-matthews/
  8. HardRightEdge
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    HardRightEdge Cheesehead

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    That sounds right.
  9. Poppa San
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    Poppa San Pray daily and take the plunge for Eli Staff Member Moderator

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    Imagine Aaron's latest contract at 10 years, $200m with a $70mil bonus, 7 years @ $3-4m ea and 3 years @ $35m. With unregulated length, that would be the best QB in the game @ $10m cap for 7 years and $21m dead cap after 7 years. How many GM's wouldn't take that and move on after 7 years?
  10. adambr2
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    adambr2 Cheesehead

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    Combined cap hits for Rodgers/Matthews by year:

    2013: 18,710,000
    2014: 29,050,000
    2015: 31,300,000
    2016: 33,350,000
    2017: 35,850,000

    These are a far cry from the $40M a year combined hit that people were expecting.

    Also keep in mind that the cap is pretty certain to increase by a pretty decent amount between now and 2017, making the increasing hits easier to take.
  11. HardRightEdge
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    HardRightEdge Cheesehead

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    1) Why would the player go for that? It amounts to 7 years, $91 - $98 mil.

    2) No sensible owner wants $21 mil in dead cap, especially from one player. It's one thing to be stuck with it because of a mistake or injury; it's another to build it into your future salary structure.

    3) When you grow the signing bonus/guaranteed money that large, a career-ending or performance-hindering injury in the early years of the contract would set the program back several years. Think of the implications of $56 million in dead cap after 2 years, for instance.

    Imagine if Al Davis could have spread singing bonuses out indefinitely. As bad as the dead cap situation is now in Oakland it could be a lot worse without the 5 year limit. Without the 5 year limit Al also would have been driving up salaries...he could have overpaid guys by an even wider margin into a more pronounced death spiral.
  12. Poppa San
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    Poppa San Pray daily and take the plunge for Eli Staff Member Moderator

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    I said
    You said
    1) $70 million guaranteed and in the bank tomorrow. Invested @ 5% is $3.5 million/year (ignoring taxes and fees) 6 years=another $20 million+
    2) You are right, no owner would but a win now GM might be able to slide it through.
    3) You and I are on the same side here as I agree it is a stupid idea. The NFL also agrees, hence the proration limit of 5 years. How is a huge signing bonus different than guaranteed money anyway? If Rodgers goes down permanently this year for instance, it would be a huge cap hit in 2015. (I am fairly certain he'd be a post June 1 designee next year in this case.)

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