Since this applies to the Bills A LOT now, can someone explain Void years?

[transplantbillsfan]

I posted this in another thread, but with the amount of void years the Bills are adding to contracts and our salary cap constraints this year and moving forward, can one of our resident CAP experts please explain Void years???

 

We just restructured Conner McGovern's contract and added 2 void years at the end of his contract.  This means that even though his contract expires at the end of 2025, there will still be dead cap money for 2 more years.

 

So does this basically just provide extra motivation to extend him for 2 more seasons beyond 2025?  And if we do that, does that basically just mean the void years we just put in his contract don't end up impacting the team at all?

 

Then as a follow up question, when we signed Leonard Floyd last offseason, it was reported that there was a void year (I think just one) that we added into the deal.  According to Spotrac, Floyd has a dead cap hit THIS YEAR of $4,376,250.

 

Now... IF that is correct regarding the Floyd deal AND my thoughts about extending a player who has void years would be beneficial in terms of the CAP, wouldn't it be wise to just sign him to another deal for next year since you're already paying him over $4m???  Even if Floyd goes out in the market and gets an offer of $10m on a one year deal from a team, the Bills could technically offer him the exact same deal and pay less than $6m in new money, correct???

 

Anyone with an understanding of the void years thing???  An explanation would be much appreciated

[Rubes]

A void year is just an extra year added on to a contract that has no salary associated with it. It allows the bonus money to be spread out over more years, to lessen the immediate impact on the cap, but extending the spread out cap hit into the future.

 

Hope I got that right...

 

[Aussie Joe]

The dead cap money in 2024 for Floyd is money they paid him last year that they pushed out ( included under their salary cap) to this year … i assume you understand that right? 
 

If you look at his figure on the cap in  2023 it is only about $2.5m we know his deal was $7m …so the difference got pushed out to this year … it’s not going to mean anything in respect of his new contract moving forward …

 

It’s just another way to push money  ( in accountiing terms) down the road … 

 

Edited February 29 by Aussie Joe

[QCity]

Void years are contract years on which the player will never play. Some people call them “dummy years” where you can dump salary cap. They allow you to lower the annual signing bonus hit by spreading them over more years.  It's somewhat based on the premise that the value of a cap dollar today is more valuable than a cap dollar in the future. Overuse can create significant problems in the future (obviously) and you never want to get cornered  into an extension for salary cap purposes that would otherwise never be made.

 

 

 

Edited February 29 by QCity

[GunnerBill]

Void years exist to spread money ALREADY PAID in real terms out for accounting purposes on the cap. 

 

We are not "already paying" Floyd $4m this year. We paid him $9m for last year. It is just half the money is accounted for this year. 

[QCity]

So Daquan Jones, 2 yr contract with a $5.5M signing bonus. Over 2 years that bonus would be a cap hit of 5.5/2 or $2.75M each year.

 

Beane wanted to free up some space so he added 1 void year, which now spreads the hit out over 3 years. 5.5/3 = $1.83M each year

 

We lowered our cap hit the first 2 years, but next year we are on the hook for a $1.83M cap hit.

 

 

 

Edited February 29 by QCity

[strive_for_five_guy]

If I’m thinking about it right, if you put too much of your players’ salaries into Void years, you effectively could put your team into cap hell in the future.  Having to account for the cap hit on players that may not even be on your team anymore.

[BarleyNY]

An example:

A team wants to sign a player to a 1 year, $7M contract, but wants to lower the cap hit in the current season. They could pay him $2M in salary plus a $5M signing bonus and add four void years to the one year deal. (5 is the maximum number of years that a signing bonus can be spread over.)

 

His cap hit would show as this:

Y1 - $3M ($2M salary + $1M signing bonus)

Y2 thru Y5 void years - $1M each (signing bonus)

 

It’s important to point out that once the contract voids all remaining cap hits would accelerate into the current season. So the cap hits for the player would be $3M in Y1 and then $4M in Y2. 

 

However if the team were to extend the player before his contract voids, then the $1M cap hits would stay in place. They would only accelerate once the player was no longer under contract. 

Edited February 29 by BarleyNY

[nedboy7]

So why is this allowed?  And when did it start? 

[Aussie Joe]

4 minutes ago, nedboy7 said:

So why is this allowed?  And when did it start? 

I have only noticed “ void years “  on the Bills salary cap the last 3 years or so.. although it may have been used elsewhere in the League  before that ..of course the signing bonus being spread out over the term of the contract has always been around … which is a similar way of spreading out money already paid to the player to future years 
 

Im sure the players association loves  it , as it’s a way to have the teams spend more money on players than the Salary Cap should allow …

 

In these days when the cap is going up 15 percent a year , I expect it to be a tool used more often…

[BarleyNY]

8 minutes ago, Aussie Joe said:

I have only noticed “ void years “  on the Bills salary cap the last 3 years or so.. although it may have been used elsewhere in the League  before that ..of course the signing bonus being spread out over the term of the contract has always been around … which is a similar way of spreading out money already paid to the player to future years 
 

Im sure the players association loves  it , as it’s a way to have the teams spend more money on players than the Salary Cap should allow …

 

In these days when the cap is going up 15 percent a year , I expect it to be a tool used more often…

Agreed. Also more teams are now owned by billionaires who made their money elsewhere and want to win. They have plenty of cash to throw around so now we have more teams looking to maximize their competitive position through maximizing their spending.

[PBF81]

The fact that a team is in this position is not good and generally either assumes poor decision-making or high-risk decision-making, like Von Miller's signing well into his back-9 at 33 for top money, for example.  

 

We haven't produced any premiere/elite players (pending anyone's definition of that) on Beane's watch.  The best we've done is Oliver on defense and Cook on offense, with Kincaid & Torrence from the '23 Draft pending.  

 

Not one of our draft picks has done anything even approaching high-level play consistently in the playoffs, which is a problem.  It's also what leads to high-risk decision-making that increases the odds of getting into the situation to begin with.  

 

 

[Tuco]

18 hours ago, transplantbillsfan said:

I posted this in another thread, but with the amount of void years the Bills are adding to contracts and our salary cap constraints this year and moving forward, can one of our resident CAP experts please explain Void years???

 

We just restructured Conner McGovern's contract and added 2 void years at the end of his contract.  This means that even though his contract expires at the end of 2025, there will still be dead cap money for 2 more years.

 

So does this basically just provide extra motivation to extend him for 2 more seasons beyond 2025?  And if we do that, does that basically just mean the void years we just put in his contract don't end up impacting the team at all?

 

Then as a follow up question, when we signed Leonard Floyd last offseason, it was reported that there was a void year (I think just one) that we added into the deal.  According to Spotrac, Floyd has a dead cap hit THIS YEAR of $4,376,250.

 

Now... IF that is correct regarding the Floyd deal AND my thoughts about extending a player who has void years would be beneficial in terms of the CAP, wouldn't it be wise to just sign him to another deal for next year since you're already paying him over $4m???  Even if Floyd goes out in the market and gets an offer of $10m on a one year deal from a team, the Bills could technically offer him the exact same deal and pay less than $6m in new money, correct???

 

Anyone with an understanding of the void years thing???  An explanation would be much appreciated

 

NOTE: This is a very long-winded version of what Barley said above.

 

Well the concept is nothing new. The first voidable year appeared back in the early 1990s. Though it wasn't widely used as it is now. And for a number of years it was used as a way for teams to get around the original rookie cap - which had the right idea but failed due to the use of voidable years. They have since figured that out. Since then teams with tight cap space have used them. But that was never us, so we never saw much of it. Lately a lot of teams have been using void years since the cap they were expecting to explode starting in 2021 went down instead of up due to COVID and they got a little behind. It is the ultimate example of kicking the can down the road by using future cap dollars in the present year. 

 

One thing it's important to remember - once a bonus in a contract has been paid and then prorated for cap purposes, there are only two things that can happen to it. It either stays prorated to the years it was originally assigned, or if the player is cut, traded, or his contract voids, the remaining prorated amounts are accelerated, and all charged to the cap in the current year.  NOTE: Technically if a player is suspended or incarcerated or is otherwise unable to fulfil his contract (like a surprise early retirement soon after signing a new contract with a big bonus), the team can get salary cap reimbursement for certain portions of a player's prorated cap. But it requires grievances, hearings, judgements etc. and is never recovered until the following season at the soonest. Outside of those extreme circumstances, nothing else can be done to remove prorated or dead cap.

 

Let's start with the Floyd example. It's not that the team is already paying him $4+ mil for the year and could get him for the same $10 mil deal by only adding $6 mil. The $4+ mil is money being charged against the current cap that's already been paid in previous years. Since the cap charge for a signing bonus is spread out over the length of a contract (up to 5 years), a team can give a player a lot of money in year one of the contract, make a lot of it a signing bonus, and spread that bonus' cap charge out over more years - giving the player more money in year one while delaying the cap charge for the team to future years. But once a player is cut, or his contract voids (even if it's on purpose), any prorated salary cap charges for those years are accelerated to the current year and appear as dead cap. So any new contract for Floyd still has to account for that $4+ million one way or another because it's already been paid - in addition to the terms of a new deal.

 

I like using round numbers so this example will be what happened in Floyd's case only with easier to look at figures. Let's say we want to sign a player named Smith to a 1-year contract for $6 million but we only have enough cap space in our current year for $3 million. So we give Smith a contract that pays him $2 million salary this year, with a $4 million signing bonus. Now if we only had a 1-year contract the whole $6 million would be charged against our cap in this season whether it was salary or bonus - not in our budget. If we made it a 2-year contract, then the cap charge for the $4 million signing bonus would be spread out over those as $2 million this year and $2 million next year - even though Smith gets all of it in year one. That would make our cap charge $4 million this year. And next year the cap charge would be whatever the salary is plus the remaining $2 million prorated cap charge for the bonus. Or, if Smith really wants to only sign for 1 year, we can still make the contract for 2 years - letting us spread the bonus out over this year and next, but also put in a trigger clause that voids the second contract year. This gives Smith all of his agreed to $6 million in the first season, while letting the team charge it as $4 million the first year and another $2 million in the following year. But since Smith won't be here in the second year, the $2 million is considered dead cap. It's money already paid Smith in year 1 being charged against our cap in year 2, even though Smith is no longer under contract with us.

 

But let's go a little further. We stated for our example we only had $3 million in available cap space to sign Smith. So in order to get his cap charge lower, we have to add more void years so we can technically spread the prorated bonus charge out further and make the first year hit smaller. So now we give Smith the same $6 million in the form of $2 million in salary and $4 million in signing bonus, but we make it a 4-year contract with the final 3 years voiding. This allows us to still give Smith $6 million in this season, but then spread the remaining $4 million SB prorated cap charge over the 4 years of the total contract. Meaning the cap charge for this year would be the $2 million salary plus only $1 million in prorated cap charge. This would lower Smith's cap charge to $3 million this season while creating a $3 million dead cap charge next year when those remaining years void. So Smith's contract looks like this (salary in green, prorated signing bonus in red) -

 

1st year - $2,000,000 + $1,000,000 = $3,000,000 cap charge (but actually paid all $6,000,000)

 

2nd year (void) - $1,000,000 

3rd year (void) - $1,000,000

4th year (void) - $1,000,000

 

While the contract for year 1 is in effect, the remaining years haven't technically voided yet. So the cap charge for year 1 stays at $3 million. Once the first season is over and the trigger kicks in, the remaining years void, and the remaining prorated cap charges are accelerated to year 2 as $3 million in dead cap.

 

So for the record, Floyd's contract was structured as above, except his numbers were 1st year salary of $1,165,500 with a SB of $5,835,000. This allowed us to pay him $7 million in 2023 with a cap charge of only $2,623,750 - and creating the $4,376,250 dead cap hit we now enjoy in 2024.

 

Now where some people get confused is when they look at Spotrac and see (we'll jump back to Smith's contract again) an upcoming dead cap of $3 million for 2024. Then sometimes the player signs a new deal with the same team before the void triggered, and it looks like that dead cap charge disappeared. It didn't disappear, it's just that the new contract was reached before the voids kicked in. Meaning the $3 million is still part of the new contract, it's just still being prorated over the remaining years like it always was. 

 

So say before the void trigger hit, we agreed to a new contract to keep Smith around for another year. He's getting older and agrees to play for $5.5 million this time. So we take the original contract and update the 2nd year to give Smith a $1.5 million salary, add another void year at the end, and do it all over again with the contract now voiding after year 2. Only now, since the new contract was reached before the voids triggered, the original prorated cap charges stay where they were, and the new prorated charges (blue) are spread out over the remaining voidable years including the new one - 

 

1st year - $2,000,000 + $1,000,000 = $3,000,000 cap charge (but actually paid all $6,000,000)

 

Made a new deal for 2nd year, added 5th year (void), and delayed voids until after year 2.

 

2nd year - $1,500,000 + $1,000,000 + $1,000,000 = $3,500,000 cap charge (but actually paying all $5,500,000)

 

3rd year (void) --------- $1,000,000 + $1,000,000

4th year (void) --------- $1,000,000 + $1,000,000

5th year (void) ------------------------ $1,000,000
 

Now a person might look at this and think, oh they gave him an extension for $5.5 million and the original $3 million dead cap figure for year 2 has disappeared. But as you can see, the $3 million is still there and still being charged against the cap as it always was - prorated bonus. The contract never voided so the prorated numbers stay in place. Only now the can has been kicked farther, and when the contract voids after year 2 there will be a $5 million dead cap charge in year 3.

 

So to your point about matching a $10 million deal for Floyd because it would only cost us $6 million. that's not the case. The $4+ million cap charge would still be there. If we signed him now (after the void) it would cost us the $10 million plus the $4+ million in dead cap. And even if we did it before the void kicked in it would cost us the same $10 million plus the original $1,458,750 prorated charge for year 2024, with the final 2 years ($2,917,500) still showing up as dead cap in 2025. No matter how you slice it, we kicked the can and the remaining $4+ million of Floyd's original contract has to be charged against our cap - either as dead cap like it is, or in addition to any new deal we could have given him. It doesn't go away and it can't be gotten rid of. Make no mistake, using multiple void years is can-kicking to the extreme.

 

We can, of course, sign player Smith to a longer deal any time we want. We would simply remove the void trigger and replace the void years with regular contract terms. But any such deal would still have the above prorated numbers attached in addition to whatever the new deal is for.

 

Peace.

 

 

Edited March 1 by Tuco

[Rubes]

5 hours ago, strive_for_five_guy said:

If I’m thinking about it right, if you put too much of your players’ salaries into Void years, you effectively could put your team into cap hell in the future.  Having to account for the cap hit on players that may not even be on your team anymore.

 

Not to be picky, but to clarify: salary money, as far as I understand it, is only charged to the cap during the year that the salary is earned (ie, when the player plays). Salary is basically for playing time; bonuses are extra and don’t have to be counted in the year the player plays—they are spread out over the life of the contract.

 

So you don’t put salary money into void years, because the player is not playing during the void years. Void years are only for bonus money, and for the purpose of spreading out the bonus money over more years, lessening each year’s cap hit but extending the cap hit over more years.

 

This is one reason you often hear salary money being converted into bonus money—it lowers the salary cap hit for that year, so that more of the player’s earnings is bonus money, which can then be spread out over more years. Adding void years allows you to then spread it out over even more years.

 

Edited March 1 by Rubes

[strive_for_five_guy]

5 minutes ago, Rubes said:

 

Not to be picky, but to clarify: salary money, as far as I understand it, is only charged to the cap during the year that the salary is earned (ie, when the player plays). Salary is basically for playing time; bonuses are extra and don’t have to be counted in the year the player plays—they are spread out over the life of the contract.

 

So you don’t put salary money into void years, because the player is not playing during the void years. Void years are only for bonus money, and for the purpose of spreading out the bonus money over more years, lessening each year’s cap hit but extending the cap hit over more years.

 

This is one reason you often hear salary money being converted into bonus money—it lowers the salary cap hit for that year, so that more of the player’s earnings is bonus money, which can then be spread out over more years. Adding void years allows you to then spread it out over even more years.

 

No worries here, appreciate the clarification on salary money v bonus money and the latter being what you can spread out.

[NoSaint]

7 hours ago, transplantbillsfan said:

I posted this in another thread, but with the amount of void years the Bills are adding to contracts and our salary cap constraints this year and moving forward, can one of our resident CAP experts please explain Void years???

 

We just restructured Conner McGovern's contract and added 2 void years at the end of his contract.  This means that even though his contract expires at the end of 2025, there will still be dead cap money for 2 more years.

 

So does this basically just provide extra motivation to extend him for 2 more seasons beyond 2025?  And if we do that, does that basically just mean the void years we just put in his contract don't end up impacting the team at all?

 

Then as a follow up question, when we signed Leonard Floyd last offseason, it was reported that there was a void year (I think just one) that we added into the deal.  According to Spotrac, Floyd has a dead cap hit THIS YEAR of $4,376,250.

 

Now... IF that is correct regarding the Floyd deal AND my thoughts about extending a player who has void years would be beneficial in terms of the CAP, wouldn't it be wise to just sign him to another deal for next year since you're already paying him over $4m???  Even if Floyd goes out in the market and gets an offer of $10m on a one year deal from a team, the Bills could technically offer him the exact same deal and pay less than $6m in new money, correct???

 

Anyone with an understanding of the void years thing???  An explanation would be much appreciated

i think at some point- perhaps after 10,000 posts here-  if you don’t understand the basics of the cap you have to take that as a lesson about who you are instead of trying to get coached up

[JoPoy88]

8 hours ago, nedboy7 said:

So why is this allowed?  And when did it start? 

1. Because the league allows it. It’s an accounting trick. It’s harmless.

2. Void years have been around for many years. They become more useful in periods of rapidly increasing salary cap, like now.

[GunnerBill]

9 hours ago, PBF81 said:

The fact that a team is in this position is not good and generally either assumes poor decision-making or high-risk decision-making, like Von Miller's signing well into his back-9 at 33 for top money, for example.  

 

We haven't produced any premiere/elite players (pending anyone's definition of that) on Beane's watch.  The best we've done is Oliver on defense and Cook on offense, with Kincaid & Torrence from the '23 Draft pending.  

 

Not one of our draft picks has done anything even approaching high-level play consistently in the playoffs, which is a problem.  It's also what leads to high-risk decision-making that increases the odds of getting into the situation to begin with.  

 

 

 

It is certainly a bit the risky swing they took on Miller. It is a bit that they haven't weaned themsleves off the middle class vet backups but also, in fairness to Beane, it is still a bit decisions they had to make to deal with the cap going backwards in covid. It hurt teams like the Bills more than most in that they were trying to do the mega deal with their Quarterback in the same period as navigating a reduced cap and so they weren't as able to do what you normally do which is front load a few contracts of other guys into that window where Josh is on the new deal but his annual hits stay low. Other guys they were extending at that time like Dawkins, Milano and Taron were all deals that pushed the bigger cap hit down the road and here we are at the back end of those contracts with them all on bigger numbers. Had the cap continued to rise at the normal rate in 2020 and 2021 I think you'd be at least $15m or so better off in cap terms from having accounted for some higher numbers on those deals earlier in the piece.

 

That would still leave us over the cap so the first two factors which are entirely of the Bills own making are not diminished. Beane is definitely culpable. But some of the excuse he makes for himself is legit.

 

As for void years generally - it's always been done and always been allowed but normally infrequently. Since the Covid cap restriction there has been an explosion in their use league wide. The Bills are far from alone in this. It will be interesting when we get another year or two out from Covid and those deals signed in 2020 and 2021 start to come off teams' dockets whether the void years trend disappears (or reduces back to what it was) or whether now it is here as a cap management staple it just continues being used at the current rate.

[Arkady Renko]

I recall the first time I saw mention of this was the Percy Harvin contract.  Interesting that they go back much farther. 

[TrentEdwardsCheckDownOn4th]

16 hours ago, Aussie Joe said:

The dead cap money in 2024 for Floyd is money they paid him last year that they pushed out ( included under their salary cap) to this year … i assume you understand that right? 
 

If you look at his figure on the cap in  2023 it is only about $2.5m we know his deal was $7m …so the difference got pushed out to this year … it’s not going to mean anything in respect of his new contract moving forward …

 

It’s just another way to push money  ( in accountiing terms) down the road … 

 

Anf is this  basically why we are in cap hell ? Did beane kick a bunch of contracts down the road to improve 2022/2023 cap numbers? 

 

Outside of josh allen , I really don't think beane has done a good job managing this team.