The Salary Cap Issue

[Thurman#1]

10 hours ago, Rew said:

People that complain about dead money endlessly or make comments like "we're paying him and he's not on the team!" (Under many l, but not all scenarios) don't really understand the cap at all.

 

I'll try to explain the basic concept in a way that gets to the universal driver.  In a cap inflationary environment, you are counting on the cap being bigger next year and the year after than it is today.  Under this scenario, you can take advantage of accounting rules to pay your players today, but not take the cap hit for 2 years.  If every other team is paying their players $250M (in cash), you can pay them $290M (in cash).  This comes with downsides and risks, and does not provide any advantage when cap is not changing dramatically year to year.  However, between NFLPA negotiations and overall revenue growth of the NFL the salary cap has increased 50% over the last 7 seasons.  Using the the techniques of cap deferal in this environment allows teams to consistently pay their players 10-20% more than pure "cash to cap". 

 

One downside of this is that you end up with more long term contracts instead of short term contracts.  This can be good.  If every player plays our their contracts you end up paying below market rates on an average basis.  However, players don't end up playing out their long deferred contracts, so you actually don't end up paying less than market rates, so there is a few% inefficiency penalty for doing this. Also these longer term structures end up increasing your "committed cap", meaning that a team taking advantage of the cap this way is not as flexible in roster moves as a team not doing this.  If every move you make us the right one, this isn't a downside.

 

Another big downside (and maybe the biggest factor impacting some teams) is that you still have to pay the cash, even if you are defering the cap hit.  Sometimes this cash goes to the player and sometimes it goes into escrow, but you can't take advantage of cap deferal if you don't have an owner able to keep $100's of millions tied up.

 

There is a 5 year limit on deferal, so with items like a signing bonus scheduled over 5 years means a maximum of 2 year deferal (on average).  It's challenging to come to terms with a player with all $ being deferred, so their is a practical cap of how much you can take advantage of this.  

 

 

People who complain about dead cap endlessly or make comments about "we're paying him and he's not on the team, "  ... understand the system perfectly. Or rather people who say we're using a giant chunk of this year's cap and getting absolutely nothing for it because the player is on another team ... they understand perfectly. It's a major handicap. As it was for us last year with the Diggs contract.

 

When you have a huge dead cap hit, ala Diggs, it means you wasted a huge amount of money, and that that money is coming out of the cap in a year when that guy is not even playing on your team. If you do it perfectly, it's still a problem but yes, not as big a problem. It's still a problem even if things went perfectly because many of these long-term contracts have void years, and even if that works out perfectly you're still going to end up having dead cap. 

 

It has consequences. Last year, each team received $255.4M in cap space. The Bills only spent $225.25M in cash.

 

https://www.spotrac.com/nfl/buffalo-bills/cash/_/year/2025

 

Why? Why did they spend in cash about $30M less than they received? Well, it's complex and there are a ton of factors but arguably the single main factor was the $31M in dead money that was being taken off the cap for Diggs while he was playing in Houston. And all of the rest of the $75M in dead cap hurt just as much dollar for dollar.

 

More, when you say, "if things go perfectly, it's all fine," ... how often do things go perfectly? Never is the quick answer there. Things might go perfectly on one contract, but on all of them? It doesn't happen, these being human beings on both sides of these contracts. That's why the lowest dead cap total in the league last year was $13M. Nobody's perfect. Absolutely nobody. The more of those contracts you write, the more you will end up paying in dead cap generally.

 

There are advantages and disadvantages. Both need to be looked at realistically.

 

 

Edited February 13 by Thurman#1

[BarleyNY]

8 hours ago, EmotionallyUnstable said:

From my perspective, based on what we’ve see so far this offseason with bringing on additional coaching staff, I feel that terry is ready to buck up and giving Beane the go ahead to maximize spending this offseason.

 

How do you see Pegula, as well as the front office’s philosophy, as compared to both extremes of the Eagles vs Bengals? 

I see them as using a traditional spending cap model. Restraint most seasons with opportunity to make targeted, occasional big pushes to get over the top. From 2021-2023 they were aggressive with their spending. They were top 6 in cash spend each of those seasons. Von Miller was a big part of that push. This past season they dialed their cash spend back to 20th in the league and cleared some dead cap. They certainly could’ve been more aggressive and kept up their spending if they were using the Eagles model, but they went with the traditional reset. 

 

Moving forward I expect them to ramp up cash spending again this offseason to try to get that championship. If that doesn’t materialize, then I’ll have real concerns about Pegula’s willingness to spend. I don’t expect that, but I’ll breathe easier once I see it happen. 

[GunnerBill]

11 hours ago, bobobonators said:

I’m certainly not an expert, but the void year option may be a tool for a team like the Bills bc we are so close. We have our franchise QB. We have a top tier RB. Some pieces on defense. Allen is turning 29. Likely will have ~4 more years in his prime and then will still be really good likely for another couple of years but will likely start tailing off. 
 

We have ~4 prime years of Allen to take this home. Go all in. 

 

I think what sort of hampered the Bills a bit (not crying about it but it is just a reality) is just as they hit the point to do that on Allen roster 1.0 (coming out of the 2020 season and the AFCCG) the covid impact on the cap happened and the cap went down and suddenly a team like the Bills, loaded up and right on the precipice was suddenly having to use void years purely as a means of standing still i.e. keeping their own guys and remaining cap compliant. They then had a chance to take one big swing coming out of 2021 (whereas without the covid cap impact I think they could have taken at least 2 or 3) but they took it on Von and for reasons I won't rehearse again it hasn't worked out.

[ngbills]

So if you have a qb like Allen in their prime, you could spend a ton of money to add playmakers. Have a good 5 year run. Then you may have one reset year that you eat a bunch of money or time it right and it’s when that Qb is due a new contract and they have a low cap hit year one. 

[gonzo1105]

2026 is the next year for the purging of contracts. It looked like Beane set it up for 2024 and 2026 as the years to get out of some contracts that maybe aren't living up to what they hoped.

[djp14150]

16 hours ago, BarleyNY said:

Teams like the Eagles can outspend teams with a more traditional cap structure by 15-18%. That’s a huge advantage. The mechanism is to push out as much cap space as possible by using signing bonuses and void years rather than salary and roster bonuses. I’ll explain how that works in another post. 

Just remember that the most important factor is cash spending. Teams have cash budgets for each year and the cap structuring follows that. There are some drawbacks and risks with the Eagles approach:

- It is aggressive and sustainable, but it’s even keeled. There is no room to push “all in” and spike spending for a season or two. 

- You need an owner willing to spend that much extra. There are actually very few of those. Most would rather pocket the money. Mike Brown has always pocketed what he can.

- Teams have to bet on the right players because it is difficult to move on from the expensive ones if things sour. Myles Garrett is a good example. The Browns operate with the same cap management style as the Eagles. It’s nearly impossible for them to trade MG this offseason.

- And the big one. The cap must co time to rise at a fairly predictable rate. If we have another Covid year where the cap falls, then there could be very big negative repercussions. 

 

So Cincy could keep both Higgins and Chase if they wanted to, but they don’t want to spend that much money. They will be compliant with the spending floor and structure their contracts so that it looks like they don’t have much space. That gives them a story to tell their fans when they let a Tee Higgins leave. Owners like Mike Brown love this structure for that reason and they don’t care if the Eagles outspend them and get a competitive advantage. 

 

I disagree on the last part.  I don’t see how the Bengals could keep both WRs snd Burrow under standard vet contracts without sacrificing other positions.

 

it coukd be done on a short 1-2 year period if there was an age gap like chase was 30+ with 2 years left and Higgenscwas coming off a rookie contract with the intention of letting chase walk/ retire.

 

the other time it might work for 1-2 yrs is if you have a young D on rookie contacts( 8 of core 13) and 4 or other 5 are on $5M and under vet contracts. You have a DE/edge getting paid.4 of the 8 are on 1st round contracts. You have a very good D so you see 3 of them are going to get paid high money.  You are using this extra cap space to cover the excess in WRs.

[Kirby Jackson]

2 minutes ago, djp14150 said:

 

I disagree on the last part.  I don’t see how the Bengals could keep both WRs snd Burrow under standard vet contracts without sacrificing other positions.

 

it coukd be done on a short 1-2 year period if there was an age gap like chase was 30+ with 2 years left and Higgenscwas coming off a rookie contract with the intention of letting chase walk/ retire.

 

the other time it might work for 1-2 yrs is if you have a young D on rookie contacts( 8 of core 13) and 4 or other 5 are on $5M and under vet contracts. You have a DE/edge getting paid.4 of the 8 are on 1st round contracts. You have a very good D so you see 3 of them are going to get paid high money.  You are using this extra cap space to cover the excess in WRs.

I think @BarleyNY’s point is that if Mike Brown decided to operate as Gayle Benson has, it’s possible. It just means that they pay a lot up front and eat the cap hits years from now. Mike Brown hasn’t been that guy in the past. That’s why ownership is so important in the NFL. You can pretty much make whatever you want work with the cap. It’s just a matter of you’re willing to pay the cash. 

[JP51]

16 hours ago, Big Turk said:

 

Essentially void years allow them to spread cap hits out over extra years even tho that player will not be playing for the team...it's like signing a 5 year deal with $100 million guaranteed, but 2 are void years, meaning instead of having to pay a cap hit of $33 million over a 3 year contract, you can pay a cap hit of $20 million over 5 years.

 

However those void years then have to be accounted for with the player not on the team.

the game I think is that the cap will go up every year... almost like borrowing money with low interest and pushing it out hoping you make more money with the money that is paid out over time... in the end there will be big dead cap money owed when those players leave etc...  

[Bleeding Bills Blue]

17 hours ago, BarleyNY said:

Teams like the Eagles can outspend teams with a more traditional cap structure by 15-18%. That’s a huge advantage. The mechanism is to push out as much cap space as possible by using signing bonuses and void years rather than salary and roster bonuses. I’ll explain how that works in another post. 

Just remember that the most important factor is cash spending. Teams have cash budgets for each year and the cap structuring follows that. There are some drawbacks and risks with the Eagles approach:

- It is aggressive and sustainable, but it’s even keeled. There is no room to push “all in” and spike spending for a season or two. 

- You need an owner willing to spend that much extra. There are actually very few of those. Most would rather pocket the money. Mike Brown has always pocketed what he can.

- Teams have to bet on the right players because it is difficult to move on from the expensive ones if things sour. Myles Garrett is a good example. The Browns operate with the same cap management style as the Eagles. It’s nearly impossible for them to trade MG this offseason.

- And the big one. The cap must co time to rise at a fairly predictable rate. If we have another Covid year where the cap falls, then there could be very big negative repercussions. 

 

So Cincy could keep both Higgins and Chase if they wanted to, but they don’t want to spend that much money. They will be compliant with the spending floor and structure their contracts so that it looks like they don’t have much space. That gives them a story to tell their fans when they let a Tee Higgins leave. Owners like Mike Brown love this structure for that reason and they don’t care if the Eagles outspend them and get a competitive advantage. 

 

It's a spending and cashflow issue for Cincy.  The Eagles stagger a lot of deals but then you come to these crossroads with each player - 

 

2025, solid "not terrible" outlook for this year with dead money

Huff - Even trading his very affordable salary cap accelerates all the bonus money to the next 2 years.  They can create 1.1M in space if they want to eat 22M next year, or they can eat 28M in dead cap next season.  

Becton 3.48 in dead cap - Injury issues makes it tough to want to trust a 26 year old but the talent was always there.  He's going to get 10m AAV

Sweat is 16.4M in dead cap - After the super bowl they probably need to extend him, which will lower his cap burden.  He's 28 and in his prime coming off a great game so I'd assume 20M AAV.  

Graham 4.56M in dead cap - He's 37 so i'd assume they eat this charge.

Baun 1.9M in dead cap - They'd love to have him back but his cap charge would be going up regardless.  I think he chases a bag elsewhere.  

Milton williams - Off the rookie deal he should get paid well.

 

2026 Tricky year because of barkley's age

Barkley in his last year (age 29) - can cut him for 16.6M dead cap, or keep him for 9.6M. If they keep him they probably need to keep him through 2028 because the expiring deal for 2027 leaves a 20M dead number.  

Goedert's last year is 2025 (assuming they pick up his option), so 2026 (age 31) is where his void year comes due.  Right now that is about 24M.  

Slay's last year is 2025 (age 34!) - If they cut him in 2025 which they will - his cap hit goes up to 22.7, and they'll likely defer 13.3M to 2026.

 

They have an interesting model of option years within contracts that essentially function as extensions.  They have to decide on the first league day though whether they cut or exercise the option.  Exercising the option is basically adding a 1-year deal spread. 

 

They draft really well so when they have to eat dead money - you just plug a rookie in and its basically like... dejean is making 15M in 2026 because it's his rookie deal + slay's dead cap.  

[BarleyNY]

25 minutes ago, djp14150 said:

 

I disagree on the last part.  I don’t see how the Bengals could keep both WRs snd Burrow under standard vet contracts without sacrificing other positions.

 

it coukd be done on a short 1-2 year period if there was an age gap like chase was 30+ with 2 years left and Higgenscwas coming off a rookie contract with the intention of letting chase walk/ retire.

 

the other time it might work for 1-2 yrs is if you have a young D on rookie contacts( 8 of core 13) and 4 or other 5 are on $5M and under vet contracts. You have a DE/edge getting paid.4 of the 8 are on 1st round contracts. You have a very good D so you see 3 of them are going to get paid high money.  You are using this extra cap space to cover the excess in WRs.

It’s simply a function of their cash spend. The Bengals are very frugal in what they spend - players, facilities, staff, etc. So they could choose to increase their cash spend on contracts and more aggressively structure them. That’s what Burrow is pushing for. You are correct that within a given budget keeping both WRs would mean cutting back elsewhere. But this isn’t that. Burrow wants them to expand their budget because there is plenty of room to do so in Cincinnati. 

[Big Turk]

1 hour ago, JP51 said:

the game I think is that the cap will go up every year... almost like borrowing money with low interest and pushing it out hoping you make more money with the money that is paid out over time... in the end there will be big dead cap money owed when those players leave etc...  

 

Essentially yes...the GM's know the cap is going up every year due to the TV contracts just signed.

[Orlando Buffalo]

People don't seem to get how so.much comes back to ownership any GM would definitely spend like Philly if they could because chances are they won't be there in 2029 if it does not work out when the $200+ million of void years hits. 

[Kirby Jackson]

Just now, Orlando Buffalo said:

People don't seem to get how so.much comes back to ownership any GM would definitely spend like Philly if they could because chances are they won't be there in 2029 if it does not work out when the $200+ million of void years hits. 

Really well said. Until teams, specifically the Saints, started manipulating the cap, teams were on pretty level ground. Now the ownership gap is presenting a massive gap in teams ability to spend. If the Philly ownership owned the Bengals there would be no question that Hendrickson, Higgins, Chase, etc.. would be back. If the Bengals ownership owned the Eagles, there’s no way that they’d be Super Bowl Champs.

[BarleyNY]

21 minutes ago, Orlando Buffalo said:

People don't seem to get how so.much comes back to ownership any GM would definitely spend like Philly if they could because chances are they won't be there in 2029 if it does not work out when the $200+ million of void years hits. 

You’re right about every GM wishing they could spend like Philly and ownership’s willingness to spend, but the Eagles are running this in a sustainable way. There is no “cap hell” year on the horizon though. Not as long as the salary cap continues to rise. 

[Orlando Buffalo]

4 minutes ago, BarleyNY said:

You’re right about every GM wishing they could spend like Philly and ownership’s willingness to spend, but the Eagles are running this in a sustainable way. There is no “cap hell” year on the horizon though. Not as long as the salary cap continues to rise. 

I am not sure how you can rework all those void years, they literally have around 400 million currently on contract, but two rings for 3 years of slim pickings sounds good to me. 

[BarleyNY]

2 minutes ago, Orlando Buffalo said:

I am not sure how you can rework all those void years, they literally have around 400 million currently on contract, but two rings for 3 years of slim pickings sounds good to me. 

There are some articles out there about how the Eagles and Browns are operating. It is infinitely sustainable as long as the NFL’s salary cap increases at its historical pace of about 8% a year. It enables them to outspend typical teams by about 15-18%. I’ll post an article if I can find one. 

[djp14150]

4 hours ago, BarleyNY said:

It’s simply a function of their cash spend. The Bengals are very frugal in what they spend - players, facilities, staff, etc. So they could choose to increase their cash spend on contracts and more aggressively structure them. That’s what Burrow is pushing for. You are correct that within a given budget keeping both WRs would mean cutting back elsewhere. But this isn’t that. Burrow wants them to expand their budget because there is plenty of room to do so in Cincinnati. 

I still don’t see it unless they sacrifice elsewhere and cut vets 

2 minutes ago, BarleyNY said:

There are some articles out there about how the Eagles and Browns are operating. It is infinitely sustainable as long as the NFL’s salary cap increases at its historical pace of about 8% a year. It enables them to outspend typical teams by about 15-18%. I’ll post an article if I can find one. 

You are still going to pay back in some future year if you pay now.

[Kirby Jackson]

 

[Orlando Buffalo]

46 minutes ago, Kirby Jackson said:

 

I honestly believe that Mark Davis is considerably poorer than the rest, but otherwise I think your point is fully valid, cheapness is a decision of business not necessity. 

[BarleyNY]

3 hours ago, djp14150 said:

I still don’t see it unless they sacrifice elsewhere and cut vets 

You are still going to pay back in some future year if you pay now.

https://247sports.com/nfl/cleveland-browns/longformarticle/understanding-the-cleveland-browns-spending-philosophy-why-it-is-sustainable-2024-235642851/#2480064

 

Here is an article explaining the methodology of the Browns, which is essentially the same as the Eagles.