Orton's Arm Posted March 1, 2006 Posted March 1, 2006 2006 Salary: $6.089 million Old proration: $2 million (from $12 million s.b. he rec'd in 2001) New Proration: $1,666,667 Reporting bonus: $1 million (likely due at start of training camp) Work out bonus: $100,000 Pro Bowl bonus: $200,000 (NLTBE) Cap hit: $10,855,667 2007 Salary: $7.25 million New proration: $1,666,667 Cap hit: $8,916,667 As of right now, $5.3 million of Eric Moulds credit card debt has been accumulated. By that I mean that over the years the Bills have given Moulds $5.3 million more in cash than what they've taken as Moulds salary cap hit. At some point they are required to even things out by taking $5.3 million more in salary cap hit for Moulds than the cash they pay to Moulds. Option 1: cut Moulds $5.3 million cap hit - $0 in new money = $5.3 million in debt paid. Option 2: keep Moulds $10.8 million cap hit - $7.2 million in new money = $3.6 million in debt paid, and $1.7 million carried over to 2007. Option 2A: cut Moulds at the end of 2006: Cap hit in 2007: $1.7 million. Total additional cap hit for just one more year of play: $7.2 million. Option 2B: keep Moulds through 2007: Cap hit in 2007: $8.9 million. ($7.25 million in new money + $1.7 million in debt paid) Total additional cap space used for two years of play: $14.4 million. There's no way that one extra year of Moulds is worth $7.2 million against the cap, nor that two extra years of Moulds are worth $14.4 million. The last time he broke 1100 receiving yards was back in 2002, and he's averaged 880 receiving yards the last three years. No paycut = no Moulds.
JDG Posted March 1, 2006 Author Posted March 1, 2006 First off, Kelly is right to look at new cash out. If Moulds gets $7 million of new cash this year, then sooner or later the Bills will take an additional $7 million salary cap hit. This isn't precisely true, as the entirety of the $7mil cap hit would occur in 2006, as the $7 mil is base salary money. You say that salary cap space in 2007 is worth less than cap space in 2006. Certainly that's true if 2007 is an uncapped year! But assuming there will be a cap, you could make a strong case that 2007's salary cap space is more valuable, dollar per dollar, than 2006 cap space. This isn't traditional economics, where you seek to maximize the value of the discounted cash flow over the life of an investment. The goal here is to win the Super Bowl, which means that cap space in a potential Super Bowl year (like 2007) is in a different category than cap space in a non-Super Bowl year like 2006. Actually, if 2007 is an uncapped year, then cap space in 2007 is worth zero. Moreover, cap space in 2007 is simply worth less if the cap goes up relatively fast. There's a lot of predictions that a new labor deal could add $10+ million to the cap. That makes each dollar of cap space less valuable than when the cap was smaller. Your analysis also seems to presume that the Bills can make a Super Bowl run in 2007, even if they accomplish none of their goals in 2006. Or really, you even seem to suggest that there just plain are no goals in 2006, seeing as winning the Super Bowl isn't one of them. I, however, disagree. I think that Super Bowl Champions, in general, are built - they don't just magically appear. (again, in general.) Thus, I think it is worth assessing whether Eric Moulds can help us achieve our goals for 2006, which I would list as a) breaking our playoff drought, and b) evaluatin JP Losman. So the question becomes: should the Bills take a $7 million salary cap hit on Moulds by keeping him another year? (I grant that the $7 million is spread out over several years, but eventually that whole $7 million in new money will hit the cap.) Or do the Bills take a bath on Moulds, and sign a guy like Givens for a much lower yearly salary? Getting rid of an aging and highly overpaid Moulds will free up cap space for free agents along the OL in 2006, while at the same time getting Moulds off the books for 2007. 614947[/snapback] Well, its not kosher to compare just Moulds' salary without considering the signing bonus (and subsequent cap hit) we'd have to take from hiring his replacement. Thus, I still believe that you are asking the wrong question. The question is how much does it cost to keep Moulds for 2006? The answer is: a) $5.5 million in additional cap hit b) less the 2006 cap hit of replacing Moulds with another WR c) plus the presented discounted value of the cap hit for cutting Moulds after the 2006 season. Putting some figures into the above equation: a) $5.5mil b) -$3 mil c) $1.9mil * probability of there being a salary cap in 2007 (call it .5) * a discount factor (usually about .93). Thus, the total cost of keeping Moulds this season is about $3.385 million. Is Moulds worth that much more to us in accomplishing our goals in 2006 than a David Givens? I think so. We'll see if Marv agrees.... JDG
JDG Posted March 1, 2006 Author Posted March 1, 2006 Do you consider pulling yourself out a a game and pouting on the sidelines a character issue? 614532[/snapback] I don't think anyone truly knows exactly what happened. Mularkey & Co. were abysmally bad managers of players. Maybe Mularkey & Co. accused Moulds of "doggin' it", and Moulds reacted badly? Who knows? Did Moulds make a mistake? Heck yeah. But the guy has been in the League for what, 10 years now, mostly on bad teams, and he has not developed much in the way of a "character issues" reputation until now. To me, one mistake does not a "character issue" make. Getting run out of town by Bill Parcells and Romeo Crennel is in a whole 'nother ball park from a single mistake like that. JDG
Orton's Arm Posted March 1, 2006 Posted March 1, 2006 Putting some figures into the above equation:a) $5.5mil b) -$3 mil c) $1.9mil * probability of there being a salary cap in 2007 (call it .5) * a discount factor (usually about .93). Thus, the total cost of keeping Moulds this season is about $3.385 million. 615138[/snapback] While we disagree about this issue, I feel the way you look at things is logical and internally consistent. You talk about using 2006 to build to success in 2007. Fair enough. But let's say Moulds gets cut at the end of 2006. We'd be bringing in a new WR in 2007 to take his place, getting the whole QB/WR chemistry thing going a year later than I'd like. But what about success in 2006? $7 million in new money for Moulds - $3 million in new money for Givens = $4 million potential cap savings, for each year that we have Givens instead of Moulds. I could be wrong, but $4 million a year sounds about what we'd have to pay to get Bentley: an excellent OL who's only been in the league four years. Bentley + Givens > Moulds. So the Bills would have a better record in 2006, and younger players to build on in 2007.
JDG Posted March 2, 2006 Author Posted March 2, 2006 But what about success in 2006? $7 million in new money for Moulds - $3 million in new money for Givens = $4 million potential cap savings, You forgot to add the accelearation of almost $2 mil in unamoritzed signing bonus onto this year's cap by cutting Moulds. JDG
Orton's Arm Posted March 2, 2006 Posted March 2, 2006 You forgot to add the accelearation of almost $2 mil in unamoritzed signing bonus onto this year's cap by cutting Moulds. JDG 616098[/snapback] I didn't forget, I just chose a discount rate of zero. I understand your reasons for feeling a higher discount rate is in order, but I see things differently.
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