Cash over cap

[Tortured Soul]

So a big sticking point between small markets and big markets is cash over cap - meaning the real dollars a team pays out every year vs. the imaginary salary cap dollars. The small market teams want there to be a cap on actual dollars spent as well. What I don't understand is shouldn't the cash over cap balance out over the course of a few years 9say, since 1993) due to salary cap restrictions?

[Ramius]

So a big sticking point between small markets and big markets is cash over cap - meaning the real dollars a team pays out every year vs. the imaginary salary cap dollars.  The small market teams want there to be a cap on actual dollars spent as well.  What I don't understand is shouldn't the cash over cap balance out over the course of a few years 9say, since 1993) due to salary cap restrictions?

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Not necessarily, because someone like danny boy can sign new expensive free agents every season with enormous signing bonuses. Sure the imaginary dollars will eventually catch up with him, but as long as he can amortize his bonuses over 5-7 years, he can actually pay out much larger bonuses (in terms of actual money) every single season.

[Tortured Soul]

Not necessarily, because someone like danny boy can sign new expensive free agents every season with enormous signing bonuses. Sure the imaginary dollars will eventually catch up with him, but as long as he can amortize his bonuses over 5-7 years, he can actually pay out much larger bonuses (in terms of actual money) every single season.

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But even if he pays out large bonuses at the beginning of contracts, the base salaries are relatively low. So other teams who actually pay out the length of contracts are paying relatively large base salaries, I would think.

[Buckeye Eric]

Complements of <a href = "http://sports.espn.go.com/nfl/columns/story?columnist=pasquarelli_len&id=2352890">Len Pasquarelli</a>

 

In the simplest terms, cash over cap is essentially the difference between a team's true payroll and the NFL salary cap in a given season. Many of the league's high-revenue teams, but certainly not all of them, have a considerable advantage over the clubs occupying the low-revenue rungs in terms of cash over cap.

 

To understand the concept of cash over cap, one must understand that the salary cap is just a bookkeeping number, one that can be massaged by amortizing signing bonuses and with other mechanisms. The cap has never been indicative of a team's payroll. The Washington Redskins, believed to be the highest revenue producing machine in the league, have had payrolls well over $100 million the last few seasons, even though the highest salary cap level ever was in 2005, at $85.5 million.

 

For the fans who can't get their heads around how this works, here's a simple example: Let's say the Redskins signed an unrestricted free agent to a five-year deal that includes a signing bonus of $10 million and a base salary of $1 million for the first season of the contract. In salary cap terms, the Redskins are charged only $3 million, arrived at by prorating the signing bonus over five years and then adding the base salary. But in real dollars expended, or payroll, that player cost the Redskins $11 million for the first year. That's a difference of $8 million between what the player was actually paid and what his cap charge was for the initial season of the contract.

 

Multiply that example by several player acquisitions, prominent free agents or high-round draft choices, and the total cash over cap is considerable.

[Ramius]

But even if he pays out large bonuses at the beginning of contracts, the base salaries are relatively low.  So other teams who actually pay out the length of contracts are paying relatively large base salaries, I would think.

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But being able to guarantee more money gives him an advantage. For example, say the redskins make 50 mil in revenue, and the bills 20. The skins can hand out 3 $15 mil signing bonuses to lure 3 free agents, while the bills could only afford to pay one of those. And a player will most often go for the larger signing bonus.

[Tortured Soul]

Good point, Ramius. That's the answer I couldn't figure out.

[AJ1]

Bottom line...the wealthy clubs have gutted the concept of a true cap and substituted the current charade. No wonder the bottom half opposes the current system. No wonder the players don't care or actually side with the greedy minority.

[Spiderweb]

The whole idea of a "cap" was to balance the playing field, yet a loop hole with the signing bonis was left open for abuse, and the rich teams have used it well to their advantage.

 

Sure would be nice if the old IRS would bring back "income averaging" but that was taken away from us. Is this not the same thing in essence in which the owners get to distort their true payroll? Add to this that every team, expects the cap to rise each year so as to help soften the blow of the large signing bonuses in the long run.

 

Want true balance? Signing bonuses count 100% against the cap in the year they are paid. Same with roster bonuses, incentive bonuses, etc. Now the players would object heavily, yet might this blow to them be softened a bit with at least partially guaranteed contracts? Large signing bonuses serve as a "guaranteed contract" as the bonus itself is a guarantee. Unfortunately the average to backup players still don't benefit much from this as their signing bonuses are relatively small. I would submit that for the collective (players) real contract guarantees would be more beneficial overall to them rather than the elite getting all the bonus money.

 

Sadly, the divide we see amongst the owners also applies to a divide amongst the players as well so change or hopefully real balance with never happen. All boils down to individual greed, apparently a common human trait.

[Pyrite Gal]

Bottom line...the wealthy clubs have gutted the concept of a true cap and substituted the current charade.  No wonder the bottom half opposes the current system.  No wonder the players don't care or actually side with the greedy minority.

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However, understanding the whole complex financial picture explains why actually the NFLPA seems to be siding more with the low-revenue teams than with the greedy minority.

 

Upshaw represents the interests of BOTH the high salaried players who actually would do best individually if the NFLPA decertified itself and there was a free-market with no salary cap and no nothing but free will and caveat emptor and also the lower-salaried, marginal and even retired players who have garnered more wealth than they though possible given their intellectual skills and talents.

 

Rather than simply siding with the greedy minority, the NFLPA is using the threat of decertifying itself and forcing a free-market upon the NFL which ultimately would diminish the quality of the product (aka kill the goose laying the golden egg) as leverage to extort (lawfully bargain) for benefits which will deliver benefits to all the players (minimum salary, pension plans, the salary cap, etc).

 

There still will be a need for a NFLPA even without an agreement with the team owners and decertification of the union as a bargaining agent. There are a variety of service all players really can use which it is morst cost-effective to provide by consolidation. In addition, their is a policing and rating of agents mechanism which would become even more important in a free-market.

 

While the NFLPA would survive in the state of nature of a true free- market it would become a very different beast.

[stuckincincy]

However,

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So..we no longer have to eat crow?