"Cap League" vs "Cash League"

[OGTEleven]

Nothing is stopping him but he won't do it, and no one else will. That said, he very very likely does have the cash to play with the big boys because the team generates a TON of cash before the majority of the expenses need to be paid. Furthermore, there has never been a 20 million dollar bonus (although there will likely be this year) and NO team is going to sign two players to 15-20 million bonuses. So it's not like these teams in the big cities are going to spend 70 million in bonuses. And furtherfurthermore, what you pay out in bonuses this year you make up in all subsequent years. The Redskins have been paying out huge money in bonuses and eating dead money for years but the amount in salary they are paying out each year is that much less than other teams.

I agree to an extent but I think you leave out an important factor. The owners that are willing to pay out huge bonuses are from the larger market teams with more cash flow from operations. While in theory the cap would put limits on this, in practice it has not because the salary cap has increased at a rapid rate over the years due to the success of the NFL.

 

I paid a huge bonus to player A this year and he takes up 8% of my cap, but next year that same dollar figure becomes 5% due to the increased cap. If these revenue increases go on forever I'll be able to pay big bonuses to players B,C and D over the next few years so I'll build it into my set of assumptions. The raw dollars I paid in the bonus came from my skyboxes, seat licenses, etc. I may have got these fees even after extorting my community into paying for a large portion of my brand new stadium. Teams like Buffalo, New Orleans, Jacksonville, KC and Cincy can't do this. The revenue stream will never stop growing at this rate in the eyes of these owners. They have delusions of grandeur and are kidding themselves. In real life, no business can sustain these high rates of revenue growth.

 

One way these self-centered blowhards (in case you're wondering who I mean Bob Kraft, Jones, Snyder, Huizenga and to some extent the jerk in Houston) delude themselves into concluding that the growth rate will continue, is to lust after large markets like LA that are currently "untapped". They think they can just move teams around and that their customer base (fans) will grow. Maybe they're right but I seriously doubt it.

 

There is a concept in accounting called goodwill. Based on goodwill, if you're selling your dry cleaning business that has been running well for 50 years, you'd get more than you would if you had opened it 2 years ago with identical assets and location. Goodwill is what makes that difference. It is hard to quantify but real. In the case of the NFL; particularly Buffalo, KC, and Cincy it is very real but fat Bob Kraft doesn't care because he needs to continue his dream induced perpetual rapid growth rate.

 

It also seems to me that these owners like to plant crap into the brown nosing media types like Chris Motenson to continually write articles playing off guys like Ralph as old and senile.

[Fan in San Diego]

If you sign Nate to a seven year, 70 million dollar deal with a 21 million bonus, it may count only 4-5 mil against the cap this year.

 

So whats the problem ? Sign Nate and get Asante Samual as well.

[ganesh]

Its turning into a "cash" league, because the higher revenue teams generate more cash than the lower revenue teams. So even tho both us and washington have the same cap limit, washing has much more cash to spend on signing bonuses. If they generate 100 mil in cash, thats 100 mil then can spend in signing bonuses this season, to clements, freeny, etc. If the bills generate only 25 mil in cash this year, thats 4x less cash we have to give to potential free agents.

 

So snyder can spend 30 mil for a SB for clements, and the bills realistically would NOT be able to match it, because we lack the cash that the redskins have.

 

hope this helps.

 

One thing to add is: Since the Snyders have 100M while the Bills have 25M, they can give an extra 75M to players this season. The snyders can distribute that signing bonus (upfront money) over the period of the contract....Of course they will have a bigger cap # in the final season...but here is where there trick comes in....When that final year comes and they are completely against the cap and require cutting players, comes the new TV deal (every 4 years)....which means a new CBA comes into the picture....A new CBA allows the cap limit to exponentially grow that year rather than the linear growth in the previous 4 years...This allows the Snyders and Jones to avoid cutting those players and continue to add more talent to their teams.....

[Boatdrinks]

So whats the problem ? Sign Nate and get Asante Samual as well.

 

The problem is that while all of these owners are rich men to most, the new breed of owners are the new breed of super rich. They simply have a lot more liquid cash to pony up for signing bonuses than Ralph does. You are comparing apples and oranges ,really. When most of a contract was paid out over time, Ralph spent near the top of league. When free agency came around and contracts became all about the signing bonus-the guaranteed cash payable as soon as the contract is signed- Ralph was out of his league. That disparity in liquid wealth has grown at an amazing clip since the late 90's. Much of being Ralph's type of rich is based on paper wealth, not necessarily liquid funds. Hence the difficulty in ponying up ever increasing amounts of cold hard cash.

[Kelly the Dog]

I agree to an extent but I think you leave out an important factor. The owners that are willing to pay out huge bonuses are from the larger market teams with more cash flow from operations. While in theory the cap would put limits on this, in practice it has not because the salary cap has increased at a rapid rate over the years due to the success of the NFL.

 

I paid a huge bonus to player A this year and he takes up 8% of my cap, but next year that same dollar figure becomes 5% due to the increased cap. If these revenue increases go on forever I'll be able to pay big bonuses to players B,C and D over the next few years so I'll build it into my set of assumptions. The raw dollars I paid in the bonus came from my skyboxes, seat licenses, etc. I may have got these fees even after extorting my community into paying for a large portion of my brand new stadium. Teams like Buffalo, New Orleans, Jacksonville, KC and Cincy can't do this. The revenue stream will never stop growing at this rate in the eyes of these owners. They have delusions of grandeur and are kidding themselves. In real life, no business can sustain these high rates of revenue growth.

 

One way these self-centered blowhards (in case you're wondering who I mean Bob Kraft, Jones, Snyder, Huizenga and to some extent the jerk in Houston) delude themselves into concluding that the growth rate will continue, is to lust after large markets like LA that are currently "untapped". They think they can just move teams around and that their customer base (fans) will grow. Maybe they're right but I seriously doubt it.

 

There is a concept in accounting called goodwill. Based on goodwill, if you're selling your dry cleaning business that has been running well for 50 years, you'd get more than you would if you had opened it 2 years ago with identical assets and location. Goodwill is what makes that difference. It is hard to quantify but real. In the case of the NFL; particularly Buffalo, KC, and Cincy it is very real but fat Bob Kraft doesn't care because he needs to continue his dream induced perpetual rapid growth rate.

 

It also seems to me that these owners like to plant crap into the brown nosing media types like Chris Motenson to continually write articles playing off guys like Ralph as old and senile.

IMO all of that doesn't really matter. there are very few players in the league that are worth 70 million and $20 mil in bonuses. Only a couple of them are FA per year and there are 32 teams vying for them. Very few of the players that guys like Snyder have signed are worth that money so Ralph isn't really competing against him for 90% of those guys. Kraft, and the Jets and Giants and Bears and other big city teams have been, if anything, not willing to put out huge money for FAs themselves, especially the Patriots. There are a few exceptions but surely the Bills could have been in the running for any and all of those players if they indeed wanted to. My argument is that there is without question a huge gap in the amount of cash made and the amount of cash generated by the large market teams versus the small markets, but what has been left out of the equation is that there isn't a huge amount that needs to be paid that is out of the small markets realm. They have the available cash and they can spend a lot more than they are spending.

 

There MAY be a problem five years from now, if the amount that the bigger cities teams are making in cash and not sharing keeps getting bigger and bigger and teams are WAY overspending for players. So far, however, neither the trend is leaning toward that nor anything on the foreseeable future leads me to believe that the small markets cannot compete and easily compete. They simply won't MAKE as many millions in profit. The gap is growing but it is still an easily manageable gap when the TV contracts just jumped 36% and each teams makes several more million than they can spend before one ticket or beer or box or parking spot or jersey or hat is sold.

[Kelly the Dog]

One thing to add is: Since the Snyders have 100M while the Bills have 25M, they can give an extra 75M to players this season. The snyders can distribute that signing bonus (upfront money) over the period of the contract....Of course they will have a bigger cap # in the final season...but here is where there trick comes in....When that final year comes and they are completely against the cap and require cutting players, comes the new TV deal (every 4 years)....which means a new CBA comes into the picture....A new CBA allows the cap limit to exponentially grow that year rather than the linear growth in the previous 4 years...This allows the Snyders and Jones to avoid cutting those players and continue to add more talent to their teams.....

But the 75 million they are spending this year cannot be spent every year. Because they will be over the cap. The Redskins are already 1.7 million over the cap this coming season before spending on anyone. And not even the Redskins, like I said before, ever spend huge money on more than a player or two in any season. And most of the guys they sign we wouldn't even want. The Patriots and and Steelers are amongst the most frugal teams in the league and who has been at the top of the league lately?

[CosmicBills]

Interesting stuff from everyone here.

 

I think it's interesting to note that both Overdorf and Levy stated (at least once each) on the show that their number one priority is resigning their own players. Number two was the draft, and the last resort was UFA.

 

However, right on the heels of those comments, Overdorf states emphatically that since it has become a "cash" league that may not be possible.

 

Lots of double speak around this time of year at OBD.

[Bill from NYC]

Interesting stuff from everyone here.

 

I think it's interesting to note that both Overdorf and Levy stated (at least once each) on the show that their number one priority is resigning their own players. Number two was the draft, and the last resort was UFA.

 

However, right on the heels of those comments, Overdorf states emphatically that since it has become a "cash" league that may not be possible.

 

Lots of double speak around this time of year at OBD.

 

The Bills are going to keep Fletcher. Ralph has openly stated that he likes him. Fletcher will be a Bill next season be it via a new contract or the franchise tag. I am as sure of this as I can possibly be as a Bills fan.

 

Nate will walk and Marv will draft a 1st round corner. He will do so no matter how many are selected in front of us.

I am less sure of this, and wishing it to be wrong, but I would bet on it.

[Fan in San Diego]

The problem is that while all of these owners are rich men to most, the new breed of owners are the new breed of super rich. They simply have a lot more liquid cash to pony up for signing bonuses than Ralph does. You are comparing apples and oranges ,really. When most of a contract was paid out over time, Ralph spent near the top of league. When free agency came around and contracts became all about the signing bonus-the guaranteed cash payable as soon as the contract is signed- Ralph was out of his league. That disparity in liquid wealth has grown at an amazing clip since the late 90's. Much of being Ralph's type of rich is based on paper wealth, not necessarily liquid funds. Hence the difficulty in ponying up ever increasing amounts of cold hard cash.

 

Signing bonuses count against the cap dont they ? I think the answer is yes, so how can teams sign $100M in signing bonuses without going over the cap ? And they are not spreading contracts over 20 years. So what gives ?

[Ramius]

Signing bonuses count against the cap dont they ? I think the answer is yes, so how can teams sign $100M in signing bonuses without going over the cap ? And they are not spreading contracts over 20 years. So what gives ?

 

signing bonuses are paid out at the time of signing, but for cap purposes, they are spread over the length of the deal. so a 5 year deal with a 15 mil SB, the player gets his 15 million check right there. But the bonus only counts 3 mil per year against the cap. (unless he's cut, then you get into dead cap)

[ganesh]

But the 75 million they are spending this year cannot be spent every year. Because they will be over the cap. The Redskins are already 1.7 million over the cap this coming season before spending on anyone. And not even the Redskins, like I said before, ever spend huge money on more than a player or two in any season. And most of the guys they sign we wouldn't even want. The Patriots and and Steelers are amongst the most frugal teams in the league and who has been at the top of the league lately?

 

That is exactly my point....They circumvent the cap when they have the cap space....When they get to being WAY over the cap, they get the CBA to help them out.....

 

As far as who wins the superbowl is a different discussion and has nothing to do with this thread.

[Kelly the Dog]

That is exactly my point....They circumvent the cap when they have the cap space....When they get to being WAY over the cap, they get the CBA to help them out.....

 

As far as who wins the superbowl is a different discussion and has nothing to do with this thread.

They never spend anywhere close to 75 million to FA and regardless of the new CBA they can't, and don't. And again, when they give someone a huge bonus, the next few years, the amount they pay that player in salary, is less on average for any other team, so they are spending more cash in April and less cash in Sept-Dec. And we're not talking 40-50-60-75 million here. At all. But rather 10-20 million more than any other team.

 

Look at their roster. It's not a bunch of star players making 75 million dollars. But they have a few stars with big contracts like most other teams, and a few average players with overblown but not outrageous contracts that they keep giving out to the Antwan Els.

 

http://www.redskins.com/team/;jsessionid=ICPIIABPLPCM

[Boatdrinks]

Signing bonuses count against the cap dont they ? I think the answer is yes, so how can teams sign $100M in signing bonuses without going over the cap ? And they are not spreading contracts over 20 years. So what gives ?

 

 

It's just creative accounting. This means amortizing the bonus over the life of the contract. That way, you may be payin60 mil in bonuses, but spreading them out over 5, 6years. You can also renegotiate old deals by turning base pay into bonus and prorating that money even further. It's just finagling the numbers to be under the cap each year.

[Fan in San Diego]

It's just creative accounting. This means amortizing the bonus over the life of the contract. That way, you may be payin60 mil in bonuses, but spreading them out over 5, 6years. You can also renegotiate old deals by turning base pay into bonus and prorating that money even further. It's just finagling the numbers to be under the cap each year.

 

Thats my understanding as well. But you can only make so many big bonus signings and then you hit the cap and can't even field a team of 53 players. Every team needs 44 - 49 bread and butter players and a handful of highly paid super stars.

The NFL has parity. The rich teams cant outspend Ralph.

[keepthefaith]

Thats my understanding as well. But you can only make so many big bonus signings and then you hit the cap and can't even field a team of 53 players. Every team needs 44 - 49 bread and butter players and a handful of highly paid super stars.

The NFL has parity. The rich teams cant outspend Ralph.

 

Any team can spend a lot if they are willing to put themselves in a poor position cap-wise in subsequent years by paying big bonuses up front on a few players. Redskins have done it but don't have the results to show for it. Fact is that they and other teams have higher payrolls in given years (cash-wise not cap-wise) and have the cash based on greater revenue/profit. That just means that if a couple teams want to compete to sign a big name free agent, they might be able/willing to outspend the incumbent team for that player. Cap rules allow for payrolls to exceed the cap figure. A true cap would eliminate that, but players union and larger market teams don't want that.