Cash to Cap? Someone help me...

[aeb16428]

Someone please explain this cash to cap thing to me. I have read the posts in this forum and many are contradictory. Would someone please provide a link to a reliable source explaining this cash to cap thing and/or provide an explanation with an example of a player being signed and how that signing would work with the cash to cap strategy.

[socalfan]

Someone please explain this cash to cap thing to me. I have read the posts in this forum and many are contradictory. Would someone please provide a link to a reliable source explaining this cash to cap thing and/or provide an explanation with an example of a player being signed and how that signing would work with the cash to cap strategy.

 

 

Forget it. The only people that could possibly explain this to anyone is the Bills' front office. No one outside of that office has any idea what it means. It is all guess work on the posters' part. The real problem is no one can tell you all the different ways the Bills could be paying out money and how they will account for it.

 

For example, if you have a running back that received a 5 year contract 3 years ago and the contract looks something like this:

 

year 1- signing bonus 5 million, salary 350k, incentives - 1 million for rookie of the year, 50k for every game started, 20k for every game with more than a hundred yards, 10k for every yard over 1000.

 

year 2- whatever

 

year 3- whatever

 

year 4 (this year)- roster bonus 5ook, salary 725k, incentives - 1 million for probowl, 50k for every game started, 20k for every game with more than a hundred yards, 10k for every yard over 1000.

 

year 5- whatever

 

 

Apparently if the Bills started this cash to cap last year, then no one can tell you if 1million of the original signing bonus is being counted as part of cash to cap THIS year. The Bills could have decided that anything happening before last year is water under the bridge or they may be pushing it forward....which of course means you have no idea on how they will handle signing bonuses for any contract before this year.

 

No one can tell you if any of the incentives are being counted as part of the cash to cap this year. For calculations will the Bills count the incentives as if they will be totally achieved, do they partially count them based on expected achievement, do they just treat them as cash over cap, do they push them into next year's calculations?

 

And consequently what the NFL calls the Bills cap is not necessarily the limit that the Bills will be spending to.

 

So no one knows except the Bills. Anyone on this board tells you anything differently you can blow them off, they are just talking through their arse.

[socalfan]

I've now seen where C Browwn has talked to the Bills' front office and Brown says that bonus from previous contracts are being amortized going forward, but not signining bonuses from this year.

 

This clarifies nothing. It only makes the problem worse for understanding what the Bills' will be spending. If they do not amortize the signing bonuses going forward, but the NFL does for calculating the current level of spending toward the cap number, then just think what that means for next year. In terms of the example above, the Bills will count the 1 million next year against the cap, so far so good...they are in synch with the NFL numbers. A new contract with a signing bonus causes an anomaly next year. Suppose a FA gets a two year deal with a signing bonus of 2 million. The Bills count all 2 million this year, they count none of it for next year....however the NFL counts 1 million of it for next year. So what does cash to cap mean to the Bills next year? Do the Bills get to spend that 1million next year that the NFL says they don't have?

 

No wonder Marv couldn't figure out what the hell they were talking about.

[Acantha]

Someone please explain this cash to cap thing to me. I have read the posts in this forum and many are contradictory. Would someone please provide a link to a reliable source explaining this cash to cap thing and/or provide an explanation with an example of a player being signed and how that signing would work with the cash to cap strategy.

From what I understand, and putting it as simply as possible, it works like this:

 

The Bills sign a FA for 5 years, 5 mil per year, with a 5 million dollar signing bonus. (don't pay attention the numbers, I'm just trying to make it simple).

 

Normally (without a back-loaded contract), the breakdown would be 2 million dollars per year (1mil for salary and 1 mil for bonus). Easy enough.

 

Now, the first year of the contract would be 6 mil. (1 year salary plus all 5mil bonus), and then 1 mil a year for the rest of the contract.

 

As SoCal said, nobody really knows how this is all going to add up given the difficulties dealing with the past players and how they all factor together. This is just how it will work from now on.

[socalfan]

........

Now, the first year of the contract would be 6 mil. (1 year salary plus all 5mil bonus), and then 1 mil a year for the rest of the contract (as salary).

.........

 

Bills say we spent 6 million this year. Next year for this contract what do they say? Do they say we spent 1million or do they say we spent 2million. What does the NFL say next year. Do this say this counts 1million against the cap or 2million against the cap?

 

If the Bills say they spent 1million next year, then the NFL will not let them spend the additional million.....so what does cash to cap mean next year?

 

If the Bills say they spent 2million next year so that it matches the NFL cap number then why the hell are they saying they spent 6million in the first year instead of 2 million? Moreover, why in the second year are they double counting that 1million salary bonus that got amortized. They counted it in the first year and the second year? If so, there is absolutely no way you can estimate what they will spend, because you can't estimate what they will claim to have spent.

 

So my point is still ... only someone in the Bills front office (other than Marv) can tell you what the Bills mean by cash to cap.

[Acantha]

Bills say we spent 6 million this year. Next year for this contract what do they say? Do they say we spent 1million or do they say we spent 2million. What does the NFL say next year. Do this say this counts 1million against the cap or 2million against the cap?

 

If the Bills say they spent 1million next year, then the NFL will not let them spend the additional million.....so what does cash to cap mean next year?

 

If the Bills say they spent 2million next year so that it matches the NFL cap number then why the hell are they saying they spent 6million in the first year instead of 2 million? Moreover, why in the second year are they double counting that 1million salary bonus that got amortized. They counted it in the first year and the second year? If so, there is absolutely no way you can estimate what they will spend, because you can't estimate what they will claim to have spent.

 

So my point is still ... only someone in the Bills front office (other than Marv) can tell you what the Bills mean by cash to cap.

 

The one main question I have, and the one that would clear up your question, is what does the league accept when reporting salaries. The only thing I've ever heard about signing bonuses is that you are allowed to spread them over the term of the contract. I've never heard that you must do that. If the league is okay with the Bills reporting all the bonus money in the first year of contracts, then all is fine. If not, then like you said, it gets confusing. But really, it will all kind of equal itself out. The bonus money that the league counts in the second year of a players contract will be offset by the full bonus money we will be paying to a first year FA.

Either way, hopefully the league will let the Bills report their money the way they want to, it will erase all the confusion.

 

BTW, if that does work, this will essentially get rid of "dead cap space". If they are paying all that money up front, we won't have to count the leftover bonus money after cutting players anymore. When you think about, this type of financing has the potential to really simply things once it gets going.

[Kelly the Dog]

The one main question I have, and the one that would clear up your question, is what does the league accept when reporting salaries. The only thing I've ever heard about signing bonuses is that you are allowed to spread them over the term of the contract. I've never heard that you must do that. If the league is okay with the Bills reporting all the bonus money in the first year of contracts, then all is fine. If not, then like you said, it gets confusing. But really, it will all kind of equal itself out. The bonus money that the league counts in the second year of a players contract will be offset by the full bonus money we will be paying to a first year FA.

Either way, hopefully the league will let the Bills report their money the way they want to, it will erase all the confusion.

 

BTW, if that does work, this will essentially get rid of "dead cap space". If they are paying all that money up front, we won't have to count the leftover bonus money after cutting players anymore. When you think about, this type of financing has the potential to really simply things once it gets going.

You guys are really completely missing the point. The Bills are basically just talking semantics. The league could care less what the Bills "say", the league will count figures for the Bills the way they always have for the Bills, and for every other team, exactly the same. The Bills just "said" this to the fans and press, and the league could care less about it because it doesn't matter to them one bit. All that matters to them is how the Bills actually sign the contracts with the players. For instance, if the Bills give a player a 6 million signing bonus on a three year contract, 2 million a year goes toward the salary cap, which is called amoritization. The Bills are "counting" that 6 million for this year as part of their spending even though no one else anywhere does. If the Bills give that same player a "roster" bonus of 6 million instead of a signing bonus, it matters not to the player or the Bills, because it is simply cash immediately to the player. But it does matter to the league because with a roster bonus, all 6 million goes to the salary cap for this year, and none of it is amoritized for the future. So in the case of a roster bonus, all six million goes to this years cap in that example. So that is the thing to watch, whether the Bills give roster bonuses to free agents or signing bonuses to free agents.

[Acantha]

You guys are really completely missing the point.

You know, you keep saying things like this...why? You say we are completely missing the point, yet you go on to give a pretty decent answer to the question that was raised. We are not missing the point, we're discussing how this impacts the spending we will do. More specifically, is "cash under the cap" a way for the Bills to use a run a round answer to spending less than the rest of the league, or is it just a different way to keep the books.

 

So assuming your answer is correct, it would only make sense for the Bills to give roster bonuses. If they don't do that, then they are simply doing nothing more than being stingy and spending less than everyone else (because on the books they will have to account for money twice). If they do give roster bonuses, they will essentially be spending the same amount of cash, just in a different way. Good to know.

 

If you're sick of giving answers, then stop. It's really not that important, it's just discussion. If you think you have a better understanding of what they are talking about and want to dish out that information, great.

[socalfan]

You know, you keep saying things like this...why? You say we are completely missing the point, yet you go on to give a pretty decent answer to the question that was raised. We are not missing the point, we're discussing how this impacts the spending we will do. More specifically, is "cash under the cap" a way for the Bills to use a run a round answer to spending less than the rest of the league, or is it just a different way to keep the books.

 

So assuming your answer is correct, it would only make sense for the Bills to give roster bonuses. If they don't do that, then they are simply doing nothing more than being stingy and spending less than everyone else (because on the books they will have to account for money twice). If they do give roster bonuses, they will essentially be spending the same amount of cash, just in a different way. Good to know.

 

If you're sick of giving answers, then stop. It's really not that important, it's just discussion. If you think you have a better understanding of what they are talking about and want to dish out that information, great.

 

 

Exactly. I think at least 75% of the board understands this point. But they don't extend the logic of it. They insist on talking about how much cap room the Bills have to spend....when in fact, the Bills new strategy makes this an irrelevant point because of accounting for the payments twice. The Bills are going to spend some money and only the Bills know how much.

[Pyrite Gal]

I think there is some confusion and contradiction because actually there is a difference between the concept of cash to cap which is a method of accounting which any team can choose to employ and the actual salary cap which every team cannot spend over the cap and must spend at least 85% of the salary cap amount as salary to the players. If they do not meet this amount bad things happen though I have no idea what they are as no team has ever come close to failing to meet the minimum payment.

 

Basically cash to cap means that a team will count every dollar the spend in a given year and plan not to spend beyond the level of the salary cap that year.

 

What this specifically means is that for the 2007 season where the salary cap is set at $109 million the Bills have unilaterally decided not to spend more than $109 million with this season.

 

This has ramifications for team building however, in that in order to actually calculate the salary cap, a team is allowed to prorate money paid to players as a bonus over the entire life of the contract. Thus, let's say hypothetically Nate Clements is given a $16 million bonus for the 4 year contract he signed (the hypo numbers were chosen to make the math easy and not to suggest NC's likely contract), his salary cap hit for this bonus will be $4 million per year plus his actual base contract payment for each year.

 

However, because the Bills have unilaterally decided to do their accounting based on only spending in a single year to the level of the salary cap, the Bills are willing to layout $109 nillion this year minus the $16 million check they wrote to NC for his bonus payment.

 

Where this has an impact on team building is that when you choose the cash to cap accounting method. it prevents you from paying out a bonus to a player who you have given a lengthy contract to at a level lower than what the salary cap allows you to pay. A team like the Deadskins might chose to pay out several huge bonus checks to several players even if the total laid out in salaries that year exceeds the cap (total payments which exceed $109 million in this year) because they are not in violation of the salary cap as they have distributed those bonuses over the life of the contract. It is not a problem for them to sign NC to a $16 million bonus because they only have a hit on their salary cap of $4 million. They then use the $12 million to sign other players.

 

The Bills on the other hand because they have unilaterally decided to only spend cash to the level of the cap now only have $109 million minus the $16 million bonus payment to pay the rest of their salaries and pursue FAs because we are only gonna lay out cash to the level of the cap.

 

This choice has even more real implications in the out years, particularly if a team chooses to cut the players they have given long term contracts to. Let's say that the Skins are disappointed with a guy they signed (lets call him Levar), When they part ways with Levar, be it by trade or cutting him the remainder of his original bonus accelerates into the current cap year. This "dead money| counts against the salary cap in the year they cut him and the Skins have that much less money to pay new bonuses or existing players. Meanwhile the Bills who have accounted for all this cash as it was paid are theoretically in a position to once again spend cash to the cap level and can do so. This assumes that the Bills are not only using cash to cap for their accounting, but also are taking the steps necessary to actually have NC's entire salary count against the cap that year. It does not really matter if they have an option to count it one way or the other as they can simply give NC his $16 million not as a bonus to be prorated but pay it to him as base salary (MB dis this with Winfield as they had the cap room to do this paying him $12 million as base salary rather than as bonus.

 

The Skins have been able to do things they way they have paying several large bonuses because the Skins team is such a money machine (their waiting list for season tickets is more than twice the size of their stadium( and because Snyder has the personal wealth and cash flow to write out these large checks he does so. In addition, they made a bet that the salary cap would go way up and it has so they have enough money to absorb tons of dead space in their salary cap and also pay new bonuses which borrow from the future to get players now.

 

In the end, it all comes out in thr wash and in the big picture nobody gets out of this life alive so robbing from the future to pay for the present has its advantages. Irs sort of a giant pyramid scheme but as long as interest keeps going up then no team or player is the last person in line so they borrow from the future.

 

The Bills accounting choice of cash to cap seems to give little team building advantage and in fact they do run the risk of actually coming close to not meeting the 85% salary cap total as if they were to pay a $16 million dollar bonus to BC one year and deal with this in a cash to cap manner, the next year they must make a similar payment in salary to one or several players or they run the risk of not hitting the 85% mark.

 

This is how it works as best as I can tell, but even the NFL experts are still working to figure the cap out so I do not claim perfection at all in my understanding.

 

I have not seen an article which adequately defines the cash to cap phrase as actually it appears relatively rare for a team to adopt it as publicly as the Bills have. Nevertheless, one of the better explanations of the salary cap can be found at the Ask the Commish site at > http://www.askthecommish.com/salarycap/ <.

 

 

Good reading!

[Kelly the Dog]

You know, you keep saying things like this...why? You say we are completely missing the point, yet you go on to give a pretty decent answer to the question that was raised. We are not missing the point, we're discussing how this impacts the spending we will do. More specifically, is "cash under the cap" a way for the Bills to use a run a round answer to spending less than the rest of the league, or is it just a different way to keep the books.

 

So assuming your answer is correct, it would only make sense for the Bills to give roster bonuses. If they don't do that, then they are simply doing nothing more than being stingy and spending less than everyone else (because on the books they will have to account for money twice). If they do give roster bonuses, they will essentially be spending the same amount of cash, just in a different way. Good to know.

 

If you're sick of giving answers, then stop. It's really not that important, it's just discussion. If you think you have a better understanding of what they are talking about and want to dish out that information, great.

You should have been excluded from that comment. You're right. I am just getting frustrated with some people, not you, that aren't reading or thinking and keep asking the same things. I shouldn't have said "you guys are completely missing the point" in a response to you.

 

The answer to your question is yes, the Bills are being stingy and spending less than everyone else. This year it will be approximately 15 million less, mostly because they have already paid out 20 million in bonuses from years past, but they are counting it as if it is this year. In other words, they are saying they are paying out 109 million or so, but in real dollars they are paying out 94 million or so. And you cannot say that "but they already spent the money" because in future years we will be paying far less (like, for instance, if a player signs for 12 mil for three years with a 6 mil bonus, we will pay and count 8 mil this year but the next two years pay him only 2 mil in cash each year).

 

Next year, we have no idea, either way, if they are going to continue this "cap to the cap" policy. If they do, they will very likely lose Losman and Evans. But I don't expect them to continue this policy. IMO, it was an order from Ralph, to Marv and Overdorf, this year, to continue the "Bills are poor concept" as a ploy to play for the league qualifiers meetings.

[socalfan]

.......

 

Where this has an impact on team building is that when you choose the cash to cap accounting method. it prevents you from paying out a bonus to a player who you have given a lengthy contract to at a level lower than what the salary cap allows you to pay. .....

 

This choice has even more real implications in the out years, particularly if a team chooses to cut the players they have given long term contracts to. .............

 

In the end, it all comes out in thr wash

....

 

The Bills accounting choice of cash to cap seems to give little team building advantage .........

 

I have not seen an article which adequately defines the cash to cap phrase as actually it appears relatively rare for a team to adopt it as publicly as the Bills have. Nevertheless, one of the better explanations of the salary cap can be found at the Ask the Commish site at > http://www.askthecommish.com/salarycap/ <.

Good reading!

 

 

The problem is that it doesn't all come out in the wash. Both methods are not equally good. Cash to cap limits your ability to compete with teams that will pay high signing bonuses. And I believe it impacts the type of free agent you can atract.

 

And the commish article simply does not explain cash to cap. It's examples are inadequate and do not reflect the reality of NFL contracts. Its simple examples cannot be understood using the commish's explanations.

[Pyrite Gal]

The problem is that it doesn't all come out in the wash. Both methods are not equally good. Cash to cap limits your ability to complete with teams that will pay high signing bonuses. And I believe it impacts the type of free agent you can atract.

 

And the commish article simply does not explain cash to cap. It's examples are inadequate and do not reflect the reality of NFL contracts. If simple examples cannot be understood using the commish's explanations.

 

Ad it says in my post, I have not yet seen an article which does anywhere near an adequate job of explaining the cash to cap phrase but since the original poster asked for an article I thought this one which does explain some cap basics is a good place to start.

 

I think you are correct that this does make a difference in that the rich can buy more than the poor (or to really state the reality, the really disgustingly rich can buy more than the merely disgustingly rich).

 

The whole NFL ponzi scheme is fascinating to me exactly because it is a real world example of how when confronted by a threat to force them to actually pursue a free market when the NFLPA threatened to decertify itself after the got their butt kicked in the mid-80's replacement player fight, the NFL owners caved in from forcing a free market approach and instead bought into a fairly socialist approach embodied in the CBA.

 

The whole stare down between the NFL and NFLPA this past year was the NFLPA with a real world example of how the NFL team owners had made more money than they probably imagined as being possible in the mid-80s by forming a partnership with the union rather than kicking their butt, they then forced the new CBA on the few disagreeing NFL team owners like Ralph which in essence not only reaffirmed the partnership but in giving the NFLPA 60.5% of the total gross receipts, the players are really the majority partners in this agreement.

 

It really is fascinating to me that a more sustainable and by many measures a better product is produced from cooperation rather than combativeness. Those who seem to treat free market approaches as though they were a god, really are proved wrong in this particular case.

[socalfan]

...... since the original poster asked for an article I thought this one which does explain some cap basics is a good place to start.

......

 

 

Thank you for clarifying your point.