Introducing Commitment Index – Part 4

Introducing Commitment Index

Part 4:  Realizable Cap Room and Relevance Adjusted Cap Number

Part 1: The “Mortgaging the Future” Assertion

Part 2: The Trough Model and the Folly of “Matching Cash With Cap”

Part 3: Measuring the Mortgage

As I have explored this week, a team may – consciously and for legitimate reasons – “mortgage its future” by committing more future cap space relative to the other teams in the league, thereby making it more susceptible to the negative consequences of both predictable and random instances of production decline and injury. Such commitments can come in two possible forms: future allocations of signing bonus proration and fully guaranteed future base salary. Continue reading Introducing Commitment Index – Part 4 »

Adrian Peterson and Guaranteed Contracts

Today Vikings running back Adrian Peterson sent out a series of tweets regarding NFL contracts not being fully guaranteed and management holding the only right to terminate the agreement. Peterson is currently in a contract dispute with the Vikings over the fact that Peterson wanted to leave Minnesota and join another team in 2015.  Peterson has recently changed his stance somewhat about the contract, turning from opportunity to financials, asking the Vikings to make more of a commitment to him by apparently guaranteeing the remainder of his contract, which has fallen on deaf ears. Though Peterson is not the person to be at the front of the “guaranteed” contract movement I think his situation brings up some interesting discussion points with NFL contracts that are worth exploring. Continue reading Adrian Peterson and Guaranteed Contracts »

Introducing Commitment Index – Part 3

Introducing Commitment Index

Part 3:  Measuring the Mortgage

Part 1: The “Mortgaging the Future” Assertion

Part 2: The Trough Model and the Folly of “Matching Cash With Cap”

In Part 1, I explained that the concept of a team “mortgaging its future” only matters to the degree that the team has mortgaged its future relative to the other teams in the league. As a result, the Mortgaging the Future Assertion should not be used in a vacuum with respect to a given transaction, but rather within the context of the position on the mortgage continuum on which every team in the league sits at that point in time.

In Part 2, I explained that the trough-like nature of the NFL salary cap dictates that the most common way in which teams supposedly mortgage their future – by incurring cap debt upon the proration of signing bonuses – does not actually lead to any mortgaging of the future if the team has enough cap space in the present year to avoid cap debt by earmarking cap space to be rolled forward. However, a team may consciously decide to incur cap debt, and therefore mortgage its future relative to the other teams in the league, for entirely rational reasons. Today, I will identify the degree to which each team has decided to do that relative to all of the other teams in the league.

In order to “measure the mortgage” for each team, I first calculated the total amount of future signing bonus proration that each team is accountable for in all future years (i.e. 2016 and beyond). For all of the reasons I have previously enumerated, I then subtracted from that number the amount of cap space that each team currently has in 2015. The resulting number for each team represents that team’s cap debt.  The following numbers are recorded as of immediately following the draft (excluding any draft pick contracts), but include the transactions related to Whitney Mercilus, James Jones, Kamerion Wimbley, and Ryan Tannehill.

TeamMortgageCap SpaceCap Debt
Jacksonville Jaguars$19,138,150$(39,128,154)$(19,990,004)
Tampa Bay Buccaneers$11,289,128$(25,910,618)$(14,621,490)
Oakland Raiders$15,941,027$(23,623,642)$(7,682,615)
Indianapolis Colts$18,121,876$(10,425,210)$7,696,666
Cincinnati Bengals$29,558,544$(19,278,949)$10,279,595
Chicago Bears$23,424,038$(11,115,272)$12,308,766
Cleveland Browns$40,023,224$(26,309,148)$13,714,076
Minnesota Vikings$25,888,916$(11,726,492)$14,162,424
New York Jets$28,605,898$(10,355,039)$18,250,859
St. Louis Rams$27,167,705$(8,755,206)$18,412,499
San Diego Chargers$35,729,586$(15,700,332)$20,029,254
Tennessee Titans$45,036,701$(24,227,273)$20,809,428
Washington Redskins$30,803,378$(6,505,142)$24,298,236
Seattle Seahawks$35,223,040$(10,854,278)$24,368,762
Denver Broncos$31,980,264$(7,060,118)$24,920,146
Philadelphia Eagles$37,233,597$(9,633,625)$27,599,972
New York Giants$36,614,385$(6,972,313)$29,642,072
Carolina Panthers$44,204,313$(9,124,248)$35,080,065
Detroit Lions$47,853,136$(4,725,692)$43,127,444
Atlanta Falcons$62,748,313$(19,587,565)$43,160,748
San Francisco 49ers$50,374,020$(6,313,247)$44,060,773
Houston Texans$55,601,570$(9,144,849)$46,456,721
Green Bay Packers$63,259,134$(16,528,182)$46,730,952
Kansas City Chiefs$50,705,952$(2,487,991)$48,217,961
New England Patriots$59,273,415$(5,910,487)$53,362,928
Miami Dolphins$65,400,713$(9,272,862)$56,127,851
Arizona Cardinals$71,232,951$(9,112,981)$62,119,970
Pittsburgh Steelers$74,676,667$(9,183,051)$65,493,616
New Orleans Saints$69,967,987$(3,904,372)$66,063,615
Buffalo Bills$74,511,837$(6,924,045)$67,587,792
Dallas Cowboys$81,964,436$(12,290,324)$69,674,112
Baltimore Ravens$82,802,900$(10,443,490)$72,359,410
 

However, cap debt is not the only type of future cap commitment that can mortgage a team’s future. The other type is future fully guaranteed base salary (or roster bonus, used here interchangeably). As was identified in Part 1, commitment of future cap dollars may lead to decreased roster talent if the players receiving the guarantees turn out to be unproductive, as the team will have less flexibility to make changes. As a result, the next step is to add future fully guaranteed base salary to cap debt. The results are as follows:

TeamCap DebtGuaranteesCommitments
Tampa Bay Buccaneers$(14,621,490)$10,165,342$(4,456,148)
Oakland Raiders$(7,682,615)$12,443,728$4,761,113
Cincinnati Bengals$10,279,595$1,910,764$12,190,359
Indianapolis Colts$7,696,666$5,500,000$13,196,666
Jacksonville Jaguars$(19,990,004)$34,080,402$14,090,398
Seattle Seahawks$24,368,762$0$24,368,762
Minnesota Vikings$14,162,424$10,428,952$24,591,376
Tennessee Titans$20,809,428$5,125,230$25,934,658
Denver Broncos$24,920,146$1,052,048$25,972,194
Cleveland Browns$13,714,076$13,391,385$27,105,461
Chicago Bears$12,308,766$17,541,590$29,850,356
Washington Redskins$24,298,236$8,000,000$32,298,236
St. Louis Rams$18,412,499$14,639,060$33,051,559
San Diego Chargers$20,029,254$16,347,067$36,376,321
New York Giants$29,642,072$7,012,352$36,654,424
Carolina Panthers$35,080,065$2,831,454$37,911,519
San Francisco 49ers$44,060,773$2,628,061$46,688,834
Atlanta Falcons$43,160,748$4,873,977$48,034,725
Green Bay Packers$46,730,952$1,956,580$48,687,532
Detroit Lions$43,127,444$6,564,510$49,691,954
Philadelphia Eagles$27,599,972$27,629,010$55,228,982
New England Patriots$53,362,928$5,583,959$58,946,887
Houston Texans$46,456,721$19,419,872$65,876,593
New York Jets$18,250,859$49,237,195$67,488,054
Pittsburgh Steelers$65,493,616$4,592,845$70,086,461
Dallas Cowboys$69,674,112$3,358,135$73,032,247
Arizona Cardinals$62,119,970$12,795,836$74,915,806
New Orleans Saints$66,063,615$9,522,313$75,585,928
Kansas City Chiefs$48,217,961$27,686,700$75,904,661
Baltimore Ravens$72,359,410$9,837,275$82,196,685
Buffalo Bills$67,587,792$18,487,451$86,075,243
Miami Dolphins$56,127,851$45,565,545$101,693,396
 

In order to arrive at Commitment Index, I then found the average Commitments across the 32 teams, and then divided each team’s individual Commitments by this average. The resulting output displays each team’s degree of future cap commitment as a percentage of the average of all teams. Displaying the outcome as an index is appropriate because it emphasizes that the important consideration is where each team stands in terms of future cap commitment relative to all of the other teams in the league. The results are as follows:

TeamCommitment Index
Tampa Bay BuccaneersNo Commitment
Oakland Raiders10%
Cincinnati Bengals27%
Jacksonville Jaguars28%
Indianapolis Colts29%
Denver Broncos52%
Seattle Seahawks54%
Minnesota Vikings54%
Tennessee Titans57%
Cleveland Browns60%
Chicago Bears66%
Washington Redskins71%
St. Louis Rams73%
San Diego Chargers81%
New York Giants81%
Carolina Panthers84%
San Francisco 49ers103%
Green Bay Packers107%
Atlanta Falcons111%
Detroit Lions115%
Philadelphia Eagles119%
New England Patriots125%
Houston Texans145%
New York Jets149%
Pittsburgh Steelers154%
Dallas Cowboys160%
Arizona Cardinals165%
New Orleans Saints167%
Kansas City Chiefs167%
Baltimore Ravens181%
Buffalo Bills190%
Miami Dolphins224%
 

In other words, the Miami Dolphins have committed more than twice as much of their future cap space as the average team, and the Cincinnati Bengals have only committed approximately one quarter as much of their future cap space as the average team.

It is important to keep in mind what information Commitment Index conveys and what information Commitment Index does not convey. Commitment Index does not declare which teams are in the “best” or “worst” cap situation. Commitment Index does not account for the number or quality of future draft picks that each team currently possesses. Commitment Index does not attempt to quantify the amount of talent, or the average age, of the specific players that each team has signed under contract for future years.

Commitment Index does, however, identify how much flexibility each team has with respect to its salary cap. We cannot predict how well each team will draft in the future. We cannot predict how lucky or unlucky each team will be with respect to injuries in the future. We cannot predict how quickly the players on each team will decline in production in the future, or whether the players will even remain on their current teams as they reach free agency. And we may not even be able to accurately quantify how much talent each team currently possesses. But, we can assume that a team with more flexibility will be better equipped to deal with unfavorable outcomes in the aforementioned categories than a team with less flexibility.

A team with a very high Commitment Index is not necessarily in a bad situation; as long as it chose to commit to the right players and gets some lucky breaks along the way. A team with a very low Commitment Index is not necessarily in a good situation; it might be a sign that the team has no players worth committing to. But if injuries and age and unlucky bounces and draft randomness persistently work to erode competitive advantages and cause all teams to regress to the mean, then a team would be well served by maintaining more flexibility than its competitors to deal with such challenges.

Bryce Johnston is the creator of Commitment Index and the co-creator of Expected Contract Value.  Bryce earned his Juris Doctor, magna cum laude, from Georgetown University Law Center in May 2014, and currently works as a corporate associate in the New York City office of an AmLaw 50 law firm. Before becoming a contributor to overthecap.com, Bryce operated eaglescap.com for 10 NFL offseasons, appearing multiple times on 610 WIP Sports Radio in Philadelphia as an NFL salary cap expert. Bryce can be contacted via e-mail at bryce.l.johnston@gmail.com or via Twitter @NFLCapAnalytics.

Introducing Commitment Index – Part 2

Introducing Commitment Index

Part 2:  The Trough Model and the Folly of “Matching Cash With Cap”

Part 1: The “Mortgaging the Future” Assertion

As has been well documented, the NFL salary cap is designed to be a “hard cap,” as opposed to the alternative option (such as in the case of the NBA) a “soft cap.” Even though a team may spend more actual money than the salary cap limit in any given season, the NFL cap is “hard” in that total cap charges cannot possibly exceed the salary cap. On the other hand, the NBA salary cap contains numerous “exceptions” that allow teams to compile cap charges that, in the aggregate, exceed the salary cap in a given year. Continue reading Introducing Commitment Index – Part 2 »

Introducing Commitment Index – Part 1

Introducing Commitment Index

Part 1:  The “Mortgaging the Future” Assertion

“Team X may have mortgaged its future.” This phrase can frequently be found adjoining analysis of transactions in a variety of contexts, such as when (i) a team signs a free agent to a significant contract, (ii) a team signs one or more older players to large contracts, or (iii) a team renegotiates a player’s contract to free up cap room in the current year at the expense of shifting cap dollars into future years.

The application of this phrase to these scenarios certainly passes the common sense test. Significant contracts typically involve committing large sums of future cap dollars to a player whose future value is uncertain. Older players are more likely to decline at a quicker rate, rendering any future cap dollars committed to such players more likely to end up as a sunk cost. Freeing up cap space in the current year at the expense of cap space in future years looks and feels like a tradeoff in which the present is enhanced at the expense of the future. Continue reading Introducing Commitment Index – Part 1 »

Seahawks Fans Crowdfunding $5 Million for Russell Wilson

If this works, this could seriously be the most game changing thing in salary cap history. If I’m not mistaken, there is no rule against fans starting a crowdfunding campaign to pay an NFL player as this couldn’t have even been imagined in 2011. Granted, I am currently studying it for the NFLPA’s Certification Exam, so maybe I haven’t gotten to that part yet.

Think of this, the NFL had around $10 billion in revenues last year, so fans are obviously okay with spending money on all things NFL. What better way to spend money on the NFL, than to actually directly pay your players, so that your team can save cap room that can then be used to improve the team and make sure your favorite players are paid fair market value.

Continue reading Seahawks Fans Crowdfunding $5 Million for Russell Wilson »

Caponomics Book Excerpt from Theories Section: Be Different, Creative and Unique

This is a first draft of one of the 25 or so theories from the “Caponomics Theories” section of my upcoming book Caponomics: Understanding NFL Roster Building through Super Bowl Champion Salary Cap Analysis. Any of the references to other chapters in this article are

E-mail me at Caponomics@gmail.com if you’re interested in staying updated when preview chapters are released to the e-mail group and want to be alerted to when the book will be made available. Join the list now and you’ll receive the chapter on the 2000 Ravens, which we’ve already sent out to the group! Continue reading Caponomics Book Excerpt from Theories Section: Be Different, Creative and Unique »