Introducing Commitment Index – Part 5

Introducing Commitment Index

Part 5: Frequently Potentially Asked Questions

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

Part 4: Realizable Cap Room and Relevance Adjusted Cap Number

So wait, how high on Commitment Index does a team need to go before it gets itself into trouble?

I do not know. Identifying the degree of future salary cap commitment that would endanger a team’s future success would require extensive historical research utilizing information that may not be available. There may be certain Commitment Index benchmarks that one could point to as having predictive value for a decline in team wins two years into the future, three years into the future, etc. There may even be extreme Commitment Index benchmarks that would make the archetypical 2002-Baltimore-Ravens type “salary cap hell” almost inevitable. I tend to think that most cases of heavy commitment can be rectified by a couple of successful drafts. But to answer the question directly, I cannot – at this point in time – declare that a certain Commitment Index score will lead to a decline in team performance in the future.

How often will you provided an updated Commitment Index?

I think there are three particularly relevant times of the year to take a look at league-wide Commitment Index. The first time to analyze Commitment Index is immediately prior to the beginning of free agency, as doing so will provide an idea as to which teams can most comfortably commit future cap room by giving out large contracts in that free agency period. The second time is following the draft, as the conclusion of the primary free agency signing period and the consummation of any draft-day trades leaves each team in a relatively static position heading into the summer. The third time is following final roster cuts at the conclusion of the preseason, as such transactions leave each team’s roster substantially finalized. I will provide an updated Commitment Index at least these three times of the year.

Why doesn’t Commitment Index take into account anticipated or actual increases in the salary cap itself? This seems like it would be an important consideration if the goal is to measure each team’s flexibility moving forward.

While the actual NFL salary cap limit is important with respect to determining how much total money will be spent by all of the teams, it is not relevant with respect to calculating how much spending power each team has in relation to all of the other teams. When the NFL salary cap limit rises, it does so equally for every team, thereby giving no team an advantage relative to the others. And while each team may end up with a different adjusted salary cap, this comes about as the result of rolling cap room forward from one year to the next under the Trough Model regime, and this is taken into account in Commitment Index by including each team’s current amount of cap space.

Why do you include fully guaranteed future base salary as a “commitment?” If it can be traded, as you have written before, then is it truly a “commitment?”

Keep in mind that Commitment Index is providing an indication of the degree to which each team possesses, or lacks, flexibility in the event that their current roster does not succeed, whether due to age, injury, or poor prospective evaluation. If all of the players under contract over-perform, then it likely does not matter how committed the team is to that group of players. So if a player has positive trade value due to satisfactory performance, then the fact that his salary is fully guaranteed likely does not matter. The more relevant scenario within the context of Commitment Index is the scenario in which the player underperforms, and therefore has negative trade value.

When the player has negative trade value, the team will likely need to provide draft pick compensation in order to convince another team to receive the player in a trade. So while fully guaranteed base salary can indeed be traded, in contrast to signing bonus proration, the team has still committed assets of some form to the player in the event that he does not perform as expected under the contract.

Why does Seattle have such a low Commitment Index? Haven’t they signed a number of young players to large contract extensions (Richard Sherman, Earl Thomas, Kam Chancellor, KJ Wright, Michael Bennett, Cliff Avril, Marshawn Lynch)? Even given that Russell Wilson has not signed an extension yet, how is this possible?

Seattle has handed out quite a few sizeable contract extensions, but the important thing from the perspective of Commitment Index is that the commitments in these contracts have largely run their course. Once the guaranteed base salaries have already been earned, they are no longer future commitments. And because signing bonuses can only be prorated over 5 years, a large chunk of the total proration runs its course after just a couple of years. A year ago, Seattle’s Commitment Index was likely much higher.

And while it is true that these players may collectively account for a very large percentage of Seattle’s salary cap going forward, this will only be the case if they play under the current terms of their contracts. But because very little of the remaining portions of the contracts are truly committed, this will not necessarily be the case. Seattle can generally choose to move on from any of them with little dead money consequence, and it will also have opportunities to renegotiate the contracts to maximize cap room in any given year. The less commitment associated with a given contract, the closer the player’s Relevance Adjusted Cap Number will be to his nominal cap number, which leads to more productive pure cap renegotiations. In summary, even though these contracts will collectively carry a very large nominal cap number each year, that collective cap number will consist of a high percentage of Realizable Cap Room.

Why doesn’t Commitment Index incorporate draft picks? Surely if a team trades away many future draft picks, it has mortgaged its future.

A perfect version of Commitment Index would take into account draft picks. Draft picks represent opportunities to acquire talent without allocating much cap room, thereby potentially offsetting failed salary cap commitments by allowing for the preservation of roster talent under conditions of significant Realizable Cap Room scarcity.

Specifically, Commitment Index would ideally incorporate the number and round of future draft picks that each team possesses relative to all of the other teams in the league. I do not think it would be necessary to account for the potential position within each round of each pick, due to the fact that team success seems only somewhat predictable one year in advance, and does not seem predictable at all more than one year in advance. But by incorporating deviations from the neutral starting point (i.e. each team possesses one pick in each round in all future years), the results of Commitment Index would be more meaningful.

However, the problem is that a single metric cannot incorporate both salary cap considerations and draft-pick considerations without a common denominator that would enable each to be translated into the terms of the other. The value of draft picks would need to be translatable into salary cap terms, and the value of salary cap room would need to be translatable into draft pick terms.

There are at least two potential ways to create such a translation. One method would be objectively, such as what Jason has done on this site. I am probably omitting other equally impressive work. However, the difficulty I have with objective methods is that they each ultimately rest upon specific criteria for measuring player production that are very debatable. For example, Jason’s metric uses Average Annual Value as its production criteria. To the extent that you do not consider Average Annual Value to be a worthwhile production metric, you would correspondingly not view Commitment Index as a worthwhile future-mortgaging metric. Personally, I would rather punt on the issue than commit to a specific production metric.

Another method would be empirically, by looking to the draft pick compensation received in trades, such as the one involving Dannell Ellerbe, in which one team eats cap space when trading a player. Should such types of trades become more commonplace – and I think they will – a market price for cap space will gradually emerge. I prefer this method, but we need more cap-related trades to take place before we can assign a draft pick value to cap space. Hopefully, a future version of Commitment Index will incorporate this empirical analysis.

Some writers suggest that a team can mortgage its future based on its commitment of cap space as between positions. Is Commitment Index silent on this issue?

Yes, Commitment Index is silent on this issue. I would classify such positional allocation analysis as an attempt to create a context-neutral rule regime (i.e. committing > X% of cap room to position Y is bad, no matter what the situation). Those assertions may or may not be true, but I have not spent any time theorizing the issue and consequently do not incorporate any such considerations into Commitment Index.

You mentioned in a footnote that Realizable Cap Room is based on the idea that every player could, in theory, be released/traded after June 1st. Given how unlikely that is due to the need for teams to free up cap room for free agency in February and March, is Realizable Cap Room a useful metric?

While I do think that Realizable Cap Rom is conceptually a useful metric, I think this is a valid criticism from a practical perspective. As a result, whenever I present Realizable Cap Room, I will simultaneously present a second version in which the number represents the difference between (i) each team’s adjusted salary cap and (ii) the aggregate of all future signing bonus prorations (instead of only the present year signing bonus prorations). The result would represent the total amount of cap room that each team would have the ability to utilize if they released or traded each player on the roster prior to the beginning of the free agency period. I will call this metric “Second Order Realizable Cap Room.”

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.

  • PerfectTrader777

    As your commitment index gets higher, your margin for error decreases. The Dolphins need a very high % of their players to exceed expectations in order to evade cap hell. It stands to reason that when you slide the commitment index bar from left to right (low to high), your team’s margin for error bar slides inversely.

    I’m not sure there should be a danger zone % threshold that a team should not cross. Some GMs take a high risk/high reward approach. The more $ you are willing to guarantee players in FA, the likelihood of attracting better players to your team increases. If these players pan out in relation to the contracts you guarantee, then you’re golden. Otherwise you’re screwed.

    Things change so fast in the NFL on a year by year, week by week basis. Generally you’d want to have a high margin for error. So many things transpire throughout the year that are impossible to predict.

    When your commitment index % increases, it generally indicates that you believe you’re in a “go for it” window of time. You’re “taking a shot” and trying to “win now”. Teams like the Bucs and the Raiders are in a rebuilding period and believe that the risk of guaranteeing big contracts outweighs the potential reward at this point in time.

    The ultimate goal is to win the Super Bowl. You’d rather have a bad team with a low commitment index in a rebuilding period than a middling team with a high commitment index, as the latter indicates there is little room for improvement. If your team is in a “win now” window of time, it may be better to increase your commitment index and maximize the amount of talent you have on your roster. In this case, the reward may outweigh the risk.

    Thoughts?

  • RegisHawk

    I suspect some of the contracts this last period were affected by the “Salary Cap Floor” policy coming into focus. How are you accounting for teams who, for all intents and purposes, are throwing boatloads of money at players right now in an effort to bring up their floor? That’s how the Suh contract, for one example, looked to me.