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.
Tying up future cap dollars does not automatically lead to an undesirable result, but the NFL stakeholder is generally correct in viewing such practice with apprehension. Accurately forecasting the future performance and health of NFL players is extremely difficult, and salary cap flexibility is desirable in order to maintain roster talent in instances where formerly-valuable players decline more quickly than expected, suffer performance-inhibiting or career-ending injuries, or are discovered to be less valuable than originally deemed to be. A team with more salary cap flexibility will have an easier time acquiring players to compensate for the decline in the former players, and a team with less cap flexibility may be forced to weather a short-term talent drain until cap commitments have expired.
But despite the conventional wisdom and common sense seemingly underlying the “Mortgaging the Future Assertion” (hereinafter, the “MFA”), the MFA often seems to be used in NFL discourse without much regard to its truth within the given context of its use. While the signing of a significant contract, or multiple significant contracts, may place a team in a precarious situation with respect to the salary cap in future years, it will not necessarily do so for each team. And while shifting cap dollars from the current year to future years may “kick the can down the road” with respect to a given contract, doing so will not necessarily lead to this outcome.
This is because team salary cap structure is relative. If every team has “mortgaged its future” to the same degree, then no team has actually mortgaged its future at all, because all teams will be competing for players in the free agency and trade markets with equal ability to spend. As a result, signing players to significant contracts only supports the MFA with respect to a given team if those contracts put that team in a more committed future salary cap situation than the other teams in the league. Likewise, shifting cap dollars on a contract from the present year to future years only supports the MFA if, by doing so, that team puts itself in a more committed future salary cap situation relative to the other teams in the league.
And herein lies the faulty logic in using the MFA in the absence of careful situational analysis: doing so assumes that the given team was, immediately prior to the transaction in question, in an identical present and future salary cap situation to all other teams in the league. If that were the case, then of course signing a player to a significant contract, or shifting cap dollars from the future to the present, would mortgage that team’s future relative to the other teams in the league.
However, this logic is faulty because that assumed status quo simply never exists. At any given moment in time, every team sits in a unique position along the continuum between 0% “mortgaged” and 100% “mortgaged.” As a result, a significant contract may not mortgage a team’s salary cap situation relative to the other teams, but instead merely shift that team along the continuum from very slightly mortgaged to only moderately mortgaged. A renegotiation performed to create cap room in the present year may have different consequences for a team that has very little current-year cap room as compared to a team that has ample current-year cap room.
In other words, I do not think that the mortgaging of a team’s future, or absence thereof, can be properly captured by context-neutral rules. A context-neutral rule might say, “whenever a team engages in a transaction that can be classified as (i), (ii), or (iii) of the first paragraph of this article, it has mortgaged its future.” While NFL stakeholders generally do not explicitly frame their transaction commentary in terms of rules such as the preceding sentence, the substance of their analysis indicates that their minds are indeed thinking along these lines. On the other hand, I argue that the mortgaging of a team’s future, or absence thereof, can only be properly captured by context-dependent analysis. No matter what the transaction, it always “just depends.”
In order to properly contextualize future-mortgaging analysis, and to thereby measure where each teams sits along the aforementioned mortgage continuum, I will utilize an index metric that displays each team’s degree of mortgage as a percentage of the mortgage of the average of all teams (which changes incrementally with every NFL transaction). I will call this metric “Commitment Index.”
Having identified the flaw in non-nuanced use of the Mortgaging the Future Assertion, in Part 2 of this series I will explore the proper way to think about the drivers of salary cap mortgaging, in Part 3 I will utilize Commitment Index to measure where each NFL team currently sits along the salary cap mortgage continuum, and in Part 4 I will propose new terminology within the context of transaction analysis that properly describes these concepts. In Part 5, I will address any miscellaneous issues via a Frequently Asked Questions format.
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 email@example.com or via Twitter @NFLCapAnalytics.