Mortgaging the Future, Part I

Every year we hear about teams mortgaging the future when it come to the salary cap.  Generally what we mean when we say that is that a team is artificially lowering a player’s salary cap charge in the current year in order to maximize the talent pool on the roster.  I’m not sure anyone has really tried to quantify the degree by which a team has put so much focus on a particular season, but with the regular season about to kick off I wanted to rank just how much each team has leveraged themselves to compete in the 2016 season.

Pretty much every teams concentrates over 50% of their spending on the top 10 contracts on a roster. Those are the players considered difference makers and the way those contracts are structured can dictate how much teams can spend on mid tier players that add the depth often needed to compete for a title. When team’s borrow from future salary caps to lower cap charges it is going to involve these players.

To rank how much each team will be hurt in 2017 made by past decisions I wanted to focus solely on these players and the way teams have manipulated their cap charges. To estimate the cap manipulation of a player’s contract their salary cap charge was compared with the contract’s annual value. A cap charge below the annual value would indicate some type of salary cap benefit in the present year being taken and above the value would mean the team already took a benefit or is bankrolling more money to the future.

Each team was ranked in three categories to measure future cap health relative to 2016.

2017 Cap Impact: The first category measures the direct change a team will see in 2017.  This value is the difference between net spending (cap charge – APY + cap space) in 2016 versus 2017’s cap allocation (cap charge – APY).  As an example of the calculation the Browns are underspending their APY by about $13.7M this year and banking $51M in cap room, giving them a net spend of $37.6M. The cap allocation for the same players in 2017 is $1.8M over their stated APY. That means overall the Browns decisions in 2016 will create$35.8M more to spend on players in 2017 than they elected to spend in 2016.

True 2017 Cap Impact: The true cap change also takes into effect all past roster decision by factoring in how much projected cap space a team has in 2017 to spend on the team. That is added to the 2017 Cap to determine the total difference a team will have next year to spend without touching a player contract on their current roster.  The Browns project to have $55M in true cap space to spend next year which make their true cap impact $91.7M in added funds to spend next year.

Ultimate 2017 Cap Impact: This takes into account the flexibility teams have built into their roster by measuring how much cap space would be gained or lost if a team cut every player in their top 10. Add this to the true impact and it gives you the ultimate amount of extra funds that a team will have at their disposal to spend  in 2017. For the Browns, who would create $52M in cap room by cutting their top 10 players, that would leave them $144M better off than their 2016 spending. So Cleveland’s overall decision making has put them in a position where, if the players were available, they could basically purchase a new team.

Here are the rankings for numbers 32-17 and in the following post I’ll put up the rest of the NFL and a table that details each of their cap impact categories.

  1. Browns

Cleveland has essentially nothing invested in the 2016 season. They are carrying over $50 million in rollover money which means any cap space created through backloading of cap dollars for their top 10 players was simply being stockpiled for the future. Overall they will be $37.8 million better off in 2017 and if they cut their current top 10 players they would effectively have $144 million extra to spend over their 2016 allocation.

  1. 49ers

San Francisco is overspending their APY the next two years, which has more to do with the fall from their glory run than concept of frontloading contracts when signed, but their decision to hold firm on spending has them in position to throw 2016 away and focus on the future. They will have a net savings of about $35M this season because they are stockpiling cap space and will be about $70M better off next season if they want to spend it on players and also have the flexibility to create over $36M in added cap room if they wanted to rip their roster apart.

  1. Buccaneers

After a few years of bad free agent results the Bucs have pulled back on manipulating the cap to sign pricey players. They have frontloaded contracts this year, paying $5M more in cap than the total APY of their top players, and are still carrying nearly $7M in cap room this year. They reap the rewards next year when those prices drop making them $19M better off in 2017 than 2016. Factor in next years expected cap room and maximum room created via cuts and the Bucs could do a massive facelift next year.

  1. Titans

The Titans seem kind of aimless, but they have avoided doing anything too crazy with their salary cap. If they did ever decide to spend money in free agency or drafted well enough to extend players they are set up to do so. They will be $56M better off next year than they are in 2016 and could create millions in cap room releasing their current top players.  Will they make those moves if the team begins to improve?  That’s probably a bigger question for them than anyone else on this list.

  1. Raiders

This is another team that is actually frontloading contracts in the current season and will gain rewards in the future by doing so. Oakland is paying $4.5M more on the cap this year and also carrying $8M in cap room.  That’s helped them create $35M they can spend next year on the roster. Without touching  contracts they are better off by $53M next year, giving them more than enough ammunition to re-sign Carr and Mack early without hurting the team.

  1. Bears

Chicago is a team that has been more fiscally responsible the last two years and in 2016 is only backloading their contracts by about $6M. With nearly $50 million in cap space and flexibility to slice and dice underperforming players they rank 5th overall. Chicago has not punted on the season (their investment in top players ranks 18th), so they are trying to compete while improving. The lone caveat here is that their best player, Alshon Jeffrey, is a free agent.

  1. Jaguars

Jacksonville’s position on this list has all to do with past salary cap decisions moreso than current ones. The Jaguars once looked to be headed down the path of all cash contracts are now one of the biggest contract backloaders in the NFL. But they have lived off unused cap room for years which keeps the immediate future bright for Jacksonville.  The question is at whether or not there is a point where it catches up with them.

  1. Bengals

You could make a strong argument that the Bengals manage their salary cap better than anyone else in the NFL which is one of the reasons they rank so highly. They are effectively tracking even this year on top cap spending and will save millions on those same players in 2017. Overall they are $42M better off next year and because they rank 6th in the NFL with top roster flexibility that only increases what they can do with the roster.

  1. Colts

I actually expected to see the Colts rank lower than this, but they will have cap space and flexibility in 2017 that pushes them here. Indianapolis’ cap allocation is relatively steady next year, in the ballpark of underspending their APY by about $3M, but they have over $40M in cap room and some flexibility to create more next year. In the past they have not shown an ability to do much with their cap room, but they will be in a position to build on this year if needed with millions to add depth or a high priced player or two.

  1. Patriots

The Patriots have become one of the best teams in the NFL at managing a roster and deciding when to pull the plug on top players, ranking just 28th in the NFL in money invested at the top.  The cap space they have created in 2017 is massive which is why they rank so highly, putting them in a positon to be about $57M better off in 2017 relative to this year. They will need that to re-sign some pending free agents who will replace the players who currently rank in the top 10. If things go badly for the Patriots, however, they won’t be able to create added cap space the same as other teams.

  1. Panthers

This is a team that has high expectations, but from a financial standpoint should not. Their top player commitment ranks 26th in NFL as they are still escaping the shadow of some terrible contracts signed by their former general manager. The team is close to cash vs cap commitments for this year and next but could have $35 million to work with in 2017 not to mention the chance to create more. This should be a much stronger roster in 2017.

  1. Packers

Green Bay is another team that does a good job with their cap via early extensions though they have been criticized for spending nothing in free agency. It’s Green Bay flexibility that puts them this high in the rankings. Their projected $17M benefit next year ranks middle of the pack, but their $58M in possible cap creation ranks first. Looking at it that way it may be more understandable why they cut Josh Sitton rather than extending him. There are big expectations for the Packers who rank 3rd in top player investment, but it’s possible the front office sees this as an end of the window season and they want to maximize their ability to retool around Aaron Rodgers in 2017.

  1. Steelers

For years Pittsburgh would have ranked on the other end of this with their overreliance on contract restructures, but most of those players are now off the team. Right now they are at a stage where the cap charges, on the whole, for their top players matches their annual values. Add in nearly $40 million of cap room in 2017 and flexibility with their top player contracts and you have a team that could add significantly next year if they need to.

  1. Seahawks

Perhaps the most interesting team in the NFL. Seattle has the largest commitment to big money players in the NFL and is well under the player APY in both 2016 and 2017, but this isn’t backloading the way that some others have done. The Seahawks has been very proactive with player extensions and using the extra contract year to eat cap charges. That helps them with flexibility to cut, which ranks 5th in the NFL and means they aren’t stuck with this roster by any means.

  1. Broncos

This ranking probably changes a bit with Emmanuel Sanders extension (I didn’t have the numbers when writing this) but Denver has done a good job of avoiding cap issues despite having the 9th largest top player commitment in the NFL. Their projected $39 million of 2017 cap space gives them a chance to assemble a team, on paper, better than this year’s team.

  1. Rams

My guess is if I dragged this out to 2018 the Rams future would look better than this, but for this year they have had to borrow future cap dollars to fit everyone in but structured many contracts such that they will pay it back in 2017. This team will have over $40M in cap room next year which will, like Jacksonville, offset the cap allocations for their current players.  They can add $34M over their current roster with Trumain Johnson as their only major free agent.