### Examining the Marginal Value Implied in Player Contracts

There are a number of ways to look at roster construction in the NFL, and Nick recently did a great job with his roster texture charts(which you should read if you haven’t already), but today I wanted to look to see how teams really derive their value when they build a roster. Normally when we look at a roster we look at two basic numbers- salary cap charges and contract annual value- and then compare franchises across the board. But I got to thinking, wouldn’t it be a much more accurate portrayal if we put those numbers in perspective by seeing how much marginal value a team is really assigning to their highest paid players?  For example Peyton Manning makes more than Darrelle Revis, but Manning plays a position where the average salary for a starter is over \$12 million. Tehnically the Jets are giving up more by having Revis as the highest paid player on the team, even if Manning has a higher stated salary. So we can best define value by determining the cost above average a team spends on their top players on the team. Continue reading Examining the Marginal Value Implied in Player Contracts »

### The Most (and Least) Efficient Salary Cap Spending in the NFL

After the third week of the season I took a look at how teams were performing based on a matrix using Pro Football Focus statistics and with all teams having completed 8 games now I thought it would be a good time to look again at the teams.

PFF grades teams in a number of offensive, defensive, and special teams categories. They usually give them equal weight sum them up and come up with an aggregate score for a team. I wanted to weight the categories with the passing categories having a weight of 56% and rushing categories 44%. These numbers simply represent the league wide play selection in 2012.  I added 20% of the penalty grade assigned to each team to calculate an offensive and defensive score.  A total grade was calculated by adding offense, defense, and special teams with the weights 42.5, 42.5, and 15.

I wanted to plot those scores against salary cap spending for the season and then add another dimension- unused cap space. So the following chart plots the score against spending with the bubble size representing unused cap room. A smaller bubble indicates minimal unused room while a larger one indicates significant unused dollars.

I do think what is very interesting is that the three biggest spenders (Denver, Kansas City, and Seattle) each rank right near the top of the league in performance. That sounds kind of normal but I would think that one team that goes overboard on spending would have a poor season.

The three teams that stand out with the most efficient use of cap dollars are the Bengals, Panthers, and Browns. Each is carrying significant cap room and still getting top of the league performance. The Panthers pretty much look to be the best bargain in football which ties in with the same takeaway I had in my Power Rankings. On the downside for the Panthers is that their salary cap will be more difficult next season as they have pushed money into 2014 and have a few deals set to void.

Philadelphia is one of the more disappointing teams. They have a high payroll and are carrying a ton of cap room yet the performance has basically been average. When I see that I wonder if a team would have pushed the payroll more if they might have been able to improve?  Tampa Bay and Minnesota would be the other two higher spenders with poor results.

Jacksonville remains a class to themselves. They are non-competitive and carry a high salary cap payroll due to significant amounts of dead money, but the huge cap space sends a message that the team just didn’t bother to do more. I understand the concept of the bigger picture but to just throw away a season this way has to be disappointing to fans of the Jaguars.

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### Nine Teams Need to Make Cap Related Moves

The NFL salary cap is a major concern for teams at two times every season. The first is the most talked about time, which is the month of February when teams are ripping apart rosters to become salary cap compliant for the new League Year and to create the maximum possible cap room for free agency. Once free agency ends the overall importance of the cap is low because only the top 51 contracts plus dead money charges count towards the salary cap.

The second most important time for the cap is right now.  By 4 PM on September 4 the cap valuations change. For salary cap purposes rosters expand to include everyone under contract. At a minimum that pushes the roster to 53 players plus a Practice Squad, which every team fields. The cost of two players adds at least \$810,000 to the roster and a PS costs a team another \$816,000.  For teams that have players on Reserve lists such as PUP or IR the salary for the players who are replacing them will now count. For some teams that can be an additional 4 to 5 players that will now be accounted for. It quickly adds up and it all adds up by Wednesday.

While most teams want to carry upwards of \$5 million in season salary cap space for emergencies, I just want to focus on the teams that will be around the \$3 million mark come Wednesday based on how things stand right now. Based on the top 51 cap room as of the morning of the 29th , nine teams will have  less than \$3 million in cap space on Wednesday. Of those nine, four will not be cap compliant unless players inside the top 51 are released.  Those four are, in order, the Rams, Chiefs, Texans, and Redskins. The other five teams are the Vikings, Seahawks, Chargers, Giants, and Bears.

With that in mind I wanted to look at these teams and moves they may need to make cap space.

Rams– The Rams are projected to about \$1.2 million over the salary cap based on their current roster construction. I would not expect the Rams to release anyone of note but instead restructuring deals for cap relief. The most likely candidates are Cortland Finnegan (\$9 million base salary), Sam Bradford (\$9 million base salary), and Chris Long (\$7.25 million base salary).  Long already restructured once so its less likely they would go to him again. With questions marks surrounding Bradford and already over \$10 million in dead money on the books in 2014, Finnegan is the guy to watch. Converting \$7 million of his base into a signing bonus will save the team \$5.5 million in cap room and increase his 2015 dead money from \$2 million to \$5.5 million, which could be considered acceptable.

Chiefs– The Chiefs will be around \$500,000 over the cap if moves are not made in their top 51. There are minimal avenues for savings for the team, due to high offseason spending and the fact that they retained Branden Albert on the Franchise tag rather than extending or trading him. There is no one of note that could be released or even threatened with release to really help them. The logical solution would seem to be having Tamba Hali restructure his contract. He carries a \$12.25 million dollar base salary and just cutting and prorating the difference would save the team about \$4 million in cap room.

If they fail to reach an agreement the other candidate is Alex Smith, and for long term cap planning probably makes more sense to approach than Hali. Smith earns \$7.5 million this season and next season. Because the contract only has two years remaining proration is limited over two years, but that could be enough to easily save at least \$3 million in cap this season by converting \$6 million of salary to a bonus. That would make his cap charge just \$10.5 million in 2014, still a bargain for a starting QB. Though neither side will want to extend that deal they could also go the void year route for proration purposes if they wanted.

Texans– Houston will only be about \$300,000 over the cap, though that number does not include the replacement body they likely need to carry to cover Antonio Smith’s one game suspension, which would increase the cap to \$700,000 over. They could carry 52 players for the week for cap purposes if necessary. The Texans are an older team so extensions to players like Wade Smith are not really a possibility. Jonathan Joseph makes \$7.5 million this season and might be a person they look at for a bonus conversion, though that will put the last two seasons of his contract very high in terms of cap charges. This could be a team that also ends up releasing some of the veteran players close to minimum salaries to pick up small amounts of cap.

Redskins– Washington will be right up against the cap and don’t really have much in the way of high salaries to reduce as their situation is compromised by the cap penalties more than expensive contracts. LB London Fletcher is the one player who should be given a pay cut from his \$5.5 million base, but that seems unlikely at this point. His contract already contains numerous void years for proration purposes so it’s possible they could simply defer the cap charges to next season. The other person to watch out for would be WR Santana Moss.  Releasing Moss will clear \$2.25 million from the books. The team could also consider asking Chris Baker, playing on a non-guaranteed \$1.323 million tender to reduce his salary by a few hundred thousand.

The Other Five (Bears, Giants, Chargers, Seahawks, Vikings)

I lumped these four together since they should all be cap compliant even after the rosters expand but wanted to touch on them briefly

Chicago we have touched on many times before and just yesterday wrote about why moving WR Earl Bennett is a likely move. The Bears have multiple avenues for cap relief if they want it via extensions, but it seems as if they will weed out some of the lower cost players like Bennett that they feel will not make a contribution rather than extending players.

The Giants cap was dealt a big blow when they lost their starting Safety for the season, but they should be ok. Players in danger could be Bear Pascoe, Louis Murphy, Aaron Ross, etc…They could also work with Chris Snee or Antrell Rolle if needed for cap space….

The Chargers could be in trouble because they already have a massive list of players on IR and PUP. Releasing Max Starks would save the team over \$2 million based on cap treatment of LTBE’s and releasing WR Eddie Royal would save \$3 million. Royal might be asked to take a pay cut instead.

Seattle is not in terrible cap position, though they currently have a IR number that will eat into it a bit if settlements are not reached. I’d imagine they will continue to cut veterans for cap relief. Releasing special teamer Heath Farwell saves the team \$1.5 million and looking at FB Michael Robinson could save \$2.5 million. Both could also be asked to take paycuts.

The Vikings might look to simply cut ties with some projected backups making over the minimum (Desmond Bishop, Fred Evans, AJ Jefferson) if they felt they needed more cap space. They will gain some added cap room once Jerome Feltons suspension is official and considering they are right around \$3 million in room may not see the need to make any moves.

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### 49ers and Chiefs Trade Disappointing WR’s

Per multiple sources the 49ers will trade 2012 first round draft pick WR AJ Jenkins to the Kansas City Chiefs. Jenkins has been a major disappointment for the WR depleted 49ers and they were considering releasing Jenkins despite the fact that they owe him guaranteed salary if someone failed to pick up his contract when placed on waivers.

The benefit of trading Jenkins is that the future guaranteed Paragraph 5 salary transfers to the team that trades for the player. That saves the 49ers from potentially having to pay Jenkins \$1,727,391 after having cut him from the team. Jenkins did have offsets in his contract, but had he cleared waivers a team could sign him for the minimum salary of \$480,000 and \$570,000 over the next two seasons leaving the 49ers with more money owed and hurting their short term salary cap as they wait for credits to be applied.

The 49ers will have a dead money cap charges of \$873,187 in 2013 and \$1,746,374 in 2014 attributed to Jenkins. The Chiefs will take on cap charges of \$705,797, \$1,021,594, and \$1,337,390 from 2013 thru 2015, the first two years of which are fully guaranteed. This trade also illustrates the team benefits of the new CBA as a trade under the prior CBA would have been difficult as the 49ers would have likely paid Jenkins a salary advance or option bonus in March and reduced his base salaries to the minimum. The cap charge associated with such a trade would have been too high for the 49ers to absorb.

After writing this I just saw that the terms of the trade included WR Jon Baldwin going to the 49ers. Baldwin had a fully guaranteed salary of \$1,061,510 that now transfers to the 49ers. Next year Baldwin will carry a cap charge of \$1,404,765 for San Francisco, none of which is guaranteed. His dead money charge for the Chiefs will be \$998,018 in both 2013 and 2014.This was a necessity for Kansas City as they could not absorb the salary cap impact of Jenkins’ contract without moving other players. Kansas City only has around \$7,500 in cap room, not enough to trade a conditional pick for Jenkins salary.  The trade in essence becomes a financial swap of disappointing first round players that provides the short term needs for the Chiefs and long term needs of the 49ers.

The trade works out to be a financial benefit  for both sides. The 49ers will save themselves around \$665,000 in guaranteed salary and remove any future guarantees from the books in 2014, when their salary cap looks to be quite tight. The cap starved Chiefs will receive an immediate cap benefit of about \$355,000 in return for taking on guaranteed salary in 2014. So it’s a benefit for both sides that, at the very least, makes sense from a financial perspective even if both sides feel there is little to gain from the players involved.

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### The Chiefs and Branden Albert

Sometimes when I write about the salary cap and roster moves Ill use a phrase like “noose around the neck” in regards to a players (rare) control over a situation. Such is the case right now regarding T Branden Albert and the Kansas City Chiefs.

Make no mistake about it. The Chiefs never intended to have Albert on their team this season. The Chiefs were remaking their franchise this past offseason and Albert didn’t really fit in their plans. The team had the number 1 pick in the draft which they were going to spend on a Tackle and were prepared to make a number of money moves to improve the team. Just off the top of my head the Chefs traded for Alex Smith, signed Mike DeVito, Anthony Fasano, Dunta Robinson, and Sean Smith plus they re-upped star WR Dwayne Bowe.  While only Bowe cost mega-money the number of mid-tier moves the team made quickly added up.

The Chiefs slapped the franchise tag on Albert primarily because they saw him as a valuable asset that could be moved to acquire more low cost pieces in the draft.  What they may not have planned on, however, was the way the market for Offensive Tackles was going to shrink in 2013. Jake Long maxed out the market at a deal worth \$8.5 million a year and the meat of the market is really around \$7.5 million, and that’s for the left side of the line. Some think Albert belongs on the right side which brings the price down even further, between \$6 and \$7 million.

Needless to say Albert wants to make more than that, around \$9 million a season, according to reports, and the Chiefs are in a real bind. Supposedly Albert and the Miami Dolphins had agreed on a price which I have to assume is in that \$9 million a year range. However there was no way that the Dolphins were going to pay an above market price for a player and give up a 2nd round draft pick as well.  They could do one or the other, not both. The trade fell through and now the Chiefs are stuck with Albert.

Since the Chiefs didn’t plan for this they find themselves in a salary cap crunch. They have around \$4.3 million in cap space for their top 51 players. The team needs about \$3.876 million in cap room to sign their rookies. Once the season begins the cap counts 53 players rather than 51, which is another \$960,000. Just like that the Chiefs are out of cap room, sunk because of the franchise tag a fully guaranteed amount of \$9.828 million. They have other options such as restructuring the contract of Tamba Hali, but does a team want to get deeper on a 30 year old pass rusher with \$6 million in dead money in 2014?  I wouldn’t think so.

That’s why Albert has the Chiefs “noose around the neck” so to speak.  They need him to bring his cap number down. He has almost no incentive to do so. Players are taking short term deals in the hopes of a changing market in 2014. He may feel that if the Dolphins were willing to bite at his price this year another team might next year. Albert is already owed \$9.828 million guaranteed in a market where multi year deals are coming in around only \$17 or \$18 million guaranteed. Sure he is betting on staying healthy this year, but for the most part the Chiefs are going to have to meet his price or simply deal with him for 1 season at the high price tag and then lose him next year.

Albert wants the money Duane Brown earned last season. It would be a deal that is around \$9 million a year with \$22 million in full guarantees.  To put that in perspective that’s about 6% more per year than Long, 20% more than Will Beatty, 25% more than Jermon Bushrod, and 31% more than Sam Baker in terms of annual value. Those were the biggest deals signed by Left Tackles in 2013 I believe. A \$22 million guarantee would represent an increase of 83% on Long (Long has guarantees conditional on health, a concession he made to get the higher APY), 16% on Beatty, 88% on Bushrod, and 20.6% on Baker. The way the typical contracts are structured and knowing the Chiefs cap concerns would likely mean he is on the team for the next 4 years if they re-sign him. Those are all incredible premiums to pay for a player that just two or three weeks ago you really did not want on the team.

So financially the Chiefs are really in a bind. Normally a team holds all the cards. This is one of the rare cases where they do not. Albert really calls the shots here. It becomes a very tricky negotiation for the Chiefs and it will be interesting to see just how much Albert flashes his power here to get the money he wants.

### Do the Miami Dolphins Need to Sign Branden Albert Before a Trade?

I read a number of tweets today discussing the potential Branden Albert to Miami trade with points being made that the Dolphins would need to re-work his contract before any deal could be made due to cap purposes. I wanted to touch on a few angles to this and why I disagree.

First of all lets just look at the non-cap approach. Why does a deal need to be made to extend Albert?  The answer is it does not. Albert has signed his franchise tender and is officially under contract to the Kansas City Chiefs. He is obligated to appear at mandatory team activities, report to training camp, and play in the 2013 league year. Those same obligations transfer to Miami if traded. Albert could be looking for a contract that is outlandish in today’s market making the cost of re-signing him prohibitive.

The largest deal signed this year by a lineman was by former Dolphin Jake Long whose 4 year contract averages \$8.5 million per year with only \$12 million in firm guarantees. Albert already had \$9.828 million guaranteed. The second largest contract was signed by RT Gosder Cherilus averaging \$7 million a year with \$15.5 million guaranteed. So signing Albert to a long term deal in the next week could be more trouble than its worth.

One should also keep in mind that this is Miami and they have been willing to play guys on deals like this in the past. In 2011 they allowed DT Paul Soliai to play out the season on a franchise tag worth over \$12 million dollars. He ended up re-signing with the team on a two year deal worth a total \$11.5 million. Good cap management and planning?  Absolutely not, but if it was good for Soliai why wouldn’t it be good for Albert?

Going into the salary cap aspect there is the thought that Alberts \$9.828 million dollar cap hit is far too much for Miami to absorb, specifically with a large rookie bill due in July.  I want to look at this from two perspectives. The prevailing line of thinking has the Dolphins with about \$8.3 million in cap room. This is based on NFLPA records and NFLPA accounting. I’ll mainly work with that figure, but my interpretation of the CBA indicates that there is a potential error in their accounting system.

When a player is designated a June cut here is how the CBA states the contract should be handled:

as if terminated on June 2, i.e., the Salary Cap charge for each such contract will remain in the Club’s Team Salary until June 2, at which time its Paragraph 5 Salary and any unearned LTBE incentives will no longer be counted and any unamortized signing bonus will be treated as set forth in Subsection (2) below

To me that indicates that the contract runs as if terminated on June 2 meaning the player should count in the top 51 during this time. Such a method of accounting makes intuitive sense because you are penalizing a teams cap by removing the cap from the top 51 and into the “dead money category” and replacing him with a player making at least \$405,000. The NFLPA accounts for them as if they are dead money. Miami has two such players which would mean that Miami could be charged an extra \$960,000 than they should be compared to the leagues official records. If that is the case Miami’s cap is closer to \$9.3 million.

But assuming \$8.3 million is the number let’s play the trade out. If Albert comes to Miami he immediately replaces the 51st player on the team, which would be Jonathan Freeny at \$480,000. That brings Albert’s net effect on the cap down to \$9.348 million, leaving Miami with just \$1 million or so to come up with. As you look through Miami’s cap sheet there are a number of players who immediately come to mind as reasonable cuts to gain that cap space.

K Dan Carpenter, very inconsistent in 2012, saves the team \$2.7 million if released. WR Davone Bess who would look to be odd man at wideout anyway saves Miami \$2.68 million in cap room. Of course cutting them means Freeny’s \$480K jumps back on the cap but its still more than enough to bring Albert in at his current cap figure. Those two players both have base salaries above \$2 million which could make both prime candidates for paycuts if you wanted to keep them on the roster and not impact the top 51 makeup. Combining a paycut with the release of LS John Denney might also do the trick. Dimitri Patterson and his \$4.5 million dollar P5 could also be looked at though the Dolphins are a bit thin in the secondary.

Going back to the June 1 cut rules, remember that Miami has large figures coming off the cap on June 2. On June 2nd both Karlos Dansby and Kevin Burnett will come off the books for the Dolphins. Dansby saves \$6.25 million while Burnett saves \$4.45 million. Since the NFLPA already has their replacements accounted for that opens the Dolphins up to \$10.7 million in salary cap space.

Assuming the Dolphins trade their highest 2nd round pick for Albert their rookie pool would be estimated to be around \$6.3 million for 10 players. Since the top 51 rule still applies those players will either displace a lower cost player or only have their prorated money count towards the salary cap. Per my calculations the draft class will likely replace 5 players, each making \$480,000 in P5 salary, with the bottom 5 only having bonus prorations count. So for as big as that \$6.3 million figure looks the Dolphins only need around \$1.9 million in cap room to really sign all these players.

While I have been critical in the past about the way the Dolphins have managed the salary cap, if this was the plan back when they cut Dansby and Burnett it was tremendous cap planning by Jeff Ireland. Nobody could really understand why Miami designated those players June 1 cuts but it clearly has left Miami with the room to absorb a franchise player like Albert and still have the cap space to function throughout the entire 2013 season. That \$10.7 million is more than enough to sign rookies, bring 53 to the roster, add a Practice Squad, and have money reserved for in season injuries and subsequent moves.

So really there is nothing standing in the way of a trade for Albert besides the cut or a paycut of one player. That’s really all it will take. Like I stated when discussing the Darrelle Revis trade, if you really want the guy go get him. The contract can always sort itself out later if need be. The player has little power to block a trade or not suit up and play. Miami has tried to build a team via free agency this year to compete now. They definitely do not need Albert to sign long term to add him to the mix.