[adsenseyu1]
Answering your questions as best I can on a number of subjects. Big focus on the Oakland Raiders, but also questions on BJ Raji and the Packers, the New York Giants, as well as the cap strategies used by a number of teams.
Podcast: Play in new window | Download
Subscribe: RSS
[adsenseyu1]
One of the big concessions made by the union in the last CBA dealt with the institution of a true rookie wage scale for all draft picks. Salaries at the top of the NFL draft had more or less grown out of control with Sam Bradford, the final number 1 overall pick in the old system, signing a $78 million dollar contract without ever stepping foot onto a NFL football field. Even today Bradford’s deal holds as the 10th largest contract at the position when measured by annual value and Bradford is a bottom tier QB. Due to the salary cap consequences of releasing him Bradford is essentially protected from being released.
While NFL teams certainly have the money to afford these deals on a cash basis, on a cap basis they had become prohibitive to the point where high draft picks were being devalued due to the high risk and excessive cost associated with the draft picks. So I wanted to look into the ways by which we can value a draft pick and examine the cost/performance relationship of a player’s career and his draft status.
The Methodology
Last year I began working on a draft valuation using data from pro football reference to score players based on Pro Bowls, Years as a Starter, and Games Played. The player’s individual score was compared to the average for his particular draft class and a score was awarded in each category and summed to calculate a total score. As my buddy RJF, a great poster over on Jetnation.com, pointed out that the use of a Pro Bowl can skew the numbers because the PB becomes a fan lovefest rather than an actual measure of productivity. While I disagree to some extent as those initial Pro Bowls require strong play to get elected for the most part (players like Mike Vick notwithstanding) at the end of a career those votes are solely based on reputation. To try to limit that this time I included All Pro nods as those are a much more difficult award to obtain. While favoritism comes into play it’s not to the extent of the Pro Bowl.
In my mind games played is a measure of being simply good enough to put a helmet on and play. In this case a special teams player is given just as much credit as Peyton Manning for simply suiting up. Getting games out of your draft picks is certainly important. Starting seasons separates those depth players from those top players on a team. If every player in your draft class turns into a starter you either did a terrific job or your team is really bad and has a lot of holes to fill. The Pro Bowl and All Pro nods measure the quality of the play itself. It’s one thing to be a starter, but it’s another to be a great starter, one of the best in the NFL. Obviously perennial all world players will get major scores for this.
I also did not compare to each individual draft class this time around as it was skewing the results when trying to pass an “eye test”. For example Ed Reed under that format was the best draft pick of the sample period because he was dominant in what was a poor draft class. Reed is a great player but his numbers just don’t match others and it seemed unfair for him to be rated so high. Instead I took the average performance from 1993, which was when the cap began and the drafts shrunk in size, to 2006. The average draft pick over that timeframe has a career of 63.3 games played, 2.3 starting seasons, 0.33 Pro Bowls, and 0.09 All Pro nods. Obviously some of these players are still playing and the numbers will change slightly over time with good players from 05 and 06 being a bit understated but for the sake of this study I felt it was reasonable enough to include them. Punters and kickers, who are given starting credit, are also overstated and should just be looked at as outliers.
To illustrate how this works I’ll use Ray Lewis who graded out as the top draft pick of the time period. Lewis finished his career with 228 games, 14 starting seasons, 13 Pro Bowls, and 7 All Pros. Those numbers would make him 2.6, 4.97, 38.3, and 77.1 times as productive in each category as the average draft pick. His total score would be 123 which I adjusted up by 4 to bring everyone up to a minimum of 0 giving him a 127 composite score. The top 5 players were Lewis, Tony Gonzalez, Peyton Manning, Larry Allen, and Alan Faneca. Manning and Gonzalez will likely jump Lewis. About 12.3% of all draft picks never played a game in the NFL.
Every players score was calculated and the draft slot score then averaged. Overall the 4th pick in the draft actually produced the most quality points. Just using a basic Excel regression we can get the best fit line and get the following to get our approximate values:
Financial Situations
So keeping this in mind we can now come up with an expected player performance for our draft pick ranging from 21.936 for the first pick down to nothing for our final draft selections. Our rookie money we are spending is a blind investment for the expected return. Obviously that cost is significantly reduced from the prior CBA draft. What I want to do is create a performance vs investment ratio (PVI) that measure the amount of expected performance above the average draft pick divided by the rookie contract cost of the slot compared to the average contract. A ratio below 1 indicates an overpriced pick and above 1 an underpriced pick. To compare with the old CBA I am using the 2010 APY’s for the players. This is not a perfect list since certain players hit rookie escalators and some did not but for the sake of comparison should be reasonable. Where you see some strange spikes it likely means the pick was a QB or I had insufficient data.
The change in the salary structure, specifically at the top of the draft, in the new CBA had significant changes on the true value of the first round, and in particular the top 10, draft picks. Under the old system the number 1 pick was incredibly overpriced compared to the rest of the draft. You paid 12.3 times the amount of the average player for Sam Bradford but were only expected to gain 5.6 times the performance over an average player. At that salary the only players to give you 12.3 times the average performance or greater out of the 1 slot were Peyton Manning and Orlando Pace, in essence a 14% chance at making it worthwhile. Even taking the first three picks into account only 5 out of 42 selections (the other 3 being Julius Peppers, Marshall Faulk, and Tony Boselli all 2nd overall picks) hit the number. Under the new system the pay vs expected performance is almost equal. The pick is still a touch overpriced but now it’s more reasonable of an expectation. 10 players of the first 42 selected have hit that threshold and a number of others are close.
In both cases your best bang for the buck comes in round 2 and the earliest stages of round 3. Based on salary being paid the most value is actually right at the top of round 3. That doesn’t mean a team should load up with players there it just means there is the least risk associated with the salary outlay and expected performance. Under the new CBA you can make a strong case to draft in the 8 slot and have a strong chance of justifying the investment. In the old CBA it would have been number 20 where the cost started to match the production.
Prices begin to get overvalued again around the 140th pick in the draft. Some of that risk is balanced out by the fact that these draft picks contain minimal guaranteed money unlike the 1st and 2nd round selections, but in general the contract being signed is probably not worth the cost. Other than just throwing something against the wall to see if it sticks the 5th rounders and beyond are almost worthless commodities and stockpiling those picks is most likely not going to pay off.
High End Risk Minimization
Now of course you are paying a premium in all of these picks that I say are overvalued because of your expectation of greatness. Nobody goes into a draft and says “boy that guy we just drafted is going to be average”. In almost all cases you think you hit a home run. While everyone has their own measuring stick for a great pick I think many will look at being a multi time Pro Bowler or All Pro as a sign of greatness. As a guide here are the percentages of multi time Pro Bowlers and All Pros based on where they were selected. Please note that Round 1 means picks after 11.
| Slot | Multi-Pro Bowl | Multi All- Pro | Avg.PVI | Avg Salary 2013 | Avg Salary 2010 |
|---|---|---|---|---|---|
| Top 5 | 48.6% | 12.9% | 0.84 | $5,120,601 | $10,816,667 |
| 6-10 | 30.0% | 11.4% | 0.97 | $3,423,740 | $6,234,580 |
| Round 1 | 25.9% | 6.1% | 1.08 | $2,097,071 | $2,629,548 |
| Round 2 | 10.3% | 3.0% | 2.09 | $1,079,548 | $863,995 |
| Round 3 | 5.5% | 1.5% | 1.92 | $713,643 | $640,232 |
| Round 4 | 3.1% | 0.6% | 1.52 | $651,490 | $566,732 |
| Round 5 | 2.7% | 0.6% | 1.19 | $594,944 | $494,989 |
| Round 6 | 2.5% | 0.6% | 0.77 | $571,117 | $473,925 |
| Round 7 | 0.8% | 0.2% | 0.38 | $558,716 | $464,188 |
Looking at these percentages plus the PVI I would say that most teams are better off moving out of the top 5 or out of the top 10 entirely. In my opinion the real sweet spot to balance that risk and reward is in the 2nd round. It is great value for the price and you are still getting a decent probability of a Pro Bowl caliber player. The way the NFL slots salaries is not really commensurate with the drop in play. There is virtually no difference between the expected performance of the 32nd and 33rd pick yet the APY drops by about 20%. Between the 2nd and 3rd round the drop is a more reasonable 6.9%. It’s all about that status the NFL gives for being a 1st round pick and it is far too high of a price.
That being said if our goal is to hit a home run (and whose goal isn’t) teams are still far better off drafting in the meat of the 1st round. I base this on the ratio of pro bowls vs cost. Drafting in the top 5 only makes us 1.9 times more likely to find a multi time Pro Bowler and 2.1 times as likely to get the multi time All Pro yet we pay, on average, around 2.5 times as much for the selection . Here is how round 1 compares to every slot in the draft:
Increased Multi Pro Bowl | Increased Cost | Ratio | |
|---|---|---|---|
| Top 5 | 0.53 | 0.41 | 1.30 |
| Top 10 | 0.86 | 0.61 | 1.41 |
| Round 1 | 1.00 | 1.00 | 1.00 |
| Round 2 | 2.51 | 1.94 | 1.29 |
| Round 3 | 4.71 | 2.94 | 1.60 |
| Round 4 | 8.35 | 3.22 | 2.60 |
| Round 5 | 9.59 | 3.52 | 2.72 |
| Round 6 | 10.36 | 3.67 | 2.82 |
| Round 7 | 32.38 | 3.75 | 8.63 |
In every situation our ratio is above 1. This means we are paying far less for the reasonable chance of landing the multi time Pro Bowler. If you can trade out of the top 5 and pick up a mid round pick plus a second round pick you are going to have a far better chance of being successful and not screwing up your salary cap than if you remain in the top 5. Under such a scenario you are 0.75 times as likely as landing the great player but you pay 0.52 times the cost, factoring in the fact that the 2nd draft pick eliminates a minimum salaried contract. That improves our ratio from a 1.3 to 1.4. Throw in a 4th rounder and we improve to a 1.46. This is all in contrast to the old CBA where no first round pick justified the risk at all. The 2nd round was the rea where you had to move which is going to minimize the chance of hitting on the player.
Now there are plenty of teams who follow a draft philosophy of more is better and will constantly move around to maximize picks. Moving around, IMO, for 6th and 7th rounders is probably not worth the effort. Clearly there is almost no value to the 7th round pick. There is a distinct drop in high end quality between the 6th and 7th and as it stands the minimum salaries and small bonuses are not going to produce results that justify the salary. The 6th round is a little more reasonable as the PB chances are more or less the same as a 4th and 5th rounder but the overall cost to gain that benefit is probably not worth it. Stockpilers need to focus on rounds 3-5 to make the most effective use of their dollars. Trading down to gain 6th and 7th rounders is not going to pay off.
Going back to the 2006 CBA clearly the NFL was way off in their pay slotting. While it is better now there is still too high of a premium going to the top of the first round. While it would never happen (except internally with teams) the salary structures should be used to either upgrade or downgrade point totals on the draft charts teams use. Bu teams are so in love with the chance of the number 1 pick and landing the next Peyton manning that most logical thinking goes out the window when they hand in the card and happily select David Carr or JaMarcus Russell. While failures to that level are not likely the odds were against the Texans and Raiders of ever finding a player worth the price tag.
While I did not touch on this here there is also something to be said for positional drafting. There are certain positions that have proven to be winners and losers in each round of the draft. Considering the commitments teams are making in guaranteed money in the first two rounds of the draft if there is even a hint of a disagreement between two players teams should consider looking at the historical positional trends to further minimize the salary risk of the draft pick. Maybe we’ll touch on that in the future one day, but I think this is a nice little start with merging the salary cap and the draft.
If anyone is interested in the pick by pick PVIs, salaries, expected results, etc… just drop me a line and I can try to get you a spreadsheet or just post a table on the site. It might take me a few days to get it out but I’ll do my best to get it out. I’d also like to extend a special thanks to our contributor Ian Whetstone who had the 2010 rookie salary data in a far more useful format than I had. I only had to make some small changes to the top picks from that year to get a relatively accurate picture of the 2010 salaries
[adsenseyu2]
[adsenseyu4]
[adsenseyu1]
One of the more interesting stories in the NFL Free Agency period this year has been the “market correction” that is killing players dreams of realizing the big payday they expected. It wasn’t long ago that D’Brickashaw Ferguson and Jordan Gross received deals worth close to $60 million. This year LT Jake Long signed for $36 million. Last season Jason McCourty and LaDarius Webb signed deals in excess of $40 million dollars. This year Aqib Talib gets $5 million and Sean Smith $16.5 million over 3 years. Both were considered franchise tag candidates. Last year Mario Williams signed a record setting contract worth $96 million. This year DE Cliff Avril was lucky to grab a two year deal worth just over $13 million. What exactly is going on? Some of have said collusion, but is it really?
You have to think of the salary cap in terms of a family budget. Think back to the way you have handled the financial crisis of recent years with rising gasoline costs, increased food prices, and relatively flat wages for most of us. At first some of us did not really adjust much. Maybe we thought it would simply get better in the future and made no changes. Others bought more on credit. Some immediately began to pull back on spending. By a year later most of us were trying to find ways to reduce costs on “luxury items”. We have no choice, for the most part, to buy gasoline for our cars or buy food for the family but dining out or going on nice vacations may have been put on temporary hold. That is really what is happening here.
Under the prior CBA the salary cap grew from $109 million in 2007 to $123 million in 2009, a growth rate of over 6% per year. Under that model, which is what was being used to sign players and create a marketplace, the cap managers of a team were banking on a salary cap of close to $150 million in 2013. When the new CBA was signed in 2011 it was so late in the process that nobody had much time to consider the real salary cap ramifications of the new deal. The union proclaimed they got a great deal and while the cap number that was agreed to was low there were concessions made to boost it via the use of $3 million dollar veteran player credits in 2011 and $1.5 million in similar credits in 2012. The bill for those moves would not be due until years in the future.
When the salary cap in 2012 showed no growth I think there was panic among teams and players. If anything the cap should have fallen and rookie wages should have been reduced but some last second bargaining seemed to boost the numbers to at least the same levels as 2011. Certain teams wisely pulled back. The 49’ers for instance were using extra cap room not to sign players but to accelerate future dead money into the current league year to add more financial flexibility to their cap management. The Eagles were allocating huge chunks of unused cap room to carryover to the following year to offset their future payrolls. The Jets stopped spending. By 2013 almost all teams are pulling back realizing that this is not a fluke occurrence but a long term problem. I don’t think they really have a choice based on my projected cap from the old vs new CBA:
There is close to a $27 million dollar salary gap between where teams thought the cap would be versus where it is in 2013 and it is only getting wider by the year. The problem is further compounded by the continued growth of the salary for the Quarterback, a subject I touched on when discussing the over the top salary given to Joe Flacco because of the position he plays and fact he just won a Super Bowl. The QB is essentially our fixed costs in our household budget. Teams have decided that they can not win without the great QB and because of the great demand for them the price skyrockets. Even backup QB’s with “potential” like Chase Daniel are making millions while other players who play 16 games a year are struggling to get a contract.
In the final capped year of the old CBA Eli Manning was the top paid QB. His deal was set to average $16.25 million a year or about 13.2% of the cap in the year it was signed. Eventually his brother jumped his total with a $19 million dollar deal in 2011 signed during the early stages of the new CBA. That $19 million represented 15.8% of the 2011 unadjusted salary cap, which one would think would cap the marketplace at those figures- 13.2% for the up and coming star and around 15.8% for the established superstar. The Saints would jump the Manning figure the following year allocating 16.6% to Drew Brees and the Ravens then caved in big on Joe Flacco pushing him to 16.3% of this years cap.
It was really the Flacco deal that made it known the QB position is not slowing down in salary anytime soon. If we consider Aaron Rodgers to be the new Peyton Manning that likely means a deal around $23.9 million a year with the superstar QB cap allocation now jumping to a whopping 18.9% compared to just 15.8% in 2011. That is $ 4 to 5 million a year that needs to be taken from other positions just because of the QB.
The wide receiver has now turned into a semi-fixed cost. Maybe its like choosing between the name brand or the generic in the store but it’s a necessity because of the high investment of the QB. When you see the deals signed by Mike Wallace and especially Percy Harvin it’s a growing market. Brandon Marshall received over $11 million in new money in 2010 when traded to Miami. Roddy White, less established at the time of signing, received just over $8.5 million in new money the year before. Wallace might compare to White. Harvin not really. Both eclipsed those contracts meaning a far greater percentage of cap allocation than planned before. It makes the Victor Cruz negotiation with the Giants very important because if they get him signed on a more slotted deal it may pull back the market a little next year. If he exceeds Harvin, which he should, then those two become the Flacco of the receivers.
Between those two positions you are looking at $6 to 8 million that teams have to pull from other spots and that doesn’t even include if the prices extend to the secondary player market. It already has with the backup QB for some teams and may hit WR2 starting soon. Then on top of that you have the overall lack of cap room and cap growth compared to a few years ago when deals were signed with rising caps in mind. So players are getting squeezed at positions the NFL is deeming less worthy. Why are they less worthy? Here are some thoughts.
The pass rusher and left tackle have always gone hand in hand in terms of importance and salary. The problem is that the NFL defenses have become so complex that pass rushes can come from anywhere on the field. It used to be my left tackle takes on the right defensive end and that is that. Now players line up all over the field to rush the passer. If you look at the statistical breakdowns I have done in the past on my other site using some of the raw data from PFF you will actually see that a larger amount of negative plays occur because of pressures coming from the right rather than left side of the line. The Left tackle is being devalued against these defenses.
Likewise the great pass rusher is being somewhat neutralized by schemes that blitz from all angles and the fact that the defense has become so situational. Its not 11 guys every play. A pass rusher may get pulled entirely from a game on 1st downs. He probably doesn’t play on short yardage downs. He may be asked to drop into coverage occasionally. And of course you can’t discount the rookie wage scale and pass rushers. Many of our most productive pass rushers are on low cost rookie contracts. While they may not play much as a rookie they become fixtures later on. With the QB salary so high getting the young cheap player on the rise is far more enticing than overpaying an older player who will be on the decline in 2-3 years.
Cornerbacks are falling victim to the new spread offense which limits their effectiveness. Back in the 1990’s Deion Sanders could literally take a side of a field away. Teams played a great deal more of 21 and 22 personnel. Now most teams go empty backfield with multiple wideouts and Tight Ends who are masquerading as wide receivers. For as great as Darrelle Revis is at neutralizing WR1 what good is he against WR2, WR3, RB, and TE? None. It was why in 2011 the Jets would be great against the pass 90% of the time except when a team would target their safeties and linebackers in coverage gaining creating huge plays that turned games. Plus, even with the increased investment in the WR1, how many teams have a pure 1? There are probably only 10 teams that have a WR that you want a grade A corner to bottleneck. Most likely you only face 4 or 5 in a year. It doesn’t pay to throw your salary all in one player. You need balance across the whole secondary to compete week in and week out.
There are some people who are of the opinion that players are accepting short term deals to hit free agency again. In some cases that may be true, but realistically this is not changing until either the salary cap starts to really grow or teams pull back on the QB spending. If Michael Bennett took a 1 year deal to “try it again” most likely he is not going to fare any better next season. Same goes for Aqib Talib. Its not just an overcrowded market its an under-capitalized market. Teams don’t have the money to spend now and need to allocate the money to spend later on what are the prime positions in football. Everyone else will just be left out in the cold taking whatever scraps teams are willing to dish out so they can continue playing football.
[adsenseyu2]
One of the more recently used salary cap relief methods has been the (ab)use of voidable contract years. Under the cap accounting rules of the CBA a signing bonus or an amount treated as a signing bonus is prorated on a straightline basis over the course of a contract up to a maximum of 5 years. When teams look for cap relief they often go to players they feel are contributing talent and restructure their contracts to convert salary into a bonus thus reducing the salary cap hit for the year.
For example lets say a player is set to earn $7 million for playing football in 2013 and that he has 3 years remaining on his contract. To make the numbers work out easier lets just assume his cap charge is also $7 million. To bring the cap charge down to a more reasonable level they will convert $6 million of his salary into a bonus and prorate it over the life of the contract. His new cap hit is only $3 million which stems from $1 million in base salary and $2 million in prorated money. His cap charges over the next two years will rise by $1 million each year.
But what if a team needs more relief? In the contract above the team is limited in its proration due to the three year length of the deal. To increase the ability to prorate money the team will offer the player to tack on two voidable years on the end of the contract. That now brings the term of the contract to 5 years. Now our team can go from $2 million a year in prorated money to just $1.2 million. Our team is now able to reduce the players overall cap charge from $7 million to just $2.2 million in 2013.
The problem with this strategy is that we are extending our contract well beyond the useful life of most players and increasing our dead money associated with the player. A voidable year has no chance of being played out. Normally the conditions to void are ridiculous such as being on a teams roster the day after the Super Bowl. No performance is needed to earn the void.
Void years were popular in the days of the old CBA as a way to deal with the rising costs of high priced rookies. They began to find their way into more veteran contracts with the first real monster deal being the Nnamdi Asomugha deal with the Raiders. Under his initial contract Asomugha locked the Raiders into a dead money cost of $12.5 million unless the Raiders were able to come to a contractual agreement on an extension before his contract voided. This deal became the model for the current problem situation the New York Jets find themselves in with Darrelle Revis.
Certain teams have begun to use the voidable year as a detriment to their future cap health, with the Raiders and Dallas Cowboys being the biggest abusers of the technique. Its one thing to use the void years for a younger player like Revis who arguably could be re-signed to a longer term deal but its an entirely different thing to use it with a player like DeMarcus Ware or Richard Seymour and to develop an entire roster devoted to void contracts. Ware will be 31 years old when the 2013 season begins. His contract will void in 2016 when he is 34 years old. There is probably a high probability that Ware’s career will be over at the point. The Cowboys have locked themselves into at least $2 million of dead money due to the void.
Every dollar saved this year is going to now be allocated to future contract years both in terms of cap costs and potential dead money costs. The cost is just driven up each year by taking the shortsighted approach and using the void contract structure. The salary cap ramifications of prorated money should provide fiscal restraints to most cap managers in the sport. Unfortunately this doesn’t seem to be the case for some teams even as they stare at millions of dollars of dead money on their cap books year after year and no trophy to show for it.
[adsenseyu1]
I had a question about this in the comments of one of the cap posts and thought it would make a good topic. I think most people have realized I have a page on the site that provides estimates for each teams Rookie Pool, which provides estimates for the cap costs of each player that will be drafted in the 2013 NFL draft. The salary cap has so many parts that it can be confusing at times and I think this just adds another layer of confusion to some and how it affects the salary cap and free agency. So lets examine in a bit more detail.
What is the “Rookie Pool”?
In the old CBA the NFL had a cap on how many cap dollars could be spent on rookies during their first season in the NFL. This was called the “Entering Player Pool” and was generally considered the “Rookie Pool” or “Rookie Salary Cap”. The league allowed a players cap hit to rise by 25% of his first years cap charge which in theory would keep rookie salaries in check. However, in practice it was not the case as teams and agents used all types of neat little cap mechanisms to render the 25% rule invalid, especially for highly drafted players. This was a major renegotiating point in the new CBA.
Per the current CBA each NFL team is allotted a maximum amount of dollars to spend on their draft picks not only in year 1 cap charges, but also in total value. Those loopholes that existed in the prior CBA were all eliminated and thus rookies are limited to increases that equal 25% of their first years cap charge. The new CBA refers to these allocations as the “Total Rookie Allocation” and “Year One Rookie Allocation”. The values for each team are determined by the position the player is drafted. I just call them “Rookie Pools” because I’m used to using that term.
While the formula itself is a secret for calculating the charges those of us who track the numbers are able to get a good idea of how the process works. In general its an exponential decay where there is rapid drops at the top of the draft in terms of value and minimal drops as you get into the 3rd and 4th round of the draft. This gives us a good idea at forecasting the charges, though the NFL and NFLPA made it a bit easier due to the way that they grow the rookie pool.
The various rookie pools grow (or fall) by the same percentage as the salary cap. To illustrate we will take a player drafted in round 7 in 2012 that had a year one rookie pool number of $402,000 which would mean they earned $390,000 in base salary and $12,000 in bonus prorations. The 2013 cap grew by 1.99% which would make that players allotment in 2013 grow to $410,000. Sounds simple except the problem with that formula is that it fails to take into consideration the basic increase in minimum salary for a player per CBA rules. Our new minimum salary is $405,000. That would leave just $5,000 in prorated bonus money to be spent on the player drafted in an identical slot.
I think all sides agree that with a rising cap it would be unfair for a player drafted in 2012 to earn a bonus that is $23,000 more than the player earns in 2013. So basically what the league has appeared to do is freeze the bonus payments and so that there is no loss of guaranteed salary as long as the salary cap is rising. My assumption is the same will occur this year. The only real growth in rookie salaries will be for players selected in the first two rounds who will have a $15,000 or so higher Year 1 cap hit that allows them to earn slightly higher raises due to the 25% rule. Beyond the 2nd round the 25% rule is not a factor and limited growth will occur. In the future the cap will need to rise by around 3.7% for the bonus money to really rise over a prior year when taking into account minimum salary growth of $15,000 per year.
So keeping all of this in mind we should get a pretty decent idea, barring some big changes by the League, as to what each team will spend on their rookies.
How does the “Rookie Pool” affect the Salary Cap
This is probably the most confusing aspect for most people. Some people this its additional money added on top of the salary cap which is not the case at all. The “Rookie Pool” is a cap within the salary cap. It is essentially money that your team needs to place aside for your rookies. It is not added to your salary cap at all.
The Chiefs (pretending there is no trade for Alex Smith) would have an allotment of around $7.445 million for their rookie class. What that means is that at the end of the preseason, assuming all their rookies make the club, the Chiefs will need to devote $7.445 million in cap dollars to their rookies. So if the Chiefs had a salary cap of $123 million their effective cap space for spending is only $115.55 million in 2013.
However when reading this it is easy to jump to conclusions that the Chiefs need to be $7.445 million under the cap today just to sign rookies. Not exactly. We need to remember that in the offseason the salary cap is based on the “Rule of 51” which means only the top 51 cap charges (plus dead money) count towards a teams salary cap. Most teams have more than 51 players under contract. The Chiefs have 55.
This means that each of the Chiefs 7 draft selections will displace a player who is currently counting towards the salary cap limit. Most of these players earn $405,000. So if you have 51 or more players under contract here is the general rule as to how you calculate the net cap space that is being eaten up by your rookie pool:
Year One Rookie Pool – (405,000 x number of draft picks)
For KC that is equal to just $4.61 million a big difference between the $7.445 million we first thought we needed to set aside. So is the Chiefs have at least $5 million in cap room they can sign free agents and not need to worry about their rookie dollars being compromised. If you are a team with less than 51 players that you will need to adjust your calculation accordingly to
Year One Rookie Pool – (405,000 x (number of draft picks – (51- players under contract) )
These are your net cap space requirements for rookies or what I would call your “Effective Rookie Pool”.
So How Much Real Cap Space Does My Team Have?
A good way to determine how much cap room your team likely has to spend is to take our salary cap space estimates and then subtract your “Effective Rookie Pool”. While I know our numbers wont be perfect for most teams they should at least be a good indicator of cap space for most of the teams in the NFL. We’ll always strive to be better so any help is always appreciated. Feel free to post, email or tweet any further questions.
[adsenseyu1]
Well before we get started I’d like to introduce everyone to Jim who is one of the new contributing writers on the site. Jim is a big Raiders fan and an amateur capologist. He’ll be popping in from time to time with his thoughts on the cap and probably doing quite a bit of Raiders related posts, as the Raiders are always a hot salary cap topic. Unfortunately for Jim its rarely positive but one of these days it has to. Onto the Q&A:
33,( who looks like a big Tony Dorsett fan)- Does the cap increase in the next several years? If so, how does this play into the process of cap planning?
Thats a great question and its one that I certainly can’t fully answer. While the cap does increase every year the projections seem to be that it will remain pretty flat even as the new TV contracts roll in. The union has had to make a number of concessions to get the cap to be even where it is today so my guess is there will be limited growth. That being said projections are nothing more than educated guesses and can change at ant time.
As for the second part of the question it absolutely plays a role. As the salary cap inflates so can contracts. It is far better for a team to shuffle cap dollars to the future because those cap dollars will, in theory, eat up much less of a percentage of the cap than they would in the present. Back in 2006 when the new CBA went into effect teams planned contracts with a certain projection in mind, but by 2007 when the cap begin rising substantially so did the pushing of money and contract values. The problem for teams now is that the cap remains at the same levels at 2009 but star player salaries keep rising. That was one of the points I was trying to make on the Flacco contract. When Eli Manning signed his record breaking deal worth $16.25 million it was on a cap of $123 million rising $5-6 million a year. The pushing of salaries from that period have essentially made that contract worth nearly $21 million a year but, with a flat cap, it eats up a far larger percentage. To try to protect themselves from that reality the Ravens designed the cap hits of the contract to remain low for the next three years hoping that by 2016 the cap grows substantially making Flacco’s high end numbers seem more reasonable.
From @ross_christie- How much of a contract will a player actually get? Is it just the guaranteed money?
Depends on the quality of player and structure of the contract. If you look at our releases page you can get a good idea as to just how much players earn before being released. Most probably earn around 50% of the contract and in many cases that is because of the protection that was built into the contract. Players that have strong representation, especially those who negotiate with weaker front offices, are able to craft player friendly contracts that make it difficult to release the players. The fact that signing bonus money is prorated and all accelerates onto the cap if released provides another layer of contract protection besides just the fully guaranteed money. A player that can negotiate a large signing bonus in conjunction with fully guaranteed salary will most likely earn more than players with more guaranteed money but no bonus protection. I would say that it is pretty rare for a player to actually play out his entire contract without ever having a paycut.
From @WeightyThings- For Bowe’s contract structure, what do you think their primary concern was in organizing it? Any player contracts coming up?
I think their main concern was getting a cap friendly deal in year 1, which they accomplished with a $4 million dollar cap hit in year 1. The Chiefs dont really have any cap issues on the horizon so they knew they could deal with the higher cap hits in years 2-5. This maximizes their chances to attract free agents and change the culture in Kansas City.
From @Dessedrengen- how is it possible for Dallas to get under 123.0 when they are at about 126 now, and then the cap penalty?(10mil$ if I guess)
The Cowboys cap penalty this year is $5 million and their adjusted cap, after carryovers, should be around $120.3 million. They did get under the cap for a brief moment before tagging Anthony Spencer. I estimate them to be around $5.6 million over the cap. I cant really see how they will get under the cap without extending Tony Romo. They were going to pay him ton anyway, but I have a feeling it will be even more now. Romo has all the leverage in the world because Dallas has almost no other options as they have restructured almost everybody on the team. Statistically he can point to Flacco and state a case he deserves close to that, though Romo is older so I cant see that working. Other options would be to restructure Doug Free but he already has a large dead money hit close to $4 million in 2015 at which point his contract should void. Its ugly in Dallas and only going to get worse
From @WeightyThings(a 2nd questions)- Now that Tyson Jackson is back at 5.2 million, what is the Chiefs salary cap looking?
Sometimes initial reports can be wrong, but based on what was reported the Chiefs gained at least $9 million in cap space. It is likely more than that as the way the reports have been worded make me think he needs to reach certain performance levels to even earn that much. If that is the case they will save more against this year cap. The team probably has around $12.5 million though that does not include the deal for Alex Smith.
From L_A_RAIDERS- The New Regime has only been here 1 year…isnt that statement a little pre mature?? What Crazy contract has Reggie Handed out?
This was in reference to a statement I made on the Raiders decision to continue to not release players but instead keep extending. Its a fair question. I think when you have a situation as bad as the Raiders you have to be willing to make very difficult decisions. They continued to make many of the same moves as the previous regimes. In Richard Seymour’s case they added another void season onto the end of his contract to just increase the inevitable dead money in 2013, which is close to $14 million. They re-signed LB Aaron Curry, who had shown nothing, to a deal that contained 3 voidable contract years and they fully guaranteed his 2012 base salary. He was gone by November. They used a similar void trick to bring Carson Palmers numbers down in 2012 which has just added to more dead money issues either in 2013 or 2014. I just think the abuse of these void years and salary conversions makes it impossible to ever get out of this hole and based on the most recent restructure of a player that most Raider fans seem to think doesnt even fit their offense it just seems to be the same approach. Maybe the moves of 2012 were done out of absolute necessity, but this last one was not.
From @Donkey_Kang With the inflated price of cornerbacks is it more likely the Chargers draft one in first 2 rounds than sign one for big money?
I could see salary cap playing a role for some teams in the draft but I have to think the Chargers are simply in BAP mode. But as a general question if you can find a QB, DE, CB, or WR in the draft you are well ahead of the game in your positional spending. The ability to have rookie contracts playing those position is a huge advantage.
Feel free to keep asking me questions either on Twitter, email, or in postings. Ill try to answer them as best I can in the future.
[adsenseyu1]
Dan Hanzus of NFL.com has the particulars as it relates to cash flow on the record setting contract for Ravens QB Joe Flacco. It is certainly quite the deal for Flacco, a player who has yet to throw for 3,900 yards in a season. The QB salaries are getting so out of whack with the rest of the league that at some point you are going to see teams suffer for overpaying good but not great QB’s. Flacco had a miracle playoff run, but a contract like this completely disregards 5 years of performance on the field.
That is not to say that this should be a surprise. A few weeks ago I looked at Flacco and predicted he would get a contract close to $21 million a year. Why? It was the Eli Manning model. Manning, who had a similar career trajectory but with more draft status cache and a slightly better track record, blew the field away in 2009 when he signed his contract worth $16.25 million a season. Eventually the bigger names like his brother Peyton surpassed that number, but Eli had more of less been the standard mark for a QB that was not considered prolific but had some playoff success.
The difference between Eli then and Flacco now is the new CBA. The new salary cap limit is $123 million and the union had to jump through hoops to even get the number that high. The salary cap limit back when Eli signed his deal was $123 million and growing rapidly. Basically there has been no inflation in the cap but the same player salary has now risen greatly. On an APY basis Manning’s deal was about $13.2% of the cap. Flacco’s is16.3%. Sure Flacco and the Ravens will manipulate that cap figure this year but at some point it will catch up with them and teams will suffer because they spent far too much money on a position, even one as important as QB. Here are some very early (and totally unofficial) estimates of what Flacco’s deal may look like.
| Base Salary | Prorated | Cap Charge | Dead Money | Cash Flow | |
| 2013 | $1,000,000 | $5,800,000 | $6,800,000 | $52,000,000 | $30,000,000 |
| 2014 | $6,000,000 | $8,800,000 | $14,800,000 | $45,200,000 | $21,000,000 |
| 2015 | $4,000,000 | $10,550,000 | $14,550,000 | $30,400,000 | $11,000,000 |
| 2016 | $18,000,000 | $10,550,000 | $28,550,000 | $25,850,000 | $18,000,000 |
| 2017 | $20,600,000 | $10,550,000 | $31,150,000 | $15,300,000 | $20,600,000 |
| 2018 | $20,000,000 | $4,750,000 | $24,750,000 | $4,750,000 | $20,000,000 |
These numbers are assuming that this $7 million dollar option bonus is paid in 2015 and is prorated over the life of the deal. Sure some will say that its a 3 year contract where you simple re-do the deal in 2016, but look at that dead money figure. What leverage does a team have to force any kind of market correction when cutting a player costs nearly $26 million on your cap? Those backend cash flows are important because it more of less gives Flacco a starting point of $19.5 million a year in a renegotiation. Its really absurd.
In my value price model I worked on, Flacco’s regular season was worth about $11.5 million a year comparative to the current marketplace. That is a ton of ground to make up to justify this contract. Its just amazing the way the QB position has been treated in the last 8 or 9 years, really since Peyton signed his first mega-deal in 2004 with the Colts. Think back to the early 2000s. Players like Trent Dilfer and Brad Johnson couldnt cash in. Thats not to say Flacco was along for the ride like they were, its just to point out the way things have changed. Even Tom Brady could not cash in relative to what others in the league were getting after his Super Bowls.
Green Bay is next up in the crazy QB carousel with a far better QB that is going to look for far more money. They don’t usually give in like this but I would not have expected the Ravens to cave in this badly either. The team that makes out the best in all of this is the New England Patriots who got their QB under a cap friendly contract until he retires. Sure he is much older and likely declining but they have a long term advantage that few teams, unless they have outstanding rookies on their rookie contracts, will be able to match in the salary allotments to field a full roster.
[adsenseyu1]