Let’s talk about the Salary Cap, and teams uses of it

[Coochie liquor]

Saw this on Reddit. Thought it was a better talking point than trading McDuffie, or trading resources for a LT. Also hoping I can get a better understanding from some of you guys who understand it more than me.

The link https://www.reddit.com/r/nfl/s/hPxltIJ2OQ

[OC] Assessing how aggressively teams are using future cap space - the Eagles effectively spent 399 million on their 2024 roster, 32% more than the average team and the most in the league

In recent years, teams have become more aggressive in structuring backloaded contracts to take advantage of the fact that the cap increases every year. Howie has taken this further than any GM in the league.

To assess this, I used APY, which is the average yearly cap hit of a contract. For example, if a player has a cap hit of $5 million this year and $25 million next year, their APY is $15 million.

By [summing the APY of the players on 2024 rosters](https://overthecap.com/contracts) instead of their 2024 cap hits, [we can see which teams are spending future money on current players](https://docs.google.com/spreadsheets...it?usp=sharing). I also included current dead cap in the calculation to get a full picture of 2024 spend.

|Team|2024 Effective Spend|
:--|:--|
|Eagles|$ 399,805,070|
|49ers|$ 366,851,304|
|Lions|$ 359,733,177|
|Jaguars|$ 358,339,795|
|Dolphins|$ 353,120,509|
|Vikings|$ 350,201,592|
|Bills|$ 344,423,075|
|Browns|$ 333,851,514|
|Jets|$ 328,251,189|
|Texans|$ 325,446,538|
|Broncos|$ 325,374,288|
|Saints|$ 306,845,039|
|Packers|$ 305,439,917|
|Ravens|$ 298,782,626|
|Buccaneers|$ 298,613,176|
|Panthers|$ 298,160,314|
|Falcons|$ 297,660,693|
|Cowboys|$ 288,264,115|
|Chiefs|$ 287,862,988|
|Seahawks|$ 287,471,672|
|Commanders|$ 283,193,993|
|Titans|$ 282,935,233|
|Giants|$ 282,618,087|
|Chargers|$ 275,610,516|
|Steelers|$ 275,385,342|
|Bengals|$ 274,078,824|
|Bears|$ 268,491,690|
|Patriots|$ 263,299,279|
|Colts|$ 259,613,378|
|Cardinals|$ 259,151,131|
|Rams|$ 245,518,950|
|Raiders|$ 232,167,153|

The average team is effectively spending $303 million on their roster, much higher than the current salary cap of $260 million. While this shows most teams are pushing some of their player's cap hits to the future, none are close to the Eagles. There are multiple reasons the Eagle's value is so high

1. Howie has signed many core players to long term, backloaded contracts
1. Howie aggressively uses void years to push money owed later for even short term contracts. For example, CJGJ has a cap hit of 14.5 million for the Eagles in 2027, even though his three year deal ends in 2026
1. Howie already been employing this strategy, meaning the Eagles had $61 million in dead cap in 2024.

You can see other teams like the Niners and Lions leaning into this strategy, giving long extensions to core players that push their cap hits into the future. Notable, the Chiefs have not, meaning they have the option to start spending more aggressively if they adopt this practice.

The most interesting question is if this practice is sustainable. Howie seems to plan to continually kick the can down the road, always paying the current roster with future cap. The advantage of this is clear, having a larger effective salary cap allows you to assemble/keep a talented roster. But there is a downside, it limits flexibility and can make it hard for a team to reset in a down year. Whether the Eagles will run into this problem, and whether adopts this practice across the board remains to be seen.

[Coochie liquor]

Still trying to understand the backloading of contracts. Does that just mean they’re pushing guaranteed money to future years, or is that non guaranteed money to make the contract seem bigger because of APY?

[chiefzilla1501]

Originally Posted by Coochie liquor

Still trying to understand the backloading of contracts. Does that just mean they’re pushing guaranteed money to future years, or is that non guaranteed money to make the contract seem bigger because of APY?

Could mean a few things. Sometimes it’s to push the overall number higher so the deal looks better (ex. A top 5 LB contract). You’ll usually have high back years with little to nothing guaranteed in prorated dead cap.

Often times it’s just deferring because you don’t have the cap space in the front years. These are usually guaranteed or guaranteed in principle by dead cap (you’re not cutting a player with $80m in dead cap). Player would likely have guarantees on the back years.

Often times there’s a renegotiation trigger. For example, a huge number in year 3 of a 5 year deal. Usually low guarantees on the back years. It gives some small flexibility for the team to have an out on the contract. It also protects players from not getting paid less. If the player busts the team can just bite the bullet and pay the hump so the back years stay unguaranteed. Usually it means the team will turn base salary into signing bonus which spreads the cap hit longer. The back years are more guaranteed because it creates more dead cap. This might also come in a mid contract roster bonus where the player has way less leverage - unlike base salary the team can just refuse to exercise it

[Coochie liquor]

Originally Posted by chiefzilla1501

Could mean a few things. Sometimes it’s to push the overall number higher so the deal looks better (ex. A top 5 LB contract). You’ll usually have high back years with little to nothing guaranteed in prorated dead cap.

Often times it’s just deferring because you don’t have the cap space in the front years. These are usually guaranteed or guaranteed in principle by dead cap (you’re not cutting a player with $80m in dead cap). Player would likely have guarantees on the back years.

Often times there’s a renegotiation trigger. For example, a huge number in year 3 of a 5 year deal. Usually low guarantees on the back years. It gives some small flexibility for the team to have an out on the contract. It also protects players from not getting paid less. If the player busts the team can just bite the bullet and pay the hump so the back years stay unguaranteed. Usually it means the team will turn base salary into signing bonus which spreads the cap hit longer. The back years are more guaranteed because it creates more dead cap. This might also come in a mid contract roster bonus where the player has way less leverage - unlike base salary the team can just refuse to exercise it

Makes sense. Just seems to me with an ever expanding cap, those hits won’t be as hard to overcome.

[Jamie]

Originally Posted by Coochie liquor

Still trying to understand the backloading of contracts. Does that just mean they’re pushing guaranteed money to future years, or is that non guaranteed money to make the contract seem bigger because of APY?

It's mainly pushing back guaranteed money. The downside comes when the contract ends, the money that's been spread out over the void years accelerates onto the present year.

For example, Thuney is on the last year of his deal, but hypothetically we could convert most of his base salary into a signing bonus, and spread it out over 5 years (2025 + 4 void years). Then when his contract ends in 2026, the money we spread out over those void years would accelerate and become dead money on the 2026 cap. But effectively we would have moved roughly half his cap hit for 2025 onto 2026. Or we could extend him in 2026 and continue kicking the can down the road.

That's the simple version, I don't entirely understand the option bonus voodoo the Eagles are doing. I gather the principle is the same, but I can't decipher what exactly their Spotrac pages mean.

[Chargem]

Originally Posted by Jamie

It's mainly pushing back guaranteed money. The downside comes when the contract ends, the money that's been spread out over the void years accelerates onto the present year.

For example, Thuney is on the last year of his deal, but hypothetically we could convert most of his base salary into a signing bonus, and spread it out over 5 years (2025 + 4 void years). Then when his contract ends in 2026, the money we spread out over those void years would accelerate and become dead money on the 2026 cap. But effectively we would have moved roughly half his cap hit for 2025 onto 2026. Or we could extend him in 2026 and continue kicking the can down the road.

That's the simple version, I don't entirely understand the option bonus voodoo the Eagles are doing. I gather the principle is the same, but I can't decipher what exactly their Spotrac pages mean.

I'm not sure, but I don't think that's true - if a contract has multiple void years I think the cap hits stay on those years unless the player is cut before the end of the contract.

[pugsnotdrugs19]

Originally Posted by Chargem

I'm not sure, but I don't think that's true - if a contract has multiple void years I think the cap hits stay on those years unless the player is cut before the end of the contract.

It’s true unless the player signs an extension. If he does that, then the void hits stay on for the years he’s still with the team.

If he leaves, it all hits your cap at once. Take Josh Sweat for example. If/when he leaves Philly, all his void year hits are going to go on the ‘25 cap.

[RunKC]

Originally Posted by pugsnotdrugs19

It’s true unless the player signs an extension. If he does that, then the void hits stay on for the years he’s still with the team.

The Chiefs did this very thing with Chris Jones. We gave him $6.75M in new money 2 years ago. They added 4 void years on his deal but it only added $3.4M of dead cap after the 2023 season, giving the Chiefs a total of $4M on the books so far for 2024. Then they gave him a new deal to balance it out.

Originally Posted by pugsnotdrugs19

If he leaves, it all hits your cap at once. Take Josh Sweat for example. If/when he leaves Philly, all his void year hits are going to go on the ‘25 cap.

This is exactly why I don’t like this approach. Josh Sweat is projected to have $17 million of dead money paid to him moving forward. They already have a little over $29 million in dead cap already and will almost assuredly have the $9.98 million owed to Sweat added onto that for 2025.

That’s almost $39 million dedicated to players not playing on your team. That’s a truly terrible way for us to stay competitive. This board freaked out enough paying Frank Clark dead money.

[crayzkirk]

From my limited understanding, these void years allow cap/salary to be turned into cash/singing bonus. The signing bonus can be split over the years of the contract. What I don't understand is how you can write a contract for 5 years and have it void after 3 years. This leaves the cash on the books however the player is free to go elsewhere.

My research indicates that this was allowed during covid because of the reduction in the salary cap. The Saints were in deep trouble so they allowed this. When Brady went to the Bucs, they did something similar: pushed his signing bonus over a longer period. However because Brady retired, everything including the signing bonus was voided.

Seems like this is something that really shouldn't be allowed as it's being leveraged in a way that was not intended. Leave it up to the lawyers to find a way to take advantage of this.

[Coochie liquor]

Originally Posted by crayzkirk

From my limited understanding, these void years allow cap/salary to be turned into cash/singing bonus. The signing bonus can be split over the years of the contract. What I don't understand is how you can write a contract for 5 years and have it void after 3 years. This leaves the cash on the books however the player is free to go elsewhere.

My research indicates that this was allowed during covid because of the reduction in the salary cap. The Saints were in deep trouble so they allowed this. When Brady went to the Bucs, they did something similar: pushed his signing bonus over a longer period. However because Brady retired, everything including the signing bonus was voided.

Seems like this is something that really shouldn't be allowed as it's being leveraged in a way that was not intended. Leave it up to the lawyers to find a way to take advantage of this.

Maybe I’m misunderstanding, but seems if you’re pushing money (possibly dead money) into future years. Why wouldn’t that be easier to manipulate on those years with the cap going up so much every season? Seems like if that’s what you’re doing it would come much closer to evening out in the future years because of the expanding cap.

Also saw this comment on another post that was related. And thought it was pretty interesting, comparing the Chiefs and Eagles success with GM philosophy and drafting.

Eagles have had a few incredible years of drafting and acquiring players via trade and FA. Devonta Smith in the first round in 2021. Dickerson in the 2nd. Drafted Jurgens in '22 in the 2nd. Traded for AJ Brown in 2022. Jalen Carter and Nolan Smith in 2023. Mitchel and DeJean in the first two rounds in 2024. They are not missing on high end draft picks.

Meanwhile in KC...in 2021 we drafted Bolton and Humphrey in the 2nd rounds. Big win on Humphrey. Bolton is above average but not a star. Biggest win is probably Trey Smith in the 6th. That value is INSANE. But the Chiefs have whiffed on a lot of OL the last 4 years.

2022 was an incredible year for Veach and Co. McDuffie / Karlaftis / Cook / Chenal / Watson / Pacheco. But whiffing on Pickens for Skyy Moore was brutal. Sure we won a SB but you have a guy who barely contributed to the team for 3 years taken in the 2nd round. You can't stack misses in the first 3 rounds and keep winning SBs.

2023 was a disaster. FAU another huge whiff. Rice looks like a top 15 WR but he got hurt early and is facing a huge suspension when he returns. Morris (2nd rounder) isn't playing. Conner is mediocre. None of the other players are anything. You can't have a draft and pick up ONE STARTER and expect to keep winning.

2024 is another mediocre draft. Worthy looks like a star, which is great. Your first round players should be contributing. But then another whiff in the 2nd round with a player who was benched for the SB. Wiley got hurt and Hicks looks promising. Everyone else is a nobody.

Chiefs need to draft better in the first 3 rounds. They also need to ACCUMULATE more draft picks. Trade away players. Trade down. You need more ammo in the draft. Veach's best draft came when he had 10 selections. The last two drafts we've only had 7 picks and we've missed on a lot of early rounders.

Since 2021, Chiefs have drafted 30 players. Their hit rate for quality starters is 46%, which is exactly the hit rate on 1st round QBs. To be a successful team you need to draft better than average. Veach did a great job assemling the junkyard Avengers (JuJu, DHop, Hunt) but he needs more pieces to move around the chessboard. I know it's crazy but I'd think about trading anyone not named Chris Jones or Pat Mahomes in order to do this. Now I know the Chiefs would NEVER but if you can get a 3rd or 4th for Kelce I'd do it.

That is the comment. It’s not mine but found it interesting comparing drafts by the GMs

[seamonster]

Originally Posted by crayzkirk

From my limited understanding, these void years allow cap/salary to be turned into cash/singing bonus. The signing bonus can be split over the years of the contract. What I don't understand is how you can write a contract for 5 years and have it void after 3 years. This leaves the cash on the books however the player is free to go elsewhere.

My research indicates that this was allowed during covid because of the reduction in the salary cap. The Saints were in deep trouble so they allowed this. When Brady went to the Bucs, they did something similar: pushed his signing bonus over a longer period. However because Brady retired, everything including the signing bonus was voided.

Seems like this is something that really shouldn't be allowed as it's being leveraged in a way that was not intended. Leave it up to the lawyers to find a way to take advantage of this.

From what I understand they still had to pay him when he retired. Which is the tradeoff with void years. Bucc's had something like 35 million in dead cap space because of these prorated void years.

[Chargem]

Originally Posted by crayzkirk

From my limited understanding, these void years allow cap/salary to be turned into cash/singing bonus. The signing bonus can be split over the years of the contract. What I don't understand is how you can write a contract for 5 years and have it void after 3 years. This leaves the cash on the books however the player is free to go elsewhere.

My research indicates that this was allowed during covid because of the reduction in the salary cap. The Saints were in deep trouble so they allowed this. When Brady went to the Bucs, they did something similar: pushed his signing bonus over a longer period. However because Brady retired, everything including the signing bonus was voided.

Seems like this is something that really shouldn't be allowed as it's being leveraged in a way that was not intended. Leave it up to the lawyers to find a way to take advantage of this.

You can say it shouldn't be allowed, but it benefits the teams, because they get cap flexibility, and it benefits the players because they get bigger contracts and more money. Who do you think is going to put a stop to this?

[htismaqe]

Originally Posted by Chargem

You can say it shouldn't be allowed, but it benefits the teams, because they get cap flexibility, and it benefits the players because they get bigger contracts and more money. Who do you think is going to put a stop to this?

It violates the spirit of the league's sacred cow - parity. Eventually they will crack down on it.

Or the cap will stop going up and these teams' bill will come due all at once.

[crayzkirk]

Originally Posted by Chargem

You can say it shouldn't be allowed, but it benefits the teams, because they get cap flexibility, and it benefits the players because they get bigger contracts and more money. Who do you think is going to put a stop to this?

I said that it seems like it shouldn't be allowed because it, IMO, is against the intent of the cap. Allowing teams to overspend and then, like in 2020 when Covid hit, the league gave the Saints a way out of it and remain competitive despite their mistakes. Since the cap goes up every year, it doesn't seem to be the risk that it used to be.

IMO, this affects the competitive balance by forcing other teams to do the same and again, IMO, it's similar to what teams in other sports do which allow them a competitive advantage over teams that choose not to do this.

Do we want the NFL to return to the pre-salary cap era where certain teams bought up the talent? Shall we turn the NFL into MLB where teams that spend the most win the most?

[Chargem]

Originally Posted by htismaqe

It violates the spirit of the league's sacred cow - parity. Eventually they will crack down on it.

Or the cap will stop going up and these teams' bill will come due all at once.

Originally Posted by crayzkirk

I said that it seems like it shouldn't be allowed because it, IMO, is against the intent of the cap. Allowing teams to overspend and then, like in 2020 when Covid hit, the league gave the Saints a way out of it and remain competitive despite their mistakes. Since the cap goes up every year, it doesn't seem to be the risk that it used to be.

IMO, this affects the competitive balance by forcing other teams to do the same and again, IMO, it's similar to what teams in other sports do which allow them a competitive advantage over teams that choose not to do this.

Do we want the NFL to return to the pre-salary cap era where certain teams bought up the talent? Shall we turn the NFL into MLB where teams that spend the most win the most?

I don't see how it's against parity or competitive balance if all teams have access to it.

Should we ban trading draft picks just in case some teams are too good at valuing picks and end up finding a competitive edge from it?