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DMN: Cowboys' offseason: Cap woes make draft, bargain hunting critical

Discussion in 'Fan Zone' started by jobberone, Jan 3, 2014.

  1. AdamJT13

    AdamJT13 Salary Cap Analyst

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    Did you forget what post you were responding to? My post was on the fact that we used about $10.6 million of our cap room to franchise Anthony Spencer, when we could have used it to sign other free agents.

    Your response was that "we had no chance at the top guys" ... and now you said it's because we didn't have enough salary cap room.

    Except that $10.6 million would have been enough to sign more than one of the "top guys." Instead, we chose to sign Anthony Spencer and got nothing out of him. That's my point.
    Kaiser and Common Sense like this.
  2. AdamJT13

    AdamJT13 Salary Cap Analyst

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    You're misunderstanding what it means to restructure a contract. All you're doing is taking money that is paid NOW and pushing the cap charge into the future. You're not changing any base salaries in the future. And if you're adding seasons onto the contract when you restructure, that's only for proration purposes -- you can cut the player and not have to pay the base salaries in those added seasons.
  3. AdamJT13

    AdamJT13 Salary Cap Analyst

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    Like I said earlier, "drafting poorly, keeping aging players, yada" is a completely different subject from restructuring contracts to push cap charges into the future. Don't confuse the two. One is dumb, and the other is smart.

    If you keep drafting poorly, keeping aging players and so forth, you don't need less cap room, you need to start draftng better and making better personnel decisions. Until you do that, it won't matter how much cap room you have or don't have.

    What you're doing is like saying, "I keep losing all of my money gambling. I should get a job that pays me less." No, you should solve your gambling problem.
    pancakeman and Kaiser like this.
  4. jobberone

    jobberone Right turn Clyde Staff Member

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    I don't agree with lumping my analogy into your last statement or the entire debate but we do agree the problem is poor personnel decisions are creating a cap pinch or should I say punch.
  5. Hoofbite

    Hoofbite Well-Known Member

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    I know what restructuring is, I just didn't phrase that all that well.

    Not that it matters, the net effect of moving base salary money or just accounting for a prorated guarantee is the exact same. Higher cap charges for the player who is now older, and ultimately less cap space overall.

    Adding seasons simply for the sake of proration guarantees that you have dead money. I fail to see how that's all that beneficial? So you can get a little smaller cap hit now? Trade off a small hit now so you're still taking cap hits when that player isn't even on your roster?
  6. Hoofbite

    Hoofbite Well-Known Member

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    That's really not an issue. Any player signing a year sooner or later is offset by some other player who signed the year before or the year after. You aren't gaining anything by signing a guy sooner because that means his contract voids sooner and you have to replace him sooner.

    As for the bolded part, I take it you are against signing old players?
  7. AdamJT13

    AdamJT13 Salary Cap Analyst

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    You do not have less cap space overall unless you have USED the cap room that you created. And if you USE that cap room wisely, having less space is irrelevant.

    What do you think you're going to do with that cap room, anyway? Sign players? Well, using my strategy, you can sign players whenever you want instead of having to wait. AND the money that is available is a higher percentage of the cap than it would be in the future.


    There's nothing wrong with dead money if the player lived up to the contract as expected.

    Let's say you want to buy a car. You're going to spend $40,000 and expect to drive it for eight years. The dealer gives you two interest-free options: You can put $8,000 down and pay $4,000 per year for the next eight years, or you can put $8,000 down and pay $2,000 per year for the next 16 years. Anyone who chooses the first option just so they're not paying for a car they are no longer driving does not understand the time value of money.
    pancakeman and Kaiser like this.
  8. Hoofbite

    Hoofbite Well-Known Member

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    Actually they're very much related in that you may be forced to keep a restructured player who has aged because the cost of cutting him is now too high.

    As it currently stands Dallas can't cut Brandon Carr even if they wanted to. $16.6M in dead money pretty much means you aren't cutting him. It's cap neutral for next year. Cutting costs the same as keeping. In 2016 Dallas would avoid $6M in charges to release him but they'd still have $7M in dead money. If they restructure him again, they're pretty much committing the 2016 season to him because it would be around $10M in dead money to cut him in 2016. He'll be 30 that year and Dallas will be faced with keeping a 30 year old CB for a cap hit of $15M or cutting an aging player to avoid $5M in charges, only to leave $10M in dead money on the books. Had Dallas never restructured him they could cut him right now and only have $6M in dead money. They essentially guaranteed 2 additional years of him being on the roster by restructuring the first time. They guaranteed 2014 (dead money of $16M if cut) and 2015 (dead money of $12M if cut)

    You delay the point at which you can GET OUT of the contract without major cap consequences. I'm not saying that any amount of dead space is the point at which you can ditch but it's just a fact that you limit your ability to rid yourself of a player who goes south by restructuring. Another fact is that players do go south. All teams have that. So willingly delaying the point at which you can escape from a bad contract while knowing that there will be bad contracts is nothing short of salary cap sadomasochism.

    If hanging on to old players is dumb, how smart is it to structure contracts in a manner that pretty much ensures that you do just that because you can't cut them before it happens?
    dreghorn2 likes this.
  9. Hoofbite

    Hoofbite Well-Known Member

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    Is it really necessary to say that we're talking about restructuring in Dallas, not just about how teams can restructure in general? If the team was simply accumulating free space and rolling it over there'd be no discussion. However, they've done nothing but cover their past blunders and restructured to get compliant. I don't know why anyone would ever broaden the discussion beyond the Cowboys by mentioning that teams can roll over cap space when Dallas first has to clear enough cap space just to be under the limit.

    Using your strategy you'd still only be able to sign the guys that are available, which is probably the biggest reason why pushing cap space to the extent that Dallas does is far from the norm. There's just not enough talent in the free agent pool to justify freeing up all that additional cap space.

    You likely wouldn't have dead space if the player lived up to the contract. If he continued to meet the expectations of those cap figures that are artificially inflated by prorations, he'd be a monster and you wouldn't even consider cutting the guy.

    Aside from that, living up to the contract is far from guaranteed. You're building more risk into the contract than is already present on the hopes and prayers that the player will live up to the expectations of it? Sounds like a hell of a plan.

    Not exactly a great example. It doesn't apply to the NFL because there's a limit to how far you can actually push the costs and as soon as the contract ends, the balance is due. So, if you're only planning on having the car for 8 years and you choose the 16 year plan you'd have to pay off the balance of the loan by the end of year 9.

    Which means you'd pay $16,000 in the 9th year. I'm sure Jerry would love to spread signing bonuses and prorated bonuses over a couple decades as well.

    A more appropriate example would be spending $40,000 on a car and only paying $500 per month for 4 years. Then, after the car has depreciated in value (player has aged), you start paying off the remaining loan (remaining guaranteed money) of $16,000 in year 5 of a 5 year loan. Now you're paying $1,250 per month for a car that is probably only worth $14,000.
    Common Sense and dreghorn2 like this.
  10. bkight13

    bkight13 Well-Known Member Zone Supporter

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    Even if they wanted to cut Carr, it is still better doing it they way Dallas does. Concede that Carr is a 10m a year CB based on the market. If Dallas paid him a straight 10m a year, they would have had cap hits of 10m in 2012 and 2013. Instead they had cap hits of 3.2m and 5.4m. That's a savings of 11.4m in cap space. If they cut him this year as a June 1st cut, his hit for 2014 would be 4.7 and in 2015 it would be 12.1m. That's 25.4m spread over 4 years as opposed to 20m over 2.

    If they keep him for 2014, which they should, his cap hit after another restructure is 7m for a total of 15.6 over years vs. 30m over 3 years. Since teams can rollover excess cap space or use it to sign more players, it's smarter to keep more options available now and pay later when the cap goes up. If the cut him next June it still would be 32.9m over 5 years vs 30m over 3 years.
  11. Hoofbite

    Hoofbite Well-Known Member

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    You take 2 years of $10M in hits, June 1st him and you'd have $2M in dead space for year 3, $4M in dead space for year 4.

    It'd be $26M over 4 years. Of course nobody would sign someone with the expectation that they don't make it halfway through the contract. Any team that operated like that would probably have a hard time getting Free Agents on board.

    And of course paying $20M in base salaries would have a higher 2 year cost when compared to paying only $15.5M in base salaries. If Dallas made his first 2 base salaries $6M, the team would only take $22M in total cap hits after the hypothetical cut. $22M over 4 years beats $25.4M over 4 years. You pay less in base salary, you pay less. Pretty simple.

    In both scenarios the team chose to pay what they did for those 2 years. That's not a savings, that's just a preference (or in this case, a necessity) to have a low cap number up front.
  12. bkight13

    bkight13 Well-Known Member Zone Supporter

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    You are still including a 10m signing bonus that is spread over the 5 years. That is what you are arguing against. I'm talking about a straight 10m a year deal for 5 years, pay as you go. Year one could have a 1m base and 9m roster bonus, but it wouldn't be spread out.
  13. bkight13

    bkight13 Well-Known Member Zone Supporter

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    If your 40k car is crappy after 2 years then you picked a terrible car and that is the problem. If you think you have to CUT a 10m a year, 28 year old star player after 2 years then the player or the signing is the problem, not the way the contract is structured.
    Kaiser and Common Sense like this.
  14. Hoofbite

    Hoofbite Well-Known Member

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    So you're just throwing random stuff out there for the sake of it?
  15. FuzzyLumpkins

    FuzzyLumpkins The Boognish

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    If I was an NFL club I would have an actuary come up with risk probabilities and age would certainly be a category. All things being equal, younger is preferable but that doesn't mean you cannot manage those type risks intelligently.

    As for the time frames, take Dez for example. Do you think it will be more expensive to extend him this year or next? I think it will be cheaper this year. Because if nothing else the cap is going up. We can extend him for 5 years this year or resign him for five next. It's better to 'borrow' the money from next year to pay this year that it is to wait until next year and use the money then. 6 years from now the contract looks the same.

    Contract lengths are what they are and the primary consideration needs to be in retaining your own guys. It rewards you for drafting well because you can extend them a year early. I am all for extending Dez, Smith, Harris and Bailey this year because it will be cheaper than what the market will be next year. I certainly want it done before the controls on the cap drop off because new demand will certainly raise prices.

    I think I get what you are saying. 'Borrowing' to get older players is not a good strategy. I am just saying that in the general sense spending dollars will be more efficient today then it will be tomorrow and there are undoubtedly guys we want to retain.
  16. xwalker

    xwalker Well-Known Member

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    Are you really arguing cap issues with AdamJT13 ?
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  17. Hoofbite

    Hoofbite Well-Known Member

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    Is that against forum guidelines?
  18. xwalker

    xwalker Well-Known Member

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    You might as well challenge Larry Allen to a bench press contest.
    Little Jr and pancakeman like this.
  19. Risen Star

    Risen Star Likes Collector Zone Supporter

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    Good stuff, Hoof. Pay no mind to the hero worship of dead money doesn't matter.
  20. Common Sense

    Common Sense Well-Known Member

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    Heh. I think it's a pretty good debate, so far. In a way, it all comes down to this:

    Everyone who has given it any thought should agree with the above statement and also realize that the Dallas situation isn't an either/or scenario. It's both simultaneously. The real question here should be, "What do you do once you realize you have a bad contract (or multiple bad contracts) on your hands?" Do you keep restructuring, like bailing water from a boat, or do you cut ties as soon as it is economically feasible? (I think all of the debate over the Ware contract is a perfect example -- do you cut him and take the $7.5 million in cap space or do you restructure and pray for the best?)

    The Brandon Carr example that hoof and Adam were debating is where it really gets good, though. What do you do with a contract that doesn't look "bad" until the player stops living up to expectations?

    Let's all say that restructuring contracts is good as long as they aren't bad contracts. How do you know what is going to end up being a good contract and a bad contract? Can an NFL franchise effectively manage a roster without being able to cut dead weight when it needs to? It's less about salary cap economics than it is about roster management philosophy.
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