Are free agents too expensive or will the $2 billion of 2018 salary cap space explode the scene

[Nightman]

Why?

It sounds like you're saying the only way to be efficient is to leverage against the future whereas in my view being efficient minimizes how much a team borrows from the future.

I'm admittedly biased by how I run my personal finances, I HATE debt, have none and retired when I was 40 because I am extremely efficient with how I save and spend money. I did utilize debt at a very low debt to equity ratio in order to achieve this so perhaps there's an analogy here to how you advocate managing the cap.

the NFL isn't the same at all...... debt is good...... the cap goes up and you pay negative interest on borrowed money.......paying more when the cap is lower is plain stupid.......there is no benefit, just wasted cap space that could have been used to win games

 

[yimyammer]

the NFL isn't the same at all...... debt is good...... the cap goes up and you pay negative interest on borrowed money.......paying more when the cap is lower is plain stupid.......there is no benefit, just wasted cap space that could have been used to win games

Oh well, sounds like you're firmly entrenched in your position, thanks for sharing your views.

 

[Nightman]

Oh well, sounds like you're firmly entrenched in your position, thanks for sharing your views.

and it sounds like you don't want to believe it.....good luck with that

 

[yimyammer]

and it sounds like you don't want to believe it.....good luck with that

you come across angry, do you think I am attacking you with my comments?

I assure you, it wasn't my intent.

 

[Nightman]

you come across angry, do you think I am attacking you with my comments?

I assure you, it wasn't my intent.

and yours come off as very passive aggressive......"oh well" is dismissive

 

[yimyammer]

and yours come off as very passive aggressive......"oh well" is dismissive

I hear you and can see how it may have come across like that, it was really just a shrug of the shoulders because I'm too lazy to push the topic any further without doing a lot more work, not because I was trying to be passive aggressive, you wrote:

paying more when the cap is lower is plain stupid.......there is no benefit, just wasted cap space

That pretty much shuts the door on my theories, thus my "oh well" but a sincere thank you for sharing your thoughts.

I wish we were having this conversation over a beer (I'll buy if you're ever in Dallas & want to chew the fat) so you could see my body language and realize I am not trying to attack or offend you. On the contrary, I brought my questions to you out of respect for your displayed knowledge of the cap.

My sincere apologies if my writing (in)abilities caused any offense

~cheers~

 

[waldoputty]

Oh well, sounds like you're firmly entrenched in your position, thanks for sharing your views.

I presume you understood what BK meant it was inefficient because there is essentially a negative interest rate?

 

[Risen Star]

I can't read all that. Just hit me with it. Are we hiding 2 billion dollars of cap space? I want to know right now.

 

[waldoputty]

I can't read all that. Just hit me with it. Are we hiding 2 billion dollars of cap space? I want to know right now.

in case you are being serious, that is the total amount of cap space for all the teams added together in 2018.
the point is with all that cap space, how can salaries not go nuts.

 

[yimyammer]

I presume you understood what BK meant it was inefficient because there is essentially a negative interest rate?

No sir, I didn't understand that but its late and I have tired head.

Care to elaborate why its considered a negative interest rate?

 

[waldoputty]

No sir, I didn't understand that but its late and I have tired head.

Care to elaborate why its considered a negative interest rate?

When BK says there is a negative interest rate, what he means is:
1. Cap is expanding at ~8% per year for next years.
2. If you can borrow cap space from a future year while paying no penalty/interest, then you are actually gaining cap space out of thin air.

Let say you are borrowing $3 of cap space in 2017 by borrowing $1 from 2018, $1 from 2019 and $1 from 2020.
While you gain $3 in 2017, but the dollar borrowed from 2018 is worth less in the dollar in 2017 because the cap is larger by 8%, and the dollar borrowed from 2019 is worth even less because you have just compounded the 8% rise in cap dollars in 2019, and the dollar borrowed from 2020 is worth even less because you have just compounded 3 times with the 8% rise in cap dollars.

Thus, the more money you borrow (within reason), the more you gain in overall cap dollars.
That is one reason why BK and I have been advocating this type of strategy because you are literally creating cap space by borrowing.
It is the opposite of every day life like most of us face, because when we borrow from a bank, we pay the bank interest.
And god forbid when we borrow from a credit card, we are paying ~20% interest.
In summary, what is good conservative money management for most of us actually reduces the amount of cap space the Cowboys have.

Of course if the cap starts shrinking (has never happened), then things can get dicey.
However, Jerry (and now Stephen) sits on the committee that negotiates TV contracts so they should have plenty of warning to know not to get caught in a mess.
Obviously the NFL can do itself a favor in the TV contract by televising Cowboys more and dont let the refs screw over the Cowboys in the playoffs.

Hope this helps.

 

[waldoputty]

the NFL isn't the same at all...... debt is good...... the cap goes up and you pay negative interest on borrowed money.......paying more when the cap is lower is plain stupid.......there is no benefit, just wasted cap space that could have been used to win games

BK - lol you know too much and most people cannot keep up with you.
It took me a lot of spreadsheet work to figure out what you are talking about.
You must be from the financial services world?

 

[waldoputty]

the NFL isn't the same at all...... debt is good...... the cap goes up and you pay negative interest on borrowed money.......paying more when the cap is lower is plain stupid.......there is no benefit, just wasted cap space that could have been used to win games

BTW, I figured out a few tricks to work with the OTC cash spent website.
So I was able to just do some sorting and should be able to do more analysis without having to do a full breakdown analysis for each team.

Here is what I found out - see particularly the right side for total cash that needs to be spent to meet the 89% floor:

-2017 cash spent--2018 cash spent-- 2019 cash spent-- 2020 cash spent-Total Cash Spent-- Need to Spend
$4,636,460,549 ----$3,214,199,680--- $2,267,808,277-- $1,225,337,808-- $11,343,806,314-- $9,750,140,618

Note that the 89% cash floor require the teams together to spend $9.75B more cash by the end of 2020
Remember I calculated there was about $2B of cap space in 2018.
While some say the teams are not going to use up the $2B of cap space, it actually appears that cap space could well get used up.
Now I just have to add up what the top available players based on today's prices ($17M for best available Daddy) and one tier down also based on today's prices.
Then we can see how much more has to be spent and figure out whether that proves crazy salary inflation.

 

[FuzzyLumpkins]

Still waiting for the proof that the cash floor is going to force teams to spend. If it doesn't then it doesn't matter.

 

[waldoputty]

Still waiting for the proof that the cash floor is going to force teams to spend. If it doesn't then it doesn't matter.

i just summed up the cash spent for all teams.
you can already see that the 89% floor in 2018 takes up ~93% ~$2 B cap space that was estimated before.
2017 is already behind in its portion of the 89%
if 2018 does not spend the cash for the 89%, it would put even more pressure in 2019 and 2020.
you can claim that a reasonable portion could be signing bonus to be spread through 5 years.
but that means 3/5 of the signing bonus would be accounted for in the 4 year window in the salary cap.
that would reduce the amount of cap space in follow on years to meet the floor.



----------------------2017-----------------2018---------------------2019------------------2020-----------------total
cash spent ---$4,636,460,549-- $3,214,199,680-- $2,267,808,277-- $1,225,337,808-- $11,343,806,314
89% of cap-- $4,917,306,932-- $5,069,440,000-- $5,411,200,000-- $5,696,000,000-- $21,093,946,932
need to spend $280,846,383--- $1,855,240,320-- $3,143,391,723-- $4,470,662,192--$9,750,140,618

 

[FuzzyLumpkins]

i just summed up the cash spent for all teams.
you can already see that the 89% floor in 2018 takes up ~93% ~$2 B cap space that was estimated before.
2017 is already behind in its portion of the 89%
if 2018 does not spend the cash for the 89%, it would put even more pressure in 2019 and 2020.
you can claim that a reasonable portion could be signing bonus to be spread through 5 years.
but that means 3/5 of the signing bonus would be accounted for in the 4 year window in the salary cap.
that would reduce the amount of cap space in follow on years to meet the floor.



----------------------2017-----------------2018---------------------2019------------------2020-----------------total
cash spent ---$4,636,460,549-- $3,214,199,680-- $2,267,808,277-- $1,225,337,808-- $11,343,806,314
89% of cap-- $4,917,306,932-- $5,069,440,000-- $5,411,200,000-- $5,696,000,000-- $21,093,946,932
need to spend $280,846,383--- $1,855,240,320-- $3,143,391,723-- $4,470,662,192--$9,750,140,618

No you're just saying that teams are not meeting the floor and assuming that they are going to blow up the market so that they do. This is why I say you don't understand my argument.

Again, there is no real penalty to not meeting the floor. The fact that they are not rolling over cap space is a big indication they don't give a damn as well. Now I am sure some teams might but assuming they are all going to blow up contract values so they avoid a nonpenalty is contrary to 3/4 of a century of NFL policy.

 

[Nightman]

No you're just saying that teams are not meeting the floor and assuming that they are going to blow up the market so that they do. This is why I say you don't understand my argument.

Again, there is no real penalty to not meeting the floor. The fact that they are not rolling over cap space is a big indication they don't give a damn as well. Now I am sure some teams might but assuming they are all going to blow up contract values so they avoid a nonpenalty is contrary to 3/4 of a century of NFL policy.

You shouldn't minimize the penalty/non-penalty impact ......several teams struggled the first 4 year cycle and even more will struggle this time... they will have to comply one way or another

Most of the salaries are regulated by the rookie pool, until that rises 1/2 of the league is making minimum wage...wage inflation is real but only for the superstars.....the RB market has gone backwards.....SS and MLB are still behind the curve......it will be hard to pay all these players up to the 89% and several teams will 'hide' or waste cap space

CLE basically traded 16m in cash and cap space for a 2nd round pick because they struggle to attract top FAs

 

[waldoputty]

No you're just saying that teams are not meeting the floor and assuming that they are going to blow up the market so that they do. This is why I say you don't understand my argument.

Again, there is no real penalty to not meeting the floor. The fact that they are not rolling over cap space is a big indication they don't give a damn as well. Now I am sure some teams might but assuming they are all going to blow up contract values so they avoid a nonpenalty is contrary to 3/4 of a century of NFL policy.

May I misunderstood what your point was.
So let me get it straight.
You are saying the floor does not matter because the owners would rather not obey the floor and rather pay the penalty and not sign players.
That just does not make any sense to me.
I thought you meant the floor numbers would not work out.

Some one else mentioned owners previously ignored the floor because the amount of penalty was small compared to signing someone they did not want to a multiyear contract.
It appears that the number could be much larger this time around.

Let say this.
If the numbers are relatively insignificant, then the owners are roughly obeying the floor and the floor is the basis for the analysis.
In which case, there would be a huge amount of $ to go after players that are almost exclusively non-elite.
If the numbers are large, I find it hard to believe the owners rather throw the money away than put those exact funds into useful players.
Otherwise, tens of millions per team would be wasted for no reason at all...
For example, they could use front-loaded contracts in 2020 that fill the missing floor expenditures that pay vet minimum salaries after 2020 and use a large 2020 base salary and signing bonus to get the cash expenditures to what they need them to be.

 

[GhostOfPelluer]

I can't read all that. Just hit me with it. Are we hiding 2 billion dollars of cap space? I want to know right now.

Not exactly "saving" it. We need it on hand for all the picks we get when we trade Romo

 

[FuzzyLumpkins]

You shouldn't minimize the penalty/non-penalty impact ......several teams struggled the first 4 year cycle and even more will struggle this time... they will have to comply one way or another

Most of the salaries are regulated by the rookie pool, until that rises 1/2 of the league is making minimum wage...wage inflation is real but only for the superstars.....the RB market has gone backwards.....SS and MLB are still behind the curve......it will be hard to pay all these players up to the 89% and several teams will 'hide' or waste cap space

CLE basically traded 16m in cash and cap space for a 2nd round pick because they struggle to attract top FAs

You just wrote several teams didn't make it before and even more aren't going to this time and think I should think that teams are concerned about it? Perhaps you should rethink that disbursement as being seen as a real penalty by clubs.

Teams are not going to drive up prices on contracts if they don't think it is going to help them win and there is a bevy of evidence that splurging in FA doesn't help you win. They have a long history of colluding to drive contract prices down too. And a whole lot of teams are doing the opposite of "learning" what you claim they are going to be afraid of.

Looks to me they don't care.