Boys 2014 cap situation is a trainwreck

[Common Sense]

The cap situation was a train wreck this year, and they restructured deals and it all worked out fine. Romo, Ware, Witten, and Carr are amicable about re-working their contracts.

It DIDN'T work out fine. That's why they're already $30 million over next year's cap. How hard is that to understand?

 

[CT Dal Fan]

It DIDN'T work out fine. That's why they're already $30 million over next year's cap. How hard is that to understand?

It's not, but they still found a way to make Romo a Cowboy for life and sign a couple free agents. I just expect a similar approach next year; except the fact they'll have to cut some more guys- most likely Miles Austin and maybe Doug Free (ouch).

 

[supercowboy8]

Dallas has a plan, they have built in restructures in a few contracts. Also you can role over cap from this year to next year. Dallas may have to cut a few players like Austin, but I think they will really just restructure Ware, Romo, and Witten again.
Also cutting Ratliff saves us over a million against the cap next year. On the team he would have been over 8 million cap hit.
We will be fine.

 

[Corso]

And you couldn't be more wrong. I'll put our guy against anyone at ESPN in a heartbeat. Ask around and anyone will tell you the same thing.

I'd place money on it.
AdamJT is gospel.

 

[xwalker]

@AdamSchefter: Dallas now projected to be NFL-high $31 million over salary cap next year. One NFL exec called Dallas' cap situation in 2014 "a train wreck"

There are really people here who think we are fine cap wise....

The Cowboys are projected to be 30 to 40 million over the cap every year. Future projections don't account for restructured contracts.

Most people don't understand the salary cap. Pushing money into the future is equivalent to a zero interest loan that can be renewed every year. The money can be pushed into the future indefinitely. It never really comes due. It does come due for some players, but other players money is pushed forward to offset those players.

If a team never pushed money into the future, then their salary cap would be exactly 100% of the NFL salary cap; however, by pushing money into the future, the virtual salary cap is greater than 100%. Some studies indicate that the virtual cap for a team like the Cowboys is about 150% of the actual cap.

If a team does not take advantage of the virtual cap, then they are operating at a disadvantage to other teams.

Most people think that this is too good to be true and that there must be a catch somewhere. The "catch" is that it takes more real money to make it happen. When a player's contract is restructured, they receive most of their base salary as a bonus. Based on the time value of money, getting the money immediately is worth more to the player than getting it later. The team must have the cash to give out the bonuses because the bonuses are giving out in the spring but most of the teams' revenue come in the fall.

There are limits to everything, but the Cowboys have not lost a player because of the salary cap in a long time. They might be limited in Free Agency, but Snyder and the Commanders proved that you can't buy a team in Free Agency.

 

[dallasdave]

If you sign someone like Carr to a large contract it is smart because he is young, good, and produces in games. To sign Grandpa Munster to a large contract and say it's ok because the salary cap doesn't mean anything is crazy.

 

[ringmaster]

It's not, but they still found a way to make Romo a Cowboy for life and sign a couple free agents. I just expect a similar approach next year; except the fact they'll have to cut some more guys- most likely Miles Austin and maybe Doug Free (ouch).

I highly doubt Free goes anywhere if he keep playing the way he has been the last couple of weeks.

 

[Corso]

Thank goodness the "Cap Situation 2014" (God I hope CNN puts up a countdown in the corner of the TV screen so we know it's serious) is just a train wreck and not...

 

[Common Sense]

The Cowboys are projected to be 30 to 40 million over the cap every year. Future projections don't account for restructured contracts.

Most people don't understand the salary cap. Pushing money into the future is equivalent to a zero interest loan that can be renewed every year. The money can be pushed into the future indefinitely. It never really comes due. It does come due for some players, but other players money is pushed forward to offset those players.

Your first statement is completely inaccurate. 30-40 million? Every year? Besides that, it isn't mathematically possible to keep creating future dead money and borrowing against it year after year without it eventually catching up. I get the zero interest thing, but you're not realizing that it's a shell game that only works with a handful of contracts. It's like going to a different bank to take out a loan each time without paying the last one back. There's a finite number of banks, and there's a finite amount of base salary on the books that can be converted into loans.. er, signing bonuses. The more dead money you accumulate, the smaller your effective cap space becomes. But you still have to field a competitive team, so you can't very well spend less money. So you borrow more. And your cap space becomes smaller. And on. And on. Eventually, you can't afford that next big contract (Dez, Tyron -- Hatcher, even) that you were going to use for a salary cap bank. So you restructure an older player instead. Old player breaks down, gets cut. More dead money. Still can't afford to resign a younger player. No new base salaries to borrow against. Then what?

Just look at the Jay Ratliff salary cap loan. Ratliff was restructured this year for salary cap space. Upon cutting him, that entire loan has to be paid in full next season. Now you have to go out and find (and pay) another Jay Ratliff on top of paying the Jay Ratliff who isn't on the team anymore when you already can't afford to resign Hatcher or Spencer. The same thing will happen with Miles Austin next year as well. Then Ware. It has worked up until now because none of these loans were coming due yet. The team already can't afford a full 53-man roster this year, apparently. Better not even think about what is going to happen when Romo can't play anymore.

 

[Hoofbite]

It's not, but they still found a way to make Romo a Cowboy for life and sign a couple free agents. I just expect a similar approach next year; except the fact they'll have to cut some more guys- most likely Miles Austin and maybe Doug Free (ouch).

They can't cut Doug Free if he finishes the season as strong as he has started. That would be awful to have him in a position where his play is far exceeding his cap number after a couple seasons of the complete opposite and then they just cut him to free up a small amount?

 

[hornitosmonster]

I hear the same broken tune every year.

 

[perrykemp]

The cap situation was a train wreck this year, and they restructured deals and it all worked out fine. Romo, Ware, Witten, and Carr are amicable about re-working their contracts.

Just need to be careful about pushing more and more money into the future for the aging veterans like Romo, Ware, and Witten. You never know when one of them hits the wall and they end up retiring / getting cut / etc and all those bills come due all at once.

 

[xwalker]

Your first statement is completely inaccurate. 30-40 million? Every year? Besides that, it isn't mathematically possible to keep creating future dead money and borrowing against it year after year without it eventually catching up. I get the zero interest thing, but you're not realizing that it's a shell game that only works with a handful of contracts. It's like going to a different bank to take out a loan each time without paying the last one back. There's a finite number of banks, and there's a finite amount of base salary on the books that can be converted into loans.. er, signing bonuses. The more dead money you accumulate, the smaller your effective cap space becomes. But you still have to field a competitive team, so you can't very well spend less money. So you borrow more. And your cap space becomes smaller. And on. And on. Eventually, you can't afford that next big contract (Dez, Tyron -- Hatcher, even) that you were going to use for a salary cap bank. So you restructure an older player instead. Old player breaks down, gets cut. More dead money. Still can't afford to resign a younger player. No new base salaries to borrow against. Then what?

Just look at the Jay Ratliff salary cap loan. Ratliff was restructured this year for salary cap space. Upon cutting him, that entire loan has to be paid in full next season. Now you have to go out and find (and pay) another Jay Ratliff on top of paying the Jay Ratliff who isn't on the team anymore when you already can't afford to resign Hatcher or Spencer. The same thing will happen with Miles Austin next year as well. Then Ware. It has worked up until now because none of these loans were coming due yet. The team already can't afford a full 53-man roster this year, apparently. Better not even think about what is going to happen when Romo can't play anymore.

Years ago I believed the same things that you are saying; however, I've spent a lot of time researching and studying the issue the past few years.

The number being thrown out there last year at this time was 40 million. I definitely know because I put together a detailed spreadsheet of the 2013 cap issues. While people were proclaiming them to be over by 40 million, I showed that they not only could get under the cap, but that they could Franchise Spencer, which they did.

It is not a shell game. The dead-money does not continue to accumulate. It is only on the cap for 1 or 2 years while the "loans" on existing players are for 5 years.

The Cowboys survived plenty of dead-money over the past few years. They've had bigger problems than the Ratliff contract. They cut Bigg, Gurode, Roy Williams x 2, Marion Barber, etc.. That dead-money is all off the books now. They even had dead-money this season from Sensabaugh and Newman which will be off the books next year.

Here is some of my work from last year:
http://www.walker-texas.com/old_files/2013-salary-cap-estimate-1.jpg
http://www.walker-texas.com/old_files/2013-restructure-estimates.jpg
http://www.walker-texas.com/old_files/2013-salary-cap-estimate.jpg

FYI - The other problem with the projected numbers is that they compare which teams are projected to be the most and least over the cap. If a team has some of their star players that are Free Agents then that team will appear to have a lower cap number right now; however, if they re-sign those players then their cap is probably in worse shape than a team that has most of it's players signed. It's an apples-to-oranges comparison.

 

[cowboys1981]

I love when outsiders pretend to know our situation beyond a narrow perspective.

 

[Hoofbite]

The Cowboys are projected to be 30 to 40 million over the cap every year. Future projections don't account for restructured contracts.

Meh. Dallas is often projected above the cap but rarely 30 to 40 million above the cap. Just last year it was like $20M, wasn't it? I can't recall many years where they were needing to free up $30M to $40M. They did free a bunch up in 2012 but they also went after Carr and a handful of scrubs.

If a team does not take advantage of the virtual cap, then they are operating at a disadvantage to other teams.

I disagree. First and foremost, whether or not a team takes advantage of the virtual cap means nothing. You could be borrowing from future years to sign a couple of top free agents and improve your team or you could be borrowing from future years simply so you don't have to cut plays from your team. Some teams may be able to sign top free agents without utilizing the virtual cap. Simply utilizing the virtual cap doesn't say anything other than the team borrowed from the future. Why they utilized the virtual cap is where operating at a disadvantage may come into play.

Of the three, which one is lacking a distinct advantage that the other two are not?

Secondly, I'm having a little difficulty reconciling the differences between the quote above and this quote here:

There are limits to everything, but the Cowboys have not lost a player because of the salary cap in a long time. They might be limited in Free Agency, but Snyder and the Commanders proved that you can't buy a team in Free Agency.

Above you state that teams who do not borrow from the future are operating at a disadvantage. In the second quote you state that being active in free agency doesn't guarantee anything. I guess I don't see where the disadvantage comes in. You're at a disadvantage if you don't spend future "fake money", but at the same time if you do spend present real money you aren't guaranteed anything at all.

If real money utilization in the form of free agent acquisition cannot give you any sort of decent assurance of improvement, how is there an advantage in spending future fake dollars when you may not even be getting the free agents in the process?

If Dan Snyder proved anything it would be that paying players like they are really good doesn't actually make them really good. He spent a lot of money but only because he highly overpaid guys like Laveraneus Coles, Mark Brunell, Adam Archuletta, etc, etc. Of course if you pay an 18 TD and 11 INT QB $50M in 2004 you're going to be disappointed.

Ultimately Dan Snyder proved that if you suck as a GM, your team will suck too.

Most people think that this is too good to be true and that there must be a catch somewhere. The "catch" is that it takes more real money to make it happen. When a player's contract is restructured, they receive most of their base salary as a bonus. Based on the time value of money, getting the money immediately is worth more to the player than getting it later. The team must have the cash to give out the bonuses because the bonuses are giving out in the spring but most of the teams' revenue come in the fall.

I'm not sure why this is an issue. None of the teams are unable to make such moves. It isn't because of a lack of free cash that not all teams restructure to the same extent as Dallas. Can't think of a single team that has been too low on free cash to partake in free agency. Pretty much the same thing except Dallas is partaking by constantly repurchasing the same guys while other teams are bringing players in. Just not really sure where this comes into the equation. If the only money that is paid at the time of the signing is bonus money, there's no difference at all between paying out a signing bonus to a free agent or converting a base salary and paying a similar amount.

Most people don't understand the salary cap. Pushing money into the future is equivalent to a zero interest loan that can be renewed every year. The money can be pushed into the future indefinitely. It never really comes due. It does come due for some players, but other players money is pushed forward to offset those players.

There's no interest but there are factors that lead to the accumulation of money that needs to shaved off the cap to get compliant. If there wasn't Dallas wouldn't be at $30 to $40M next year or whatever it is. You certainly don't go from very little restructuring to restructuring 20% of your salary cap. I don't recall a lot of restructuring under Parcells, likely because when he first got here the roster was so deplete of talent worth keeping around longterm but that's a whole other topic. No matter the reason, Dallas started well under $30M and where they are at next year is $30M to $40M.

The very fact that most contracts have increasing cap figures over time kind of necessitates that you have to restructure more with each successive year. If you don't receive significant relief from expiring contracts or by making cuts, what's the alternative. Dallas hasn't had a lot of large contracts expire and most of the significant cuts they have had have carried a bit of dead weight.

I guess Spencer could be considered an expiring contract. Hatcher as well although I'd like the team to bring him back. Even still, $30M to $40M to go?

Tack on to that you'll eventually have a total of 4 restructures added to a single year. Restructures from 2014 will add money to the next four years so if you are restructuring every year, you'll eventually have cap money from 2014, 2015, 2016 and 2017 added to the 2018 cap.

Given that 80% of the restructured total is spread to the follow following years, if Dallas was restructuring $30-$40M every year they'd eventually have $24M to $32M of restructured money belonging to previous seasons that is added to their current year's cap. They'd be restructuring $30M just to cover the $30M in previously restructured money, leaving no money to sign their own players or sign free agents and they'd need contracts to expire or cut players just to keep their own guys.

Even if Dallas was minimally restructuring, the stagnant cap over the last couple years would allow small additions to accumulate to an amount greater than the cumulative cap increase. From 2012 to 2015 the projected cap was supposed to only increase by a total of $5M. They restructured a bit in 2012, not even sure how much but Brandon Carr's restructure this year would more than double the $1.25M average increase in cap total. Witten restructured to add 900K so between just these two restructuring in 2013, Dallas has all but erased any added cap space for 3 of the 4 seasons in that span.

Not interest but perhaps inflation paired with a near fixed income. Natural inflation in the form of how contracts are generally structured with regard to increasing base salaries over time, and artificial inflation in the form of money added to future years; taken for the wants, and perhaps more appropriately in this team's case, needs of right now.

 

[Kaiser]

Years ago I believed the same things that you are saying; however, I've spent a lot of time researching and studying the issue the past few years.

Not that it matters, but I've been reading Cowboys message board since the mid 1990's and since the cap was put in place, every year the same arguments have been made. Its been a steady drumbeat of "Dallas can't manage the cap and it will all catch up them one day".

I'm sure we will be reading it for another 20 years as well.

 

[Hoofbite]

Not that it matters, but I've been reading Cowboys message board since the mid 1990's and since the cap was put in place, every year the same arguments have been made. Its been a steady drumbeat of "Dallas can't manage the cap and it will all catch up them one day".

I'm sure we will be reading it for another 20 years as well.

Early 2000s wasn't enough?

They had $23M in dead money applied to a salary cap of $67M at one point. That'd be the equivalent of having $43M in dead money right now.

How bad does it have to get?

 

[FuzzyLumpkins]

Bluefin made an awesome post and I am just paste it for the next 6 or so months while we have to hear this asinine argument over and again. This is not the entirety of his post it has much more to it and if you have not read it, you should.

It comes to $145.099M, actually.

And there are 46 players under contract for 2014, not 56.

The team will need to restructure several contracts next off-season. Tony Romo and Demarcus Ware will create $19M in room. Sean Lee, Brandon Carr and Jason Witten can create another $12M.

These five restructures would drop the estimated 2014 cap number to $114.099M.

If Miles Austin is designated as a June release, that will add another $5.5M when it takes effect (June).

The current unadjusted cap is $123M, it will probably go up a couple of million in 2014 and the team will carry over any unused space from this season as well (it won't be much, though).

I know some fans really start biting their nails when the topic of pushing more guaranteed money into future years with new signing bonuses comes up, but that's what's on the menu for 2014.

Doing this would add just over $8M per season to future caps in 2015-18.

That's OK.

The team won't need to restructure bunches of contracts in 2015, Romo is the only one I'm expecting (create $10.3M).

 

[Kaiser]

Early 2000s wasn't enough?

They had $23M in dead money applied to a salary cap of $67M at one point. That'd be the equivalent of having $43M in dead money right now.

How bad does it have to get?

That was a once in a lifetime event of Aikman getting hurt and then forcing his release. For the other 19 years its just been reading 2000 posts about the sky falling.

 

[Iron_Man]

Is this do to Washington DC? I swore that was being debated during the shutdown....

@AdamSchefter: Dallas now projected to be NFL-high $31 million over salary cap next year. One NFL exec called Dallas' cap situation in 2014 "a train wreck"

There are really people here who think we are fine cap wise....