Salary cap structure question

[robbieruff]

So I am hoping that some of our resident "capologists" can shed some light on a question I have about our ability to "structure" deals in the most cap friendly manner going into the next couple of seasons when the presumed "Romo dividend" kicks in with his expected trade/release (I am assuming that that happens at this point even though I've been a huge Tony fan over the years).

So I'm sure we've all seen the articles about how the Boys will save a minimum of $5MM in cap space with a Romo departure (bigger in 2017 if a post June 1). We've also seen a lot of breakdowns of the other expected steps the FO will take to generate cap space, such as contract restructures for Fred and Smith, etc. I've read estimates for us having $18MM to $30MM+ in 2017 cap space depending on how agressive we are with restructures and potential veteran releases. Then of course, with Romo fully off the books (presumably) in 2018, the full Romo dividend balloons the cap space to $40-something million in 2018 and close to $60MM in 2019. These are roughly the estimates I've seen in commentary though I might be off a bit.

Which leads to my question on cap management logistictics. What leeway does a team have to push out comp in years 2 or 3 in a contract to lower the initial year's cap hit? My thinking being that whoever we sign for 2017 (whether our own FA's from elsewhere) would have a contract structure with a lowish first year salary (plus bonus proration) with significant salary increases in years 2, 3, etc., when we see a quantum leap in cap room. Perhaps this would be a way we are more inclined for a top flight (or even merely "good") FA defensive player(s) without putting ourselves in too much of a bind for the 2017 season.

Welcome any genius-level insights on the matter!

 

[gmoney112]

I haven't done the exact numbers, but I think even if you trade/release Romo before June 1, we can still free up like 40 mill in various restructures.

If Romo is gone, and they take the accelerated hit this year, the amount of cap in 2018 will be 60 mill+.

Yes, it'd be beneficial to get a more manageable cap figure this year and increasing cap numbers next year and beyond. This could be managed by offering a proportional signing bonus instead.

 

[waldoputty]

I haven't done the exact numbers, but I think even if you trade/release Romo before June 1, we can still free up like 40 mill in various restructures.

If Romo is gone, and they take the accelerated hit this year, the amount of cap in 2018 will be 60 mill+.

Yes, it'd be beneficial to get a more manageable cap figure this year and increasing cap numbers next year and beyond. This could be managed by offering a proportional signing bonus instead.

i believe you could open up $30M without touching Romo.
if you want to trade him before june 1, then someone like @bkight13 can comment on how much is accelerated.
60M in 2018 does not need romo to be gone.
i think bk said you will have 90M cap space or so if romo is gone.

 

[FuzzyLumpkins]

I haven't done the exact numbers, but I think even if you trade/release Romo before June 1, we can still free up like 40 mill in various restructures.

If Romo is gone, and they take the accelerated hit this year, the amount of cap in 2018 will be 60 mill+.

Yes, it'd be beneficial to get a more manageable cap figure this year and increasing cap numbers next year and beyond. This could be managed by offering a proportional signing bonus instead.

We save $45m over the next three years if we cut him. You can move it around but that is what it boils down to when you consider what he is owed still in salary and you subtract the dead money. It's a $15m AAV.

 

[big dog cowboy]

We save $45m over the next three years if we cut him. You can move it around but that is what it boils down to when you consider what he is owed still in salary and you subtract the dead money. It's a $15m AAV.

Wouldn't you just shove it all to the last year when the salary cap would be at it's highest to lessen the overall hit?

 

[FuzzyLumpkins]

Wouldn't you just shove it all to the last year when the salary cap would be at it's highest to lessen the overall hit?

That is an interesting question. If you cut him you designate him a June cut I would think. If you trade him then it is what it is and it all accelerates unless you trade him in June or beyond.

 

[Nightman]

So I am hoping that some of our resident "capologists" can shed some light on a question I have about our ability to "structure" deals in the most cap friendly manner going into the next couple of seasons when the presumed "Romo dividend" kicks in with his expected trade/release (I am assuming that that happens at this point even though I've been a huge Tony fan over the years).

So I'm sure we've all seen the articles about how the Boys will save a minimum of $5MM in cap space with a Romo departure (bigger in 2017 if a post June 1). We've also seen a lot of breakdowns of the other expected steps the FO will take to generate cap space, such as contract restructures for Fred and Smith, etc. I've read estimates for us having $18MM to $30MM+ in 2017 cap space depending on how agressive we are with restructures and potential veteran releases. Then of course, with Romo fully off the books (presumably) in 2018, the full Romo dividend balloons the cap space to $40-something million in 2018 and close to $60MM in 2019. These are roughly the estimates I've seen in commentary though I might be off a bit.

Which leads to my question on cap management logistictics. What leeway does a team have to push out comp in years 2 or 3 in a contract to lower the initial year's cap hit? My thinking being that whoever we sign for 2017 (whether our own FA's from elsewhere) would have a contract structure with a lowish first year salary (plus bonus proration) with significant salary increases in years 2, 3, etc., when we see a quantum leap in cap room. Perhaps this would be a way we are more inclined for a top flight (or even merely "good") FA defensive player(s) without putting ourselves in too much of a bind for the 2017 season.

Welcome any genius-level insights on the matter!

The rule of thumb is that for every 10m in contracts you sign 1m is used in cap space Year 1 or 10%

Lets say you sign Melvin Ingram for 5/60m........24m guaranteed with 18m signing bonus

His Year One cap hit would be 5m.......a 1.4m base salary and 3.6m in signing bonus
Year 2 could increase to 4.6m base and 3.6m signing bonus for an 8m cap hit

If you sign 200m in FAs you can limit the Year One cap hits to 20m total

 

[robbieruff]

The rule of thumb is that for every 10m in contracts you sign 1m is used in cap space Year 1 or 10%

Lets say you sign Melvin Ingram for 5/60m........24m guaranteed with 18m signing bonus

His Year One cap hit would be 5m.......a 1.4m base salary and 3.6m in signing bonus
Year 2 could increase to 4.6m base and 3.6m signing bonus for an 8m cap hit

If you sign 200m in FAs you can limit the Year One cap hits to 20m total

That's he response I was looking for my man. I just wasn't sure if there were any funky restrictions the league imposes on how multi-year deals are structured that would force us to pay up more in year one, which would obviously be to our disadvantage his upcoming season. Thx for the great perspective!

 

[xwalker]

So I am hoping that some of our resident "capologists" can shed some light on a question I have about our ability to "structure" deals in the most cap friendly manner going into the next couple of seasons when the presumed "Romo dividend" kicks in with his expected trade/release (I am assuming that that happens at this point even though I've been a huge Tony fan over the years).

So I'm sure we've all seen the articles about how the Boys will save a minimum of $5MM in cap space with a Romo departure (bigger in 2017 if a post June 1). We've also seen a lot of breakdowns of the other expected steps the FO will take to generate cap space, such as contract restructures for Fred and Smith, etc. I've read estimates for us having $18MM to $30MM+ in 2017 cap space depending on how agressive we are with restructures and potential veteran releases. Then of course, with Romo fully off the books (presumably) in 2018, the full Romo dividend balloons the cap space to $40-something million in 2018 and close to $60MM in 2019. These are roughly the estimates I've seen in commentary though I might be off a bit.

Which leads to my question on cap management logistictics. What leeway does a team have to push out comp in years 2 or 3 in a contract to lower the initial year's cap hit? My thinking being that whoever we sign for 2017 (whether our own FA's from elsewhere) would have a contract structure with a lowish first year salary (plus bonus proration) with significant salary increases in years 2, 3, etc., when we see a quantum leap in cap room. Perhaps this would be a way we are more inclined for a top flight (or even merely "good") FA defensive player(s) without putting ourselves in too much of a bind for the 2017 season.

Welcome any genius-level insights on the matter!

The cap space you see in future years only includes player that are under contract. For 2019 it shows 80M in cap space but there are only 19 players under contract.
Tony Romo
Dez Bryant
Tyron Smith
Tyrone Crawford
Ezekiel Elliott
Sean Lee
Travis Frederick
Orlando Scandrick
Cedric Thornton
Dan Bailey
Jeff Heath
Jaylon Smith
Maliek Collins
Charles Tapper
Dak Prescott
Anthony Brown
Kavon Frazier
Rico Gathers

 

[xwalker]

So I am hoping that some of our resident "capologists" can shed some light on a question I have about our ability to "structure" deals in the most cap friendly manner going into the next couple of seasons when the presumed "Romo dividend" kicks in with his expected trade/release (I am assuming that that happens at this point even though I've been a huge Tony fan over the years).

So I'm sure we've all seen the articles about how the Boys will save a minimum of $5MM in cap space with a Romo departure (bigger in 2017 if a post June 1). We've also seen a lot of breakdowns of the other expected steps the FO will take to generate cap space, such as contract restructures for Fred and Smith, etc. I've read estimates for us having $18MM to $30MM+ in 2017 cap space depending on how agressive we are with restructures and potential veteran releases. Then of course, with Romo fully off the books (presumably) in 2018, the full Romo dividend balloons the cap space to $40-something million in 2018 and close to $60MM in 2019. These are roughly the estimates I've seen in commentary though I might be off a bit.

Which leads to my question on cap management logistictics. What leeway does a team have to push out comp in years 2 or 3 in a contract to lower the initial year's cap hit? My thinking being that whoever we sign for 2017 (whether our own FA's from elsewhere) would have a contract structure with a lowish first year salary (plus bonus proration) with significant salary increases in years 2, 3, etc., when we see a quantum leap in cap room. Perhaps this would be a way we are more inclined for a top flight (or even merely "good") FA defensive player(s) without putting ourselves in too much of a bind for the 2017 season.

Welcome any genius-level insights on the matter!

Brandon Carr's 1st year cap hit was 3.2M on his 5-year, 50M contract.

 

[waldoputty]

The cap space you see in future years only includes player that are under contract. For 2019 it shows 80M in cap space but there are only 19 players under contract.
Tony Romo
Dez Bryant
Tyron Smith
Tyrone Crawford
Ezekiel Elliott
Sean Lee
Travis Frederick
Orlando Scandrick
Cedric Thornton
Dan Bai
Jeff Heath
Jaylon Smith
Maliek Collins
Charles Tapper
Dak Prescott
Anthony Brown
Kavon Frazier
Rico Gathers

True, but that includes Romo who will probably not be around in 2019.
It also includes 2/3 of the probowler OLs
It also includes the top 3 offensive skill players - QB, RB and WR1 if you do not include Romo.
It also includes 3 of the current starting DL as well as the best D player in Lee
May be it would be most instructive to show which starters are NOT included in the 19.

 

[Nightman]

The cap space you see in future years only includes player that are under contract. For 2019 it shows 80M in cap space but there are only 19 players under contract.
Tony Romo
Dez Bryant
Tyron Smith
Tyrone Crawford
Ezekiel Elliott
Sean Lee
Travis Frederick
Orlando Scandrick
Cedric Thornton
Dan Bailey
Jeff Heath
Jaylon Smith
Maliek Collins
Charles Tapper
Dak Prescott
Anthony Brown
Kavon Frazier
Rico Gathers

Right....but the bottom 26 guys count for 10% of the cap or around 17m....that is 4 Draft classes away of cheap labor

That would make it 45 under contract and still 60m under

 

[tm1119]

Sure, of course you can back load the contract. But obviously that comes with risks as well. There's a lot of dud signings that just never work out for whatever reason in the NFL. Back loading the contract runs the risk of being stuck with a high priced player that never worked out from the beginning. Ideally free agent contracts are heavily front loaded to make the contract easier to get out of.

For instance, if you take the Melvin Ingram example from above...we would still owe Ingram a guaranteed $10M in the 3rd year of his deal with his total cap hit being $12-15M. And what if the transition to 4-3 doesn't go well from the beginning and he's just not good for us? Basically if you're going to back load a free agent contract it better be a young, safe player that you are 100% sure will work for your team. (Not saying Ingram wouldn't work for us by the way, just using the example I was given)

 

[xwalker]

True, but that includes Romo who will probably not be around in 2019.
It also includes 2/3 of the probowler OLs
It also includes the top 3 offensive skill players - QB, RB and WR1 if you do not include Romo.
It also includes 3 of the current starting DL as well as the best D player in Lee
May be it would be most instructive to show which starters are NOT included in the 19.

That's not the point of my post.

The point is that just because there is cap space, the dollar figure on that cap space is misleading because it's not for a full roster or even close to a full roster.

Two teams can show 80M in cap space for 2019, but if one team has 19 players under contract and the other team has 40 then just looking at the 80M number does not really give you much info.

 

[Nightman]

That's he response I was looking for my man. I just wasn't sure if there were any funky restrictions the league imposes on how multi-year deals are structured that would force us to pay up more in year one, which would obviously be to our disadvantage his upcoming season. Thx for the great perspective!

There used to be something called the 30% rule that prevented contracts from being too back-loaded but I don't know if that still applies with the new CBA.... ... Adam would know better

But it is very easy to get a low Year One cap hit to take advantage of more cap space down the road

A 5 year deal can be spread over 7 seasons with restructures, voidable years and dead money

 

[Nightman]

Sure, of course you can back load the contract. But obviously that comes with risks as well. There's a lot of dud signings that just never work out for whatever reason in the NFL. Back loading the contract runs the risk of being stuck with a high priced player that never worked out from the beginning. Ideally free agent contracts are heavily front loaded to make the contract easier to get out of.

For instance, if you take the Melvin Ingram example from above...we would still owe Ingram a guaranteed $10M in the 3rd year of his deal with his total cap hit being $12-15M. And what if the transition to 4-3 doesn't go well from the beginning and he's just not good for us? Basically if you're going to back load a free agent contract it better be a young, safe player that you are 100% sure will work for your team. (Not saying Ingram wouldn't work for us by the way, just using the example I was given)

I'm not sure about the 10m still guaranteed in Year 3.....there would be a ton of Dead Money(3 x 3.6m prorated signing bonus + 7m from Year one + 4m from Year 2 = 21.8m) but not anymore guaranteed money(18m signing bonus + 1.4m + 4.6m base salaries = 24m gtd)

The point is you can't get these deals wrong whether they are outside FAs or internal FAs.... teams know more about their own guys so they are usually safer bets

 

[waldoputty]

There used to be something called the 30% rule that prevented contracts from being too back-loaded but I don't know if that still applies with the new CBA.... ... Adam would know better

But it is very easy to get a low Year One cap hit to take advantage of more cap space down the road

A 5 year deal can be spread over 7 seasons with restructures, voidable years and dead money

the point is we could pretty sign whatever we want and make it work under the cap.
even if that is signing 3 top FAs, a decent RT, a very good WR2 and one of our 2 SS.

 

[Nightman]

the point is we could pretty sign whatever we want and make it work under the cap.
even if that is signing 3 top FAs, a decent RT, a very good WR2 and one of our 2 SS.

Easily.....we just have to sign the right people....just like we have to draft the right people

You only get one shot at the draft each year but Free Agency can be a lot more deliberate

 

[waldoputty]

Easily.....we just have to sign the right people....just like we have to draft the right people

You only get one shot at the draft each year but Free Agency can be a lot more deliberate

right, needs to get done before draft to get the big pieces.
almost wish the draft took place before FA instead of the other way around.

 

[Bohuntr97]

right, needs to get done before draft to get the big pieces.
almost wish the draft took place before FA instead of the other way around.

Absolutely. You could draft for your needs then sign a FA, for possibly less money.