The case for Restructuring Romo

[Alexander]

What are using all this cap space for now...vs saving it in future years?
Is there an expensive FA out there that we're going for?

Thanks for turning this into another Peterson thread.

 

[Nightman]

Did something happen with Romo today?????..............hmmmm

I got to say I was worried for awhile and after the McFadden signing I was in the red, but those screaming patience were right

The FO finally came through and added some talent in Hardy and McClain.

I'm glad they didn't remain fixated on being frugal and did what they had to do to take a 12-4 team to the next level.

 

[Kaiser]

Did something happen with Romo today?????..............hmmmm

You were right. They have way more than they need at this point (if my previous numbers were right), I wonder if they have other players on the radar (not AD) or if they just plan to roll the leftover 2015 money into 2016.

 

[Temo]

You were right. They have way more than they need at this point (if my previous numbers were right), I wonder if they have other players on the radar (not AD) or if they just plan to roll the leftover 2015 money into 2016.

Honestly all it does is help pay for Greg Hardy. They'll need that money until they figure out how many games he's going to play. Any money Hardy doesn't earn will probably be rolled over into next year.

 

[AdamJT13]

My position on performance is that a higher level of play justifies a higher cap charge, and given that players decline over time it's ridiculous to think an older version of a great player will be more likely to justify a high cap charge than the younger version of the same great player. It's a pretty widely accepted position that you don't pay for age and you don't pay for past performance, but that's essentially what restructuring does. You take a higher charge at an older age, which is when the natural course of a player's career suggests that he won't be as productive.

You don't PAY for age, but a cap charge is not the same as paying the player. You can pay now and get charged later. You're not paying for age, you're just changing when the money you've already paid hits the cap.

As for the percentage of the salary cap a player takes up, I'm not sure why that's even something worth discussing.

Because THAT is what is important as far as building the team, not the specific dollar amount. Think of the cap as being 100.0 NFL currency units each season. The dollars-to-NFLCU "exchange rate" would get smaller each year, but the cap would remain at 100.0 NFLCU. So $5 million dollars might be 3.5 NFLCU this year but only 3.3 NFLCU next year, 3.1 NFLCU the year after than and 2.8 NFLCU the year after that. The same dollar amount becomes a smaller percentage of the cap as the cap goes up.

Fully guaranteed multi-year contracts don't exist, but if such a contract did exist the percentage of cap used would be the same regardless of how it was structured. If a fully guaranteed contract for 4 years paid $50M and the total cap space over those 4 years was $600M, it doesn't matter in what way you structure it in terms of the percentage of cap used over the 4 year period. Percentage-wise, $50M of $600M is the same no matter how you want to split it up.

That's correct ONLY if the cap applies to the four-year period combined, but it does not -- the cap is for only one year at a time. And how a contract is structured affects the percentage of the cap you use each season and the combined percentage of the cap used.

Using your scenario, let's pretend that the caps for that four-year period are $143 million, $147 million, $152 million and $158 million ($600 million total). Now let's look at a flatly structured contract with equal cap charges of $12.5 million per season -- the percentages of the cap would be 8.74, 8.5, 8.22 and 7.91 for a total of 33.38, or an average of 8.34 percent. Suppose you structured the contract so that the cap charges declined each year, from $17 million to $14 million to $11 million to $8 million -- the percentages of the cap would be 11.89, 9.52, 7.24 and 0.51 for a total of 33.71, or an average of 8.43 percent. Same total money, same total cap, but different percentages because of how the contract is structured.

Now let's look at scenarios with increasing cap charges, such as $8 million, $11 million, $14 million and $17 million. The percentages are now 5.59, 7.48, 9.21 and 10.76, for a total of 33.05 and an average of 8.26. With a smaller cap charge to start and greater increases, the percentages become even smaller -- at $4 million, $9 million, $15 million and $22 million, the percentages are now 2.8, 6.12, 9.87 and 13.92 for a total of 32.71 and an average of 8.18.

Just by moving money around, taking bigger cap charges when the cap is higher, you're actually lowering the percentage of your annual cap that you use.

The only way you can say it's foolish is if you believe teams make roster moves entirely independent of the potential dead space a move would make. That's just not true.

I never said teams weren't stupid. They do stupid things all the time.

You'd also have to believe that Brandon Carr would still be on the roster right now if the team were able to free up $8M by cutting him, as they would be had they never restructured his contract.

While $8M could certainly give you the level of play that Carr has provided, the fact that there's next to no cap space created by cutting him means that the team would have to utilize more cap space to replace his level of play than they would just by keeping him. Keeping him is the cheapest option they have right now, and it's entirely because they restructured him. Furthermore, had they not restructured him it's questionable that he is on the roster for 2014 because they could have taken the $6M in dead space it would have created and signed a guy with the $6M in space that cutting him would have freed up.

Dead money is absolutely a deterrent to releasing a player. I'm not sure how anyone could think otherwise.

Again, it's not the restructuring that is the problem -- it's the original contract and/or what the team did with the cap room it saved by restructuring. The team created almost $10.9 million of cap room in 2013 by restructuring Carr. If they kept him in 2014 and paid him an additional $7.5 million in salary ONLY to avoid taking an additional cap hit of $4.651 million, that's completely stupid. And if they're keeping him around this season and will pay him another $8 million ONLY because cutting him now would save less than $600,000, that's also stupid. Who pays an extra $15.5 million to avoid costing themselves less than $4.1 million? If he's not worth his salary, CUT HIM. Don't hang onto him just because it would cause "dead money" -- that only compounds the problem.

If Carr hadn't been restructured at all, the team would have had to have structured other contracts to take smaller hits in 2013 and larger hits in 2014, 2015 and beyond (meaning we'd have less cap room now because other players' cap numbers would be higher); and we wouldn't have been able to carry over as much cap room from 2013 to 2014 and again from 2014 to 2015 without other cap-saving moves (meaning we'd have even less cap room now because even more other players' cap numbers would higher and/or our amount carried over would be less or non-existent). As shown by the examples above, the net effect of restructuring Carr is a slightly lower percentage of the cap being used on him, which is a positive thing, not a negative thing.

As I've said many times, if you're going to pay the player anyway, there's absolutely no reason NOT to structure the contract favorably -- whether that's at the original signing or by restructuring. And if the player isn't worth his salary, you either pay him less (if he'll take it) or get rid of him, don't hang onto him and compound the problem. Anything else is just foolishness.

 

[USMarineVet]

Without reading any previous posts, I firmly believe that we should NOT, under any circumatances push Tony Romo's cap hit any further down the line than it is already. Period!

 

[windward]

Without reading any previous posts, I firmly believe that we should NOT, under any circumatances push Tony Romo's cap hit any further down the line than it is already. Period!

Romo's base salary is 8.5 million next year a restructure then won't make a huge difference to our long term cap situation.

 

[Nightman]

Without reading any previous posts, I firmly believe that we should NOT, under any circumatances push Tony Romo's cap hit any further down the line than it is already. Period!

Romo's base salary is 8.5 million next year a restructure then won't make a huge difference to our long term cap situation.

That is why this year's restructure was never in doubt. It had the high base salary- 17m, 5 years remaining to get the max pro-ration and 15m of his 17m was already guaranteed.

This pro-ration was scheduled the moment he signed the extension. They tried to act cap poor in negotiations with Dez, Murray and others, but agents know about restructures.

 

[Hoofbite]

You don't PAY for age, but a cap charge is not the same as paying the player. You can pay now and get charged later. You're not paying for age, you're just changing when the money you've already paid hits the cap.

Who cares what a guy is paid beyond the relationship to his cap figure. If he's paid a lot he has a high cap charge, or if he is paid a little but has a lot of restructured money added, he also has a high cap charge. There's no difference. The cap is the limiting factor in acquisition so what a guy is paid is only of concern to the extent that it reduces cap space.

Because THAT is what is important as far as building the team, not the specific dollar amount. Think of the cap as being 100.0 NFL currency units each season. The dollars-to-NFLCU "exchange rate" would get smaller each year, but the cap would remain at 100.0 NFLCU. So $5 million dollars might be 3.5 NFLCU this year but only 3.3 NFLCU next year, 3.1 NFLCU the year after than and 2.8 NFLCU the year after that. The same dollar amount becomes a smaller percentage of the cap as the cap goes up.

That's correct ONLY if the cap applies to the four-year period combined, but it does not -- the cap is for only one year at a time. And how a contract is structured affects the percentage of the cap you use each season and the combined percentage of the cap used.

Using your scenario, let's pretend that the caps for that four-year period are $143 million, $147 million, $152 million and $158 million ($600 million total). Now let's look at a flatly structured contract with equal cap charges of $12.5 million per season -- the percentages of the cap would be 8.74, 8.5, 8.22 and 7.91 for a total of 33.38, or an average of 8.34 percent. Suppose you structured the contract so that the cap charges declined each year, from $17 million to $14 million to $11 million to $8 million -- the percentages of the cap would be 11.89, 9.52, 7.24 and 0.51 for a total of 33.71, or an average of 8.43 percent. Same total money, same total cap, but different percentages because of how the contract is structured.

Now let's look at scenarios with increasing cap charges, such as $8 million, $11 million, $14 million and $17 million. The percentages are now 5.59, 7.48, 9.21 and 10.76, for a total of 33.05 and an average of 8.26. With a smaller cap charge to start and greater increases, the percentages become even smaller -- at $4 million, $9 million, $15 million and $22 million, the percentages are now 2.8, 6.12, 9.87 and 13.92 for a total of 32.71 and an average of 8.18.

First and foremost, I think you're mistaken in thinking you can just average percentages that are based on differing denominators. Each years percentages represents a different dollar amount. It makes no sense to average them as though they didn't. Might need a weighted average.

Secondly, even if you could, look at how small the effect is. 8.43, 8.34, 8.18, which makes the biggest discrepancy 0.25%. On a total cap of $150M, you've successfully swindled a grand total of $375K in cap space over a 4 year span. That's the perk? Less than $100K per year in benefit? Any team that needs that sort of insignificant boost has bigger problems on their hands.

Again, it's not the restructuring that is the problem -- it's the original contract and/or what the team did with the cap room it saved by restructuring. The team created almost $10.9 million of cap room in 2013 by restructuring Carr. If they kept him in 2014 and paid him an additional $7.5 million in salary ONLY to avoid taking an additional cap hit of $4.651 million, that's completely stupid. And if they're keeping him around this season and will pay him another $8 million ONLY because cutting him now would save less than $600,000, that's also stupid. Who pays an extra $15.5 million to avoid costing themselves less than $4.1 million? If he's not worth his salary, CUT HIM. Don't hang onto him just because it would cause "dead money" -- that only compounds the problem.

Cap space is the limiting factor to acquiring talent. Jerry isn't concerned about spending dollars, but if he doesn't have the cap space to put his dollars to use then he cannot spend. If Jerry could he would pay someone else the money going to Carr, but it would require more cap space to do so and the team doesn't have the cap space to chuck away like that. If it wasn't Carr, it would be someone else provided the team had cap space so spending real dollars is irrelevant.

If Carr hadn't been restructured at all, the team would have had to have structured other contracts to take smaller hits in 2013 and larger hits in 2014, 2015 and beyond (meaning we'd have less cap room now because other players' cap numbers would be higher); and we wouldn't have been able to carry over as much cap room from 2013 to 2014 and again from 2014 to 2015 without other cap-saving moves (meaning we'd have even less cap room now because even more other players' cap numbers would higher and/or our amount carried over would be less or non-existent). As shown by the examples above, the net effect of restructuring Carr is a slightly lower percentage of the cap being used on him, which is a positive thing, not a negative thing.

This is exactly why restructuring is bad. It's exactly the same as structuring a contract with higher charges in future years. You increase cap charges in future years under both scenarios. You pretty much just said what I have been saying.

As I've said many times, if you're going to pay the player anyway, there's absolutely no reason NOT to structure the contract favorably -- whether that's at the original signing or by restructuring. And if the player isn't worth his salary, you either pay him less (if he'll take it) or get rid of him, don't hang onto him and compound the problem. Anything else is just foolishness.

If you lose cap space by getting rid of him, you won't.

 

[Nightman]

A lot of Dead Money comes from signing bonuses and not restructures. Giving contracts to bad players is what causes salary cap issues.

MBIII, Flozell, TNew, RW31, RW11, Hamlin, Austin, Free, Ratliff, Carr didn't live up to their deals

When you restructure you also get an extra year or two to pro-rate the money. If you straight line account for a 5/50m contract you take a 10m cap hit every year.

10m, 10m, 10m, cut
5m, 6m, 8m, June 1st cut 6m, 5m

 

[AdamJT13]

Who cares what a guy is paid beyond the relationship to his cap figure. If he's paid a lot he has a high cap charge, or if he is paid a little but has a lot of restructured money added, he also has a high cap charge. There's no difference. The cap is the limiting factor in acquisition so what a guy is paid is only of concern to the extent that it reduces cap space.

That was in regard to your claim that "you don't pay age," which is a good idea. But it has nothing to do with when the cap charges should hit the cap.

First and foremost, I think you're mistaken in thinking you can just average percentages that are based on differing denominators. Each years percentages represents a different dollar amount. It makes no sense to average them as though they didn't. Might need a weighted average.

Again, you have to consider the cap being equal to 100.0 each year -- as if your cap number can never be greater than 100 percent of the cap. The actual dollar amount is meaningless -- whether the cap is $20 million or $200 million, you can use up to 100 percent of it. Would you rather take a $15 million cap hit when the cap is $20 million or $200 million? Obviously, the latter. It's the same thing to a lesser degree when actual contracts and cap numbers are involved -- it's always better to take any cap hit when the cap is higher, if you have a choice.

Secondly, even if you could, look at how small the effect is. 8.43, 8.34, 8.18, which makes the biggest discrepancy 0.25%. On a total cap of $150M, you've successfully swindled a grand total of $375K in cap space over a 4 year span. That's the perk? Less than $100K per year in benefit? Any team that needs that sort of insignificant boost has bigger problems on their hands.

Those were just hypothetical examples to show how the percentages change, not showing the maximum advantage that could be gained. And that savings is PER YEAR, not over a four-year span -- the four-year cap was $600 million, remember? Those were AVERAGE percentages for the four years.

Cap space is the limiting factor to acquiring talent. Jerry isn't concerned about spending dollars, but if he doesn't have the cap space to put his dollars to use then he cannot spend. If Jerry could he would pay someone else the money going to Carr, but it would require more cap space to do so and the team doesn't have the cap space to chuck away like that. If it wasn't Carr, it would be someone else provided the team had cap space so spending real dollars is irrelevant.

Like I said, if Carr is not worth the money, then the problem was signing him in the first place, not restructuring his contract in 2013. And to keep paying him more than he is worth is simply foolish. If the team thinks he's worth it, then they keep him and pay him. If not, they should cut him, regardless of the cap consequences. You DON'T compound the problem by paying him more than he's worth.

This is exactly why restructuring is bad. It's exactly the same as structuring a contract with higher charges in future years. You increase cap charges in future years under both scenarios. You pretty much just said what I have been saying.

Neither one of those is bad! That's the point. You WANT to structure contracts that way. The only thing bad is signing players for more than they're worth -- or getting less from them than what you're paying or have paid them.

If you lose cap space by getting rid of him, you won't.

And that's incredibly stupid. The money he has already received is already going to hit the cap at some point. Why keep him and continue accumulating even MORE cap charges if he's not worth it?

 

[jterrell]

various:
Pushing 13m for Romo this year is a pretty small thing.
It is real money we will eventually eat but we can recoup any unused portion of that 13m next year and going forward. Say you push 4m unused cash each of the next 3 years... you've broken even.

I disagree with Adam on always pushing money.... We saw years where the cap did not grow.
You don't want to rely on that happening to where it becomes a de facto model.
That is not good business.

But you should have a set of players/positions you are willing to push. QB, LT, Pass rusher seem like a pretty good list.
If you limit yourself to just those guys you have a controllable total pushed off and that allows you to go replace one of them as they leave.
When you push off 7-10 guys and you see those players leave you probably do NOT have money to replace them.

As with Carr, Ratliff and others there are times where you push money off but then it locks you into keeping a guy that has become a poor value OR eating large escalations you didn't intend to eat.

Cash is king. You do not want to budget out to the last cent and deny yourself future cash reserves. Those reserves allow you moves you may have had no idea existed 2 or 3 years prior.

 

[Nightman]

various:
Pushing 13m for Romo this year is a pretty small thing.
It is real money we will eventually eat but we can recoup any unused portion of that 13m next year and going forward. Say you push 4m unused cash each of the next 3 years... you've broken even.

As with Carr, Ratliff and others there are times where you push money off but then it locks you into keeping a guy that has become a poor value OR eating large escalations you didn't intend to eat.

Cash is king. You do not want to budget out to the last cent and deny yourself future cash reserves. Those reserves allow you moves you may have had no idea existed 2 or 3 years prior.

That is the biggest myth with restructures. The dead money has no bearing on keeping a player. It is just something fans complain about when lazy sportswriters report on dead money.

The dead money cap hits are always less than keeping the player. It may look bad on this year's spreadsheet, but the savings have already been pocketed.

It is like going on a dream vacation and paying with a 0% interest credit card. If you pay over 3 years you could argue you took the vacation 2 years ago and are still paying for it, but you enjoyed the all the benefits of the trip and you are just paying what you owe, spread out to lessen the impact.

But if you take another vacation just because you are still paying for the previous vacation then that is poor decision making. Now you have to pay for both trips, even though the second one was poorly planned and overpriced.

 

[Fla Cowpoke]

That is the biggest myth with restructures. The dead money has no bearing on keeping a player. It is just something fans complain about when lazy sportswriters report on dead money.

The dead money cap hits are always less than keeping the player. It may look bad on this year's spreadsheet, but the savings have already been pocketed.

It is like going on a dream vacation and paying with a 0% interest credit card. If you pay over 3 years you could argue you took the vacation 2 years ago and are still paying for it, but you enjoyed the all the benefits of the trip and you are just paying what you owe, spread out to lessen the impact.

But if you take another vacation just because you are still paying for the previous vacation then that is poor decision making. Now you have to pay for both trips, even though the second one was poorly planned and overpriced.

Exactly....kills me when the say we are cutting player X and it's going to leave 5m in dead money next year, when player X was going to be counting 12m against the cap next year. That 7m savings gets left out of the equation. In many cases, you can ditch the underperforming player and add a top notch replacement for a combined total less than player X was going to cost.

 

[jterrell]

That is the biggest myth with restructures. The dead money has no bearing on keeping a player. It is just something fans complain about when lazy sportswriters report on dead money.

The dead money cap hits are always less than keeping the player. It may look bad on this year's spreadsheet, but the savings have already been pocketed.

It is like going on a dream vacation and paying with a 0% interest credit card. If you pay over 3 years you could argue you took the vacation 2 years ago and are still paying for it, but you enjoyed the all the benefits of the trip and you are just paying what you owe, spread out to lessen the impact.

But if you take another vacation just because you are still paying for the previous vacation then that is poor decision making. Now you have to pay for both trips, even though the second one was poorly planned and overpriced.

Sorry, but that is simply incorrect.

It can actually cost more to release a guy if not just this season than certainly next.
And anytime you release a player you must replace him in some manner. That has an additional cost.

The scheduled restructure plan Dallas employed for a few years was woefully flawed and based entirely on this line of thought.

We SAW it ACTUALLY fail.
This isn't really debatable.

Ratliff wanted out of Dallas badly and had a ranting screaming fit with the owner but we kept the guy around for months afterwards because of financial considerations. Then we released him, paid a fortune and had no ready-made replacement because Crawford was injured. So we showed great restraint in signing Melton to an inventive-laden deal that carried no future negatives. That has helped clean up the cap.

If Carr had been structured as we have the last 14 months, we'd be in a very different situation right now.
Pushing money is simply limiting your future moves and that is not generally a good model.

There has to he balance between leveraging cap tactics and maintaining financial flexibility.

Dallas HAS clearly shifted it's contract models showing they have learned from the failures of the scheduled restructure model.

It is seldom good to ASSUME you know what will happen with a player 3 or 4 years down the road in the NFL. Paying them as if you know can be catastrophic.

 

[jterrell]

Exactly....kills me when the say we are cutting player X and it's going to leave 5m in dead money next year, when player X was going to be counting 12m against the cap next year. That 7m savings gets left out of the equation. In many cases, you can ditch the underperforming player and add a top notch replacement for a combined total less than player X was going to cost.

when a player is cut both cap savings and dead money are discussed widely.

FWIW, it we cut Tony Romo today it would cost us 45m dollars on the cap.
He costs us 15m to keep.

This time next year he costs 20m on our cap.
BUT if he tore up his back this year and retired, next year he would cost us 31 million.

So, no, it is not always cheaper to cut the player.

 

[Nightman]

Sorry, but that is simply incorrect.

It can actually cost more to release a guy if not just this season than certainly next.
And anytime you release a player you must replace him in some manner. That has an additional cost.

The scheduled restructure plan Dallas employed for a few years was woefully flawed and based entirely on this line of thought.

We SAW it ACTUALLY fail.
This isn't really debatable.

Ratliff wanted out of Dallas badly and had a ranting screaming fit with the owner but we kept the guy around for months afterwards because of financial considerations. Then we released him, paid a fortune and had no ready-made replacement because Crawford was injured. So we showed great restraint in signing Melton to an inventive-laden deal that carried no future negatives. That has helped clean up the cap.

If Carr had been structured as we have the last 14 months, we'd be in a very different situation right now.
Pushing money is simply limiting your future moves and that is not generally a good model.

There has to he balance between leveraging cap tactics and maintaining financial flexibility.

Dallas HAS clearly shifted it's contract models showing they have learned from the failures of the scheduled restructure model.

It is seldom good to ASSUME you know what will happen with a player 3 or 4 years down the road in the NFL. Paying them as if you know can be catastrophic.

You are confusing bad contracts with dead money. Ratliff quit on the team right after a restructure.

People never mention the 6m he saved against the cap when they complain about the dead money.

You have to pay for all your mistakes sooner or later. Signing bonuses and restructures allow you to spread out the hits to lessen the impact.

It's like blaming the pen for signing MBIII, RW31, RW11, Ratliff, Austin, Free and Carr to bad deals.

 

[Nightman]

when a player is cut both cap savings and dead money are discussed widely.

FWIW, it we cut Tony Romo today it would cost us 45m dollars on the cap.
He costs us 15m to keep.

This time next year he costs 20m on our cap.
BUT if he tore up his back this year and retired, next year he would cost us 31 million.

So, no, it is not always cheaper to cut the player.

Romo's 31m hit would be split over 2016 and 2017. They would save 1m, 8m and 5m over his projected cap hits for the next 3 years.

 

[jterrell]

You are confusing bad contracts with dead money. Ratliff quit on the team right after a restructure.

People never mention the 6m he saved against the cap when they complain about the dead money.

You have to pay for all your mistakes sooner or later. Signing bonuses and restructures allow you to spread out the hits to lessen the impact.

It's like blaming the pen for signing MBIII, RW31, RW11, Ratliff, Austin, Free and Carr to bad deals.

No, you are confusing smart business decisions with poor ones.
Dallas locked itself into deals with players that replied upon scheduled restructures which means that falsely assigned certainty to those players.

The best advantage the NFL has over other sports is the ability to jettison players immediately with limited financial impact. Scheduled restructures kills that.

Ratliff was restructured down in 2013. The plan was to have him count ~5m on the cap in 2014. BUT they were scared off and so paid 8m for him that season.

Arguing we SAVE x amount when we were never gonna pay that base salary is just poor logic.

Now, Dallas has properly adjusted and we are seeing lots of 1 year deals and actually incentives. So the cap makes sense and we aren't tied to all these guys.
We can move to a new guy with zero additional cost in those situations.

And when you don't pre-ordain that you'll hit every trigger you can adjust and use them when most valuable.

 

[jterrell]

Romo's 31m hit would be split over 2016 and 2017. They would save 1m, 8m and 5m over his projected cap hits for the next 3 years.

Not necessarily it would not.
If they wanted to make that happen they could but they'd be paying a huge sum 2 years down the road. which would be fairly awful cap mgmt.