MRMADD Posted October 20, 2005 Share Posted October 20, 2005 The dreaded cap hell is looming in 2006! The 2005 salary cap is $85 million and will likely only climb to $90 million in 2006, and the media reports that the Skins have almost $114 million promised in 2006. Ouch, right? Read on… First a little background (skip this if you have a short attention span)… The salary cap is calculated by the following formula: ((Adjusted DGR x CBA percentage)-League-wide Benefits)/32 = Team Salary Cap The DGR is the defined gross revenue – the income all the teams’ earn in a year. The CBA percentage is the portion of the DGR that is allocated for player salaries. The CBA percentage drops from 65.5% in 2005 to 64.5% in 2006. League-wide benefits are pensions, etc., that are paid by the league. http://www.nflpa.org/Media/main.asp?subPage=CBA+Extension+Features There are some other quirks in 2006 because the CBA is only extended through 2007 (2007 is an uncapped year, for now). Signing bonuses can only be prorated over 4 years. Minimum salaries also rise. The rookie pool (allocated percentage of the salary cap) has a maximum size of 5%. Because the DGR is likely to rise in 2005, the overall cap for 2006 is expected to land in the $90 million range. It is very likely, however, that the league will either extend the CBA or rewrite it between now and 2007. That could change everything, but it certainly won’t result in a smaller salary cap. For the purposes of our argument here, let’s use $90 million as the 2006 cap. Remember, the top 51 guys count against the cap. One caveat (and it’s a biggie): this doesn’t include performance bonuses and other variables. If Jimoh’s contract says he gets a $10 million bonus for making the Pro Bowl, that doesn’t count against the cap this year. But if he makes the Pro Bowl (OK, stop laughing), then he counts for $10 million against the 2006 cap because it’s now a “Likely to achieve” incentive. OK, now the good stuff… Total cap costs for top 15 players in 2006: $60.6 million Total cap costs for other 29 players (projected) in 2006: $20 million Existing dead money: $3.5 million (Barrow, Morton, McCants) Projected dead money: $2.5 million (Ramse, Noble, Hall, Tupa) Projected rookie pool (est. 7 players, no first round): $2 million Cap cushion (mid-season additions, etc.): $1 million Total projected Skins cap in 2006: $89.6 million Over/under: $400K UNDER Wait! How is that possible? The media says the Skins are at $114 million! It’s because the media is… wrong. Here are those top 15 players (lots of these numbers are unconfirmed, but they’re pretty close): Arrington $7 Samuels $6.8 Jansen $5.6 Brunell $5.4 Thomas $4.9 Daniels $4 Moss $3.6 Washington $3.3 Portis $3.2 Griffin $3 Taylor $3 Wynn $2.8 Rogers $2.3 Harris $2.4 Bowen $2.4 A little explanation is in order. You’ll see on many sites, for example, that Marcus Washington counts as $5.2 million against the cap in 2006. Not true. Washington gets a $1.5m salary, his prorated signing bonus counts as $1.167m, and he’s due a $2.5m bonus in the offseason. Total: $5.2 m. But the $2.5m bonus can be prorated, making his cap cost in 2006 equal $3.3m, not $5.2. Same for Arrington: you’ll see the media say that his cap cost in 2006 is $12m, but it’s really $7m once you prorate the $6.5m roster bonus over four years. Did you know that there are 13 players due offseason bonuses for a combined total of $30m? Many of these (“guaranteed” bonuses, unlike offseason workout bonuses, for example) can be reduced from a cap standpoint. For this exercise, I’ve calculated the cap hit of all 13 guys if their offseason bonuses are prorated over 4 years instead of accelerated into 2006. Five guys either need to restructure or get cut: Brunell, Wynn, Harris, Bowen, and Daniels. Each of these guys has a big salary but not much bonus against the cap. Three of them, Wynn, Harris, and Daniels are also due offseason bonuses. That means they get either cut or restructured, because cutting them doesn’t trigger a lot of dead money. Convert their salary into a bonus (four-year prorate) and reduce their 2006 cap hit (combined) from $14.2 million to about $5 million, saving $9 million. You’ll notice that I assume that Ramsey, Noble, Hall, and Tupa are gone. That puts the Skins almost $10 million under the cap. Why is $10 million the magic number? Simple. If the Skins trade Arrington, he costs an extra $5m against the cap in 2006. If they release him, they reduce his cap hit by $2m, but they (1) don’t get anything in return, (2) have another $7m in dead money in 2007, and (3) watch him go play for a rival. So it’s really in their best interest to trade the guy if they're not going to keep him. So now the Skins trade Arrington, leaving them $5m under the cap. That’s plenty of room to sign whoever the Skins trade him for – a veteran player, a first round draft pick… anything. The bottom line… Cap hell? I don’t think so. More like cap heck. The Skins have tied up enormous dollars in a handful of players, making them kinda thin as a team, unlike the Patriots or Eagles, for example. The Skins can’t afford to have many million-dollar role players because they have so many $3-5 million stars. But they’re not screwed from a cap standpoint. They actually have a little room to maneuver, and can afford to trade or keep Arrington without having to ditch other players. Following my model, the Skins are $10m under the cap if they keep Arrington, $12m under if they cut him, and $5m under if they trade him. You won’t read this in the newspaper, of course, because it would require a journalist to actually know how to add. Let’s just keep it between us. Link to comment Share on other sites More sharing options...
SkinsHokieFan Posted October 20, 2005 Share Posted October 20, 2005 I also think the cap will be higher then 90 million with the new TV deal Last time there was a tv deal the cap went up 17 percent, even if it goes up only 10 percent this time it'll still be over 90 million The media and opponent fans simply don't get it, we will never be in cap hell ever because, "cash solves the cap" as has been repeated over and over Maybe this time they will figure it out Link to comment Share on other sites More sharing options...
iheartskins Posted October 20, 2005 Share Posted October 20, 2005 I'm sort of waiting for the other MrMadd (angry) shoe to drop. But solid analysis. It's too bad definitive information relating to player salaries and contracts isn't more freely available on the Internet. Even redacted documents with the language for incentive clauses, etc. would be great--and it'd put to bed a lot of the media conjecture on cap hell/heaven. Link to comment Share on other sites More sharing options...
FootballGuy2677 Posted October 20, 2005 Share Posted October 20, 2005 I rather trade Arrington even if it means losing 5 Million dollars in cap then gaining 2 Million Dollars in cap considering we dont even have a 1st round pick in 2006 cuase we traded it and a 3rd round for Jason Campbell. Im hoping that we will trade Arrington for a 1st Round Draft Choice, or a defensive player considering we are losing talent there. Maybe Lance Briggs if he is a Middle Linebacker, or Maybe a D-linemen that can pressure from the Jaguars or somthing. I say D-lineman that can pressure becuase trading him for a Defensive back would on make the Cornerback, Safety, ect...better but if we can aquire sombody like a D-Lineman that can pressure, it will force the quarterback to force some throws and that will make the entire secondary better. Forced Throws= Turnovers(especially when you throw them towards sean taylor.That man is crazy on the field.) Link to comment Share on other sites More sharing options...
wsniper1 Posted October 20, 2005 Share Posted October 20, 2005 thats a lot of thinking right there. Link to comment Share on other sites More sharing options...
MRMADD Posted October 20, 2005 Author Share Posted October 20, 2005 I also think the cap will be higher then 90 million with the new TV deal Could be, but I wanted to be conservative. They likely won't push the cap up much because they'r renegotiating the CBA and will want some leverage over the players union. I think it will be in the $90 to $100m range, but likely on the low end. Link to comment Share on other sites More sharing options...
Stuck In TX Posted October 20, 2005 Share Posted October 20, 2005 Holy Moly. MRMADD, you've got to be the smartest man alive! :notworthy Great Post, Thanks for the info. Link to comment Share on other sites More sharing options...
iheartskins Posted October 20, 2005 Share Posted October 20, 2005 Also be curious to hear what inmate and Pocono have to say about this... Link to comment Share on other sites More sharing options...
barry wilburn Posted October 20, 2005 Share Posted October 20, 2005 One catch is that you seem to assume a June 1 rule in 2006, which will not happen if there is no CBA. Under the current CBA teams must take the entire SB acceleration for any player cut after June 1 2006. Basically the Skins have bet the farm on a CBA extension, and my understanding is that a lot of the roster boni you refer to AUTOMATICALLY prorate when the new CBA is signed. I agree that the SKins are fine if there is a CBA extension. I do think there is trouble on the horizon if no deal is struck. Also, I think the team needs a number of key additions next offseason if it is to take a run while Gibbs is still around. I'd say that at a minimum, we need a DE (or three) a kicker, a return specialist, a mid level corner (for depth) a conventional TE, a back up OT and a big receiver. Given our recent draft history, we won't be able to cover this shopping list with the six picks we still have. Hopefully we'll be able to ship off Ramsey and maybe Lavar for some picks or an impact player. I like a lot about the team's current direction, but I'm not really thrilled about our cap position. Link to comment Share on other sites More sharing options...
TheLongshot Posted October 20, 2005 Share Posted October 20, 2005 So, I guess this is another assumption that we are planning on trading or releasing Lavar? How about one for neither? Really, I think it is a bit early for that analysis... Jason Link to comment Share on other sites More sharing options...
Stew Posted October 20, 2005 Share Posted October 20, 2005 good thread, I was wondering about Mr. Arrington and Mr. Brunells cap hit next year. Link to comment Share on other sites More sharing options...
tvo14 Posted October 20, 2005 Share Posted October 20, 2005 Holy Moly. MRMADD, you've got to be the smartest man alive! Or the man with the most free time on his hands and a really good calculator! ;o) I don't see us keeping both Wynn and Daniels. Wynn is definitely gone and Daniels will be also if he doesn'tr restructure. We simply need more speed on the ends in the NFL these days. We can do what dallas did and get rid of them both and draft two young studs. Link to comment Share on other sites More sharing options...
TheLongshot Posted October 20, 2005 Share Posted October 20, 2005 Also, I think the team needs a number of key additions next offseason if it is to take a run while Gibbs is still around. I'd say that at a minimum, we need a DE (or three) a kicker, a return specialist, a mid level corner (for depth) a conventional TE, a back up OT and a big receiver. Given our recent draft history, we won't be able to cover this shopping list with the six picks we still have. Hopefully we'll be able to ship off Ramsey and maybe Lavar for some picks or an impact player. A lot of these positions can be found in FA, like the return specialist or the corner. We already have a big receiver, his name is Cooley. The only thing that I see that we NEED to cover in the draft is both lines, and perhaps another corner. Jason Link to comment Share on other sites More sharing options...
tizzod Posted October 20, 2005 Share Posted October 20, 2005 :violin: Same song every year. We have some pretty sweet geeks working on this cap thing years in advance, I'm sure. We'll squeeze under it. We always do. Link to comment Share on other sites More sharing options...
MRMADD Posted October 20, 2005 Author Share Posted October 20, 2005 Basically the Skins have bet the farm on a CBA extension, and my understanding is that a lot of the roster boni you refer to AUTOMATICALLY prorate when the new CBA is signed. Yeah, that's true, but lots of teams have bet the farm on a CBA extension. The league doesn't really have a choice, and Gene Upshaw knows that without it lots of veterans are going to get cut. The Skins are certainly in the bottom 10 of the league in cap costs, but they aren't going to have to pull a 49ers/Titans and release lots of guys to get under the cap. They haven't managed the cap well, but a few lucky breaks (does Ramsey count as a lucky break? He's over $5m next year, all salary, so he's an easy cut) worked out OK. If they hadn't traded Coles and accelerated his $9m dead money cap hit, they probably would have spent the money and would be truly screwed. Link to comment Share on other sites More sharing options...
gshaffer88 Posted October 20, 2005 Share Posted October 20, 2005 Wow you really know you capology. I can say that I am impressed great thread. Are the skins really paying Daniels that much! :doh: For that much :2cents: I'd like to see a sack or a QB pressure once a game. :eaglesuck :gaintsuck :dallasuck Link to comment Share on other sites More sharing options...
bigswanny Posted October 20, 2005 Share Posted October 20, 2005 Thanks for posting this I have never been too cap savvy. This post puts things into better perspective than the one I had before. Again thanks a lot! :notworthy :applause: :notworthy Link to comment Share on other sites More sharing options...
Oldfan Posted October 20, 2005 Share Posted October 20, 2005 Will someone please explain to me why another team would be interested in trading for Arrington? He has an existing contract that pays him far more than he is worth (especially since he is coming off a serious knee injury). Give me a scenario that makes a trade plausible. Link to comment Share on other sites More sharing options...
MRMADD Posted October 20, 2005 Author Share Posted October 20, 2005 So, I guess this is another assumption that we are planning on trading or releasing Lavar? How about one for neither? Really, I think it is a bit early for that analysis... I mapped all three scenarios: keep him, they're $10m under. Trade him, they're $5m under. Release him, they're $12m under. I don't have a strong opinion. He's a talented player, but (1) there's definitely some bad blood there, (2) Williams doesn't seem to need him, (3) he's expensive, and (4) they can get something good in return, like a first round pick. So I'm just showing that IF they're getting rid of him, they should trade him, not release him. Link to comment Share on other sites More sharing options...
MRMADD Posted October 20, 2005 Author Share Posted October 20, 2005 Will someone please explain to me why another team would be interested in trading for Arrington? He has an existing contract that pays him far more than he is worth (especially since he is coming off a serious knee injury). Give me a scenario that makes a trade plausible. This question really surprises me. Quick, name all the other young three-time Pro Bowlers who'll be available next year? The guy is reportedly healthy, and would have to pass a physical, so there isn't much risk there. And his contract is CHEAP. Do you remember Jeremiah Trotter? He left the Eagles after a bitter contract dispute and a nasty knee injury, and the Skins still gave him a 7-year, $35m contract. Believe me, there's a big market for Lavar. Here's the contract the new team would assume: 2006 $500K 2007 $2m 2008 $3.5 2009 $5.5 2010 $6m 2011 $7m That's peanuts. Of course, Arrington's got Poston as an agent, so he'll demand a new signing bonus, but even if you assume he'll get another $10m on top of his existing contract as a signing bonus (and the $6.5m roster bonus in July), he's still cheap, relatively speaking. Link to comment Share on other sites More sharing options...
bedlamVR Posted October 20, 2005 Share Posted October 20, 2005 Thanks for the cap break down makes you think this Dan Snyder knows a thing or two about running businesses Link to comment Share on other sites More sharing options...
Oldfan Posted October 20, 2005 Share Posted October 20, 2005 Here's the contract the new team would assume: 2006 $500K 2007 $2m 2008 $3.5 2009 $5.5 2010 $6m 2011 $7m Arrington's original contract was $68 mil over 8 years. What happened to the other $43.5 million? Link to comment Share on other sites More sharing options...
MRMADD Posted October 20, 2005 Author Share Posted October 20, 2005 Arrington's original contract was $68 mil over 8 years. What happened to the other $43.5 million? Bonuses. All of the signing bonuses ($11m in 99, $16m in 2003) are guaranteed money, meaning they're paid by the Skins. His new team won't be liable for those bonuses (except the roster bonus due in July). His annual salaries aren't that big. They do balloon up late in the contract, but you can work around that. Link to comment Share on other sites More sharing options...
MRMADD Posted October 20, 2005 Author Share Posted October 20, 2005 Thanks for the cap break down makes you think this Dan Snyder knows a thing or two about running businesses You're awfully generous. Snyder outspent the league on talent, but hasn't won. His highest paid player -- the guy he gave a fat extension to a year ago -- is riding pine. He's paying Mark Brunell $5m next year. Next year he'll pay $7m for Daniels and Wynn. He's got $9m in dead money from a guy he drove out of town. This is not a shining example of cap management. In both real and cap dollars, they spend more than anyone else on talent. It violates severals laws of economics and probably the law of gravity that they've stunk so bad since Snyder got here. Unfortunately, Snyder's infatuation with big-name stars instead of team players has led to his downfall. Gibbs is fixing that. Link to comment Share on other sites More sharing options...
zallera Posted October 20, 2005 Share Posted October 20, 2005 I also think the cap will be higher then 90 million with the new TV dealLast time there was a tv deal the cap went up 17 percent, even if it goes up only 10 percent this time it'll still be over 90 million The media and opponent fans simply don't get it, we will never be in cap hell ever because, "cash solves the cap" as has been repeated over and over Maybe this time they will figure it out I actually remember hearing that the cap next year could reach into the $100 millions. Link to comment Share on other sites More sharing options...
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