A.T.E - Salary Cap

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A.T.E - Salary Cap

Postby DEHog » Fri Jan 16, 2004 6:22 am

I think one of the most important and misunderstood area in the game today is the salary cap. I have spent years trying to figure this thing out. Every time I think I have it, I hear or see contracts done up in a different way.

.Here a good link to a Q&A on the cap http://www.askthecommish.com/salarycap/faq.asp
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Postby tazlah » Fri Jan 16, 2004 8:35 am

Does every team in the NFL have the same $$$ amount to spend (eg, $100M)? Or is the salary cap based on how well they do each season? :?:

And does the salary cap just include players or EVERYONE on staff? :hmm:

Thanks guys!

taz 8)

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Postby Justice Hog » Fri Jan 16, 2004 9:22 am

DEHog writes:

I have spent years trying to figure this thing out.


Hey, thanks dude for investing all of your time and energy trying to "figure this thing out."

I, for one, could care less...and would much rather focus on whether my next drink is gonna be a beer or Jameson on the rocks!

ROTFALMAO -drinking ROTFALMAO -drinking ROTFALMAO -drinking ROTFALMAO -drinking ROTFALMAO -drinking ROTFALMAO -drinking

Seriously, I've never been worried about what the "powers that be" do regarding the spending cap. As I've said before, if the contract makes the player happy and makes the team happy.....then I'm happy!

And Tazlah so eloquently asks:

Does every team in the NFL have the same $$$ amount to spend (eg, $100M)? Or is the salary cap based on how well they do each season? and And does the salary cap just include players or EVERYONE on staff?


I think each team, no matter how good/bad they do, has to abide by the same salary cap structure.

As for who falls under the salary cap, I believe only players' contracts count towards the cap...not the "management".
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Postby BossHog » Fri Jan 16, 2004 10:19 am

Unlke JH, I follow the cap very closely. I think it is one of the single most important factors to success in the modern era.... and though it's basically an effort in futility due to all of the factors, my mathematical little noodle enjoys it.

So.... the salary cap:

Yes, Taz, every team gets the same amount of money. This year it will be approximately $78.5 million

Yes Taz, it includes only players, althought it includes everything attached to a player's contract -- bonuses, signing bonus, annual contract amount etc

Ok, this bit is a little more technical and mathematical, but i will do my best to explain as I go...

... the league has a number called the DGR (Defined Gross Revenues) This number represents the amount of money in a 'pool' of league money. This money comes from ticket sales, merchandise sales, and broadcasts. So it basically represents the 'pool' of $$$ that the league makes.

The second # of importance is the CBA percentage. The CBA (collective bargaining agreement) is the contract between the league itself and the NFL Players Association. This agreement has all of the guidelines for the union's agreement with the league. When the league established the new CBA, it was written into the agreement, how much of that 'DGR' that we mentioned earlier would actually go to the cap number. Here are those percentages:

1998-2001 63%
2002 64%
2003 64.25%
2004 64.75%
2005 65.5%
2006 64.5%
2007 Uncapped Year

So what this means is that being 2004, the league uses one of the above numbers to come up with the Players Share of the DGR. So they take the pool of money mentioned above and they multiply it by 64.75% to come up with a new number -- which they call the Players Share of he DGR. To recap, the Players DGR equals the DGR x the CBA %.

OK, so now the league has an amount of money that they can set their cap values with.

But we're not quite done yet.

The league must also take into account the amount of money that will be paid to players by way of benefits. So the next thing they do is figure out the benefits for the whole league, and subtract them from the number that we came up with above. Now the league is left with a number that represents the available money to all 32 teams.

So divide by the number of teams, and you have your individual cap number for each team.

To sum it up non mathematically.... the league takes all the money from ticket sales, merchandise sales, and broadcasts etc and puts into a kitty. Then they apply the percentage from the bargaining agreement that the league has set aside for 2004 to come up with the players share of the kitty. Then before they can decide how much of the kitty each team gets, they take off all of the players' leaguewide benefits, and then finally divide that number equally among the 32 teams.

And to sum it up mathematically....
DGR x CBA Percentage = Players Share DGR

Players Share minus Projected League wide Benefits =
Amount Available for Player Salaries

Amount Available for Player Salaries / Number of Teams =
Unadjusted Salary Cap per Team





There are thousands of other salary cap questions and answers... that's what we opened football 101 for.
Hopefully this thread at least helps you understand where that magical big number comes from.
Sean Taylor was one of a kind, may he rest in peace.

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Postby tazlah » Fri Jan 16, 2004 3:54 pm

Thanks for that BossHog! I mostly understood that! :D

You did post that 2007 is an Uncapped Year. Does that mean that's when they go back to the table to figure it all out again or is it really uncapped and teams can spend whatever they want? :hmm:

Mucho Gracias!!!
taz 8)
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Postby BossHog » Fri Jan 16, 2004 10:43 pm

tazlah wrote:You did post that 2007 is an Uncapped Year. Does that mean that's when they go back to the table to figure it all out again or is it really uncapped and teams can spend whatever they want?


Well both actually.

2007 IS an uncapped year... so that does in fact mean that if a new collective bargaining agreement was not reached by 2007, it would indeed be an uncapped season.

But the owners would never let it happen. Experts say that the owners would lock the players out long before they would actually go into a season without cap protection.

I hear a lot of people gripe about this stuff, and to be honest, the NFL is BY FAR the best run professional sport. The result may be parity, but the cap is the only thing that keeps games even remotely affordable. Football doesn't have 41 home games like baseball & hockey, or 81 like baseball.

So I think that there is absolutely no chance that 2007 will be an uncapped year because I think the owners will insist a new CBA is in place by then, or they will lock the players out.

The Redskins have done pretty well in strike affected seasons though... so maybe we should hope that no new agreement is reached by then.....
Sean Taylor was one of a kind, may he rest in peace.

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Postby psummersjr » Wed Jan 21, 2004 3:46 pm

So, my question would be, how do they restructure contracts to count less against the cap? It seems to me that they're always talking about putting more money into incentives and bonuses so a player doesn't count as much against the cap but you're saying it does count against the cap.

Will the eventual bonuses only count against the cap if they achieve them and since they don't know if they will be achieved or not they'll be deferred to the next season's cap total?

Often I hear it said that a player will make so much against the cap one year, so much the next, etc... are they just being paid less one year than another and they'll count more against the cap one year versus another?

It just seems to me, when a team restructures a players contract, they're simply putting off possible cap restrictions to another year.

I hope that post wasn't totally confusing and idiotic-sounding!
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Postby psummersjr » Wed Jan 21, 2004 3:54 pm

I just read part of that FAQ linked to in the first post and it's totally crazy... but it did answer my questions.

BossHog, for the record, your initial explanation was much better than askthecommish.com's was.
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Postby skinsfaninroanoke » Wed Jan 21, 2004 3:59 pm

The problem psummersjr is that the cap system is idiotic and confusing at times :)

The thing with signing bonuses is that they are spread out over the life of the contract. It is the only guaranteed money these athletes have in their contract.

If you get paid a 10 mil bonus for a 5 year contract, it is divided by 5 for the number of years in your contract and added to the salary number of each year. So, if you were paid 2 mil, 3 mil, 3.5 mil, 4 mil and 5 mil respectively for the 5 years, you would add the 2 mil to each years salary figure to see what your true hit would be. This isn't even counting incentives that are likely to be made in the year which are counted against the cap as well. There are incentives that are not likely to be made that do not count unless the goal is met.

For example, Bruce retiring this year, as best as I can figure it out will save us 6 mil, but not the 2 mil of his signing bonus. That will be "dead cap money" on us just like we had dead cap money due to Stephen Davis this last year - 6 mil worth.

To restructure - though - they pay some of the salary that would have been earned by a signing bonus and then sign the player to a longer contract to spread that bonus out. It does, however, work against the team doing that - eventually. Like Lavar will end up costing the Skins over 9 mil in 2007 and 11 in 2008.

I hope that helped... but you had the idea down to some degree anyway :)
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Postby psummersjr » Wed Jan 21, 2004 4:46 pm

That's pretty unbelievable what Lavar will count against the cap in 2007 and 2008... but if he fulfills his potential under Gibbs, I think I'm willing to suffer
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