Salary Cap Question

  1. You have chosen to ignore posts from Not-A-Shot. Show Not-A-Shot's posts

    Salary Cap Question

    Someone help me understand something.  Why does extending a guy's contract affect this year's cap?  I've seen it written here many times. 

    If a guy is signed through the end of 2013, and signs for three extra years from 2014 to 2016, why would that affect the cap number of 2013?

     
  2. You have chosen to ignore posts from joepatsfan111111. Show joepatsfan111111's posts

    Re: Salary Cap Question

    In response to Not-A-Shot's comment:

    Someone help me understand something.  Why does extending a guy's contract affect this year's cap?  I've seen it written here many times. 

    If a guy is signed through the end of 2013, and signs for three extra years from 2014 to 2016, why would that affect the cap number of 2013?



    It wouldn't, people don't understand the definition of "extension". All salaries on 2013 are in the books unless someone restructures for specifically the second half this year which is a highly unlikely thing. 

     
  3. You have chosen to ignore posts from rkarp. Show rkarp's posts

    Re: Salary Cap Question

    it affects this years cap because the team, for cap purposes will pay part of the signing bonus now...

     
  4. You have chosen to ignore posts from gogogopats. Show gogogopats's posts

    Re: Salary Cap Question

    Maybe they have to pay signing bonuses?

     
  5. You have chosen to ignore posts from neinmd. Show neinmd's posts

    Re: Salary Cap Question

    Here is a simple way of looking at the impact of a salary cap.

    Let's say a player is signed to a 4 year contract with a $2M salary per year and an $8M signing bonus. The cap hit for the first year is $2M + ($8M/4) = $4M. The signing bonus is prorated over the length of the contract. A signing bonus is important to the player because sometimes it's the only guaranteed part of his payout. It's good for the owner because he can prorate the bonus over the length of the contract from a salary cap perspective.

    The downside of this is that if the team lets the player, in the example above, go at the beginning of year 2, the salary cap hit in year 2 is for the entire remaining bonus amount (or $6M in this example), plus any guaranteed portion of the base salary for the year.

    Teams that have expensive past contracts and need to refresh talent can get themselves into trouble with salary caps. The Steelers are an example. At the beginning of this year, they were $22.5M OVER their cap and had to restructure a number of contracts, and let some key players go without getting a lot back in terms of draft picks. BB didn't help them by upping the bidding on Sanders Wink in a driveby shooting to hurt an AFC contender (all's fair in love and war!). The net result - a weaker team. Their recent acquisistion of Levi Brown from the Cardinals was only made possible because the guy had restructured his contract and the Steelers got clocked on the salary cap for only a rookie charge.


    This is one of BB's strengths as a GM. He has a PhD in salary cap management and is not afraid to part with important players PRIOR to a new contract to avoid a cap hit.

    Sorry for the long answer. Hope it's helpful.

     
  6. You have chosen to ignore posts from PatsEng. Show PatsEng's posts

    Re: Salary Cap Question

    In response to Not-A-Shot's comment:

    Someone help me understand something.  Why does extending a guy's contract affect this year's cap?  I've seen it written here many times. 

    If a guy is signed through the end of 2013, and signs for three extra years from 2014 to 2016, why would that affect the cap number of 2013?



    It all depends on the signing bonus of the extension. An extension can raise or lower a cap number for the year the extension is given but can't effect base salary or potentially earned bonuses for that given year unless the base salary is converted into guaranteed money and spread across the remainder of the deal. Examples:

    In the case it could increase the cap number -

    Player X makes $1mil base salary, no bonuses, and the cap hit for the remaining signing bonus comes in at $1mil so total cap hit that year would normally be $2mil. Now if he extends lets say 4 years with a signing bonus of $10mil then this year remaining signing bonus gets added to the extension making the entire signing bonus $11 over 5 years (roughly lets call it $2mil for simplicity). Since the base salary didn't decrease the adjusted cap hit is the $1mil base plus the new bonuses that was spread over the length of the contract of $2mil so the new cap hit is $3mil or an increase of $1mil.

    In the case it could decrease the cap number -

    Player X has a $1mil base again but from previous reworks or bonuses has $5mil in bonuses this year for a $6mil cap hit. They sign an extension for 2 years with a $2mil signing bonus so that $2mil gets added to the current $5ml for a total of $7mil that gets spread over 3 years (roughly $2mil a year). So the new cap hit is the $1mil base and $2mil bonus which comes to $3mil cap hit saving $3mil a year

    In the case base salary gets converted decreasing cap hit -

    So player X has a $10mil base and $4mil remaining bonus resulting in a $14mil cap hit. They extend him 3 years with $12mil normal signing bonus however, they convert $8mil of his current base salary to guaranteed bonus for a total of $20mil guaranteed at signing. His new base is $2mil for that year and the $20mil guaranteed + remaining $4mil gets added and divided over the 4 years of the new extension. The new $2mil base plus the $6mil bonus spread across results in a $8mil cap hit this year reducing the cap hit by $6mil.

    The thing about reworking base is that you are just pushing the hit down to road (ala what the Jets did) so you are essentially passing the buck with interest which is a good way to either have larger amounts of dead money or if the player is declining be forced to pay for less performance

     
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