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View Full Version : Why not "create" future cap space?


Xman
03-05-2007, 03:17 PM
The cap is a "hard cap." But, it can be manipulated, if you want to. The problem with that is - there will come a year when you have to dump a lot of players and really suck while you take your cap hits (see previous years of Tenn/SF/etc.)(and SF is setting themselves up for another cycle with all their current signings)

I personally think manipulating the cap is a great idea - because I would rather have a great team for four years - even if we have a bad team for the next two.

That being said, we are not that close to a Superbowl team, so my "manipulation" at this time - would be to "forward load" our cap. Meaning take the hits now. Several ways to do that (i call it "opposite manipulation"):
1) cut the long large contract players that need to go and take the hits now (Domanick/Carr/Wong and possibly Greenwood but we might need him for one more year)
2) instead of big signing bonuses, make it front loaded salary - that way the player gets his money early on but there is no spread out hit.
For instance: Ahmans Contract; 4 yrs 23 mil; I would have made it salaries of 7, 5, 4, 7 with a minimal signing bonus. We would take a 7 mil hit this year, but we would "get that back" the next two years. Then, in yr 4, we could cut him if he wasn't worth the big number at the end - which is probably the plan anyway.

Then in 2008 or 2009 - start with the big signing bonuses (which would lower the cap hit since the signing bonus could be spread out over 7 or 8 years - like the Clements contract - so we would be able to add 6-8 quality players). We would have a good 6 year run before the cap crushed us and forced us to rebuild (i would normally project a 4-6 year period before the cap crushes you but if we "opposite manipulate" in advance then we get an extra two years).

That being said - most front office would be happy with a consistent contender. So, they are not going to set themselves up for a "cap crush" year. And, most teams would like to get better now (including the Texans), so they are probably not going to "opposite manipulate" to create extra space in a year or two. But, by cutting Moulds (which saved no money this year - but will save a lot next year) and maybe Wong/Domanick/Carr, the team is at least accelerating the dead money hit. So, while not front loading salary, they are clearing the dead money so it does not hamstring them next year (if we dont cut them this year, we cut them next year and lose a ton of "dead money" then).

So, it probably won't happen, but if I were GM, we would be front loading and cutting the "dead money" guys. Of course that means no free agents of value (because the cap money would be gone) but, next year we would have a huge amount of cap room to play with (we will have a lot anyway, but it could be even more).

I guess it boils down to whether you want the team to be a little better now (getting an extra player now and paying for him later) at the cost of being a little worse later (having to pay for the player we sign now in a couple of years which will keep us from having another quality player a couple of years down the road).

TexanSam
03-05-2007, 03:20 PM
....Aren't we already doing this?

texans83
03-05-2007, 03:21 PM
Great post!!!!! It helped me understand more about it. All I know is when I play Madden I usually sign for a long time period and then have it spread over a long time. haha great post.

Errant Hothy
03-05-2007, 03:25 PM
2007 Dead money about 20 million

http://www.houstonprofootball.com/cap.html

2008 Dead money about 0

http://www.houstonprofootball.com/cap2008.html

Yes I know these are projected but telling the FO the should absorb a cap hit this year to have more cap flexiablitiy next year is akin to telling a squirrel to store up nuts for the winter. Both situations will get you a "what they hell do you think I'm/we're doing?"

Ole Miss Texan
03-05-2007, 03:29 PM
rep coming your way. i completely agree with this and in part think that's what Smith is doing. He gotten rid of a lot of guys that needed to go...the big money ones.

Like you said we aren't near being a superbowl team. We arent signing a lot of FAs for Lots up big dollars anymore so when their contract is up we won't be hit again. Let's go ahead and and take that hit now while we can. once we're pretty darn good we'll have more cap to work with to get that 1 or 2 guys that are the missing link. we can sign that clements....or dare i say champ bailey when he's a FA because we only have one glaring weakness to make it to the AFC championship!

I like the idea of giving more money out now for cap reasons in the future....the players have to like that too. Pay the guys now we know we have to and we'll have a lot more room to work with later ...when it really counts.

Kubiak and Smith are doing it right. From what's going on so far I can tell Smith is a really smart guy when it comes to this. They are really rebuilding this team by the draft. and getting the complinents in the draft that help us get to that point in the future. Awesome awesome...i'm pumped for our future.

Ole Miss Texan
03-05-2007, 03:31 PM
....Aren't we already doing this?

Yea i think that's exactly what Smith is doing. I'm glad we're on the same page. Some people just want immediate results. and usually that just takes longer to pay off in the long run.

I'd rather a Championship in 5 years than a only a winning season in 2. LOL

SamuraiSword
03-05-2007, 03:42 PM
The cap is a "hard cap." But, it can be manipulated, if you want to. The problem with that is - there will come a year when you have to dump a lot of players and really suck while you take your cap hits (see previous years of Tenn/SF/etc.)(and SF is setting themselves up for another cycle with all their current signings)

I personally think manipulating the cap is a great idea - because I would rather have a great team for four years - even if we have a bad team for the next two.

That being said, we are not that close to a Superbowl team, so my "manipulation" at this time - would be to "forward load" our cap. Meaning take the hits now. Several ways to do that (i call it "opposite manipulation"):
1) cut the long large contract players that need to go and take the hits now (Domanick/Carr/Wong and possibly Greenwood but we might need him for one more year)
2) instead of big signing bonuses, make it front loaded salary - that way the player gets his money early on but there is no spread out hit.
For instance: Ahmans Contract; 4 yrs 23 mil; I would have made it salaries of 7, 5, 4, 7 with a minimal signing bonus. We would take a 7 mil hit this year, but we would "get that back" the next two years. Then, in yr 4, we could cut him if he wasn't worth the big number at the end - which is probably the plan anyway.

Then in 2008 or 2009 - start with the big signing bonuses (which would lower the cap hit since the signing bonus could be spread out over 7 or 8 years - like the Clements contract - so we would be able to add 6-8 quality players). We would have a good 6 year run before the cap crushed us and forced us to rebuild (i would normally project a 4-6 year period before the cap crushes you but if we "opposite manipulate" in advance then we get an extra two years).

That being said - most front office would be happy with a consistent contender. So, they are not going to set themselves up for a "cap crush" year. And, most teams would like to get better now (including the Texans), so they are probably not going to "opposite manipulate" to create extra space in a year or two. But, by cutting Moulds (which saved no money this year - but will save a lot next year) and maybe Wong/Domanick/Carr, the team is at least accelerating the dead money hit. So, while not front loading salary, they are clearing the dead money so it does not hamstring them next year (if we dont cut them this year, we cut them next year and lose a ton of "dead money" then).

So, it probably won't happen, but if I were GM, we would be front loading and cutting the "dead money" guys. Of course that means no free agents of value (because the cap money would be gone) but, next year we would have a huge amount of cap room to play with (we will have a lot anyway, but it could be even more).

I guess it boils down to whether you want the team to be a little better now (getting an extra player now and paying for him later) at the cost of being a little worse later (having to pay for the player we sign now in a couple of years which will keep us from having another quality player a couple of years down the road).

yeah good post and btw are you an accountant? :tease:

Xman
03-05-2007, 03:43 PM
....Aren't we already doing this?

We are doing at least half of it (if we keep cutting the dead weight): taking the dead money hits (or at least part of them with more possibly coming)

But, if we are still backloading the contracts of players we are signing, then we are going to pay that later. And the extention on AJ does the same thing.

Ahman:
I am not sure what the exact contract numbers are.
If they are salaries like 7, 5, 4, 6 with a minimal signing bonus, then it is front loaded and it will save us money on the back end (I put a large number in the last year in case we need to cut him - but if we did cut him then we would have a zero cap hit instead of the prorated signing bonus hit that year).
If the salaries are 3, 4, 5, 6 with a 4 mil signing bonus, then we are paying a couple of mil less the first two years - which means we pay that back the last two.


The AJ deal:
"The deal is worth $60 million and includes $15 million in guarantees. Johnson had two seasons remaining on the original contract he signed as the Texans' first-round choice in the 2003 draft, at base scheduled base salaries of $5.25 million for 2007 and $7.75 million for 2008. Those base salaries were reduced, replaced in part by the signing bonus, and the Texans gained much-needed cap room with the maneuver. It is believed the extension, which essentially created an eight-year deal counting the two season remaining on Johnson's original contract, carved out more than $6 million in new 2007 cap room."

"Creating" more than 6 million in cap room in "2007" means we will be takign that hit sometime down the road. I am definitely glad we locked him up, but bigger base salaries (in the early years which accle the hit and late years in case he is hurt) would accelerate the hits.

Xman
03-05-2007, 03:45 PM
yeah good post and btw are you an accountant? :tease:


lawyer actually

Ole Miss Texan
03-05-2007, 03:52 PM
Is there a way to pay more of their guaranteed money up front? and low salary? That way its about the same amount they'd be getting anyway but if after 2 years they really stink it up..and they have 2 years left on the contract we could release them? Majority of their guaranteed money has been paid...so the money the 'should' get is all salary.....would we not have to pay that salary portion?

I think we should go ahead and pay the majority of them up front for the most part.

Texian
03-05-2007, 03:54 PM
Why does Moulds have a $3 + million cap hit in 07 if we got him last year with a 5th RD draft pick?

Xman
03-05-2007, 04:03 PM
Is there a way to pay more of their guaranteed money up front? and low salary? That way its about the same amount they'd be getting anyway but if after 2 years they really stink it up..and they have 2 years left on the contract we could release them? Majority of their guaranteed money has been paid...so the money the 'should' get is all salary.....would we not have to pay that salary portion?

I think we should go ahead and pay the majority of them up front for the most part.

The players know that they need to get their money "up front." Most of the NFL contracts are not gaur so if a player signs a 4 year contract for 4, 6, 8, 10 mil per year, and he is a 6 mil player, he knows he might get cut in yr 3 (or be asked to renegotiate) and would be cut in yr 4.

The only way to gaur the player the money (if he doesn't get it in a signing bonus) is to pay him a large salary up front the first year (and the player is going to insist upon getting his money within the first year if he can). So, the contract could be flipped to 10, 8, 6, 4, which would be great for the player and it would accel the cap hit. But, and it is a big but, this exposes the team to injury hits (player gets hurt in yr 2, so it never gets the benefit of the cheaper years), or stupidity (TO like attitudes wanting "more money" because they are underpaid at 6 or 4 mil - while ignoring they got their money up front).
So, a 10, 4, 4, 10 deal could work out for both sides. Player gets his big money the first year and team is not exposed for the last 10 mil in yr 4 if it doesn't want to be.

dalemurphy
03-05-2007, 04:04 PM
I've wondered the same thing- why teams don't front-load when they have space available. I think part of the answer is if you front-loaded contracts then you would end up with holdouts as you got to the back end of the deals. For example, if we flipped AJ's deal then in 2013 he'd only be making about 2 million while guys not nearly as good would be making 6X that much. That would create a real big problem, I think.

Xman
03-05-2007, 04:06 PM
Why does Moulds have a $3 + million cap hit in 07 if we got him last year with a 5th RD draft pick?

Because we are taking a hit on bonus money we gave him.

That 3 mil is part of a 3 year 4.5 (or so) bonus. When we cut him, the remaining 3 mil (we took the hit on the first 1.5 of the 4.5 bonus last year) hits (instead of just 1.5 this year and 1.5 next year - but if he was cut after June 1 it could have been split)

Ole Miss Texan
03-05-2007, 04:08 PM
I've wondered the same thing- why teams don't front-load when they have space available. I think part of the answer is if you front-loaded contracts then you would end up with holdouts as you got to the back end of the deals. For example, if we flipped AJ's deal then in 2013 he'd only be making about 2 million while guys not nearly as good would be making 6X that much. That would create a real big problem, I think.

i understand that... but isn't it all an accounting standpoint? wouldn't he have basically just gotten that $4million early? If so he could invest that money and really come out on top.

A dollar today is worth 2 tomorrow or a bird or....hmm what's the saying...lol

Xman
03-05-2007, 04:16 PM
i understand that... but isn't it all an accounting standpoint? wouldn't he have basically just gotten that $4million early? If so he could invest that money and really come out on top.

A dollar today is worth 2 tomorrow or a bird or....hmm what's the saying...lol

True. But, I think the concern is for the TO situation. Philly gave him a huge signing bonus with low salaries. I dont remember the exact numbers, but it was something like 3 yrs, 5 mil a yr and a 15 mil signing bonus (I am guessing on this but I am sure the ratios are close).
So, in yr 1, TO gets 20 mil (team takes 10 mil cap hit). Which is great for him and he feels he is worth it because he produces.
In yr 2 and 3, he gets 5 mil (team takes 10 mil cap hit) - he feels underpaid because he "only made 5 mil." He really made 10 per year, and any sane person would realize that, but the "***** factor" could create potentila headaches for the teams front office.

Meloy
03-05-2007, 04:19 PM
The Texans sign a NFL VP who is a "cap guru". He probably is working hard to get us into the right mix to have the best cap we can have. It doesn't matter how much $ you have to spend if someone else offers more. I wanted Nate Clemments but not at that price.

TommyS
03-05-2007, 04:23 PM
I've wondered the same thing- why teams don't front-load when they have space available. I think part of the answer is if you front-loaded contracts then you would end up with holdouts as you got to the back end of the deals. For example, if we flipped AJ's deal then in 2013 he'd only be making about 2 million while guys not nearly as good would be making 6X that much. That would create a real big problem, I think.

but he would've banked all his cash already...

excuse me if this is a little basic -

my understanding is there are two parts of the contract that agents look at. there is the total amount, and the guaranteed amount. you can have a 10 year 100 million dollar contract, which looks great on sportscenter but if its backloaded as salaries then your client will never see it. players want signing bonuses and roster bonuses. signing bonus can be spread over the life of the contract, where roster bonuses are cash now.

if we dropped his bases salaries to the minimum/year, but gave Player X a big signing bonus, then the team gets a low cap hit per year (spreadout the bonus, but forced to pay the bonus even if the payer if off the team), and the player gets guaranteed money. good for the player.

if Player X gets no signing bonus but big salaries then the team can decide year by year if they want to keep the player at his next salary, cut him any offseason as salaries are not guaranteed. the player only gets paid if he produces each year. good for the team, bad for the player.

the work of the agents and the FO is to balance the wants of the player and the wants of the team. give the player enough gauranteed bonus money to make him sign the deal, but backload enough into salaries towards the end of the deal so that if the player doesnt produce he can be cut with minimal 'dead' money.

its a serious balancing act, very difficult.

Xman
03-05-2007, 04:23 PM
The Texans sign a NFL VP who is a "cap guru". He probably is working hard to get us into the right mix to have the best cap we can have. It doesn't matter how much $ you have to spend if someone else offers more. I wanted Nate Clemments but not at that price.


I wanted Clements also - I thought he would fill our biggest hole (couple that with drafting a stud FS in the 1st or 2nd along with adding another DE and OLB - our d would be solid).

But, we are not ready to hand out those contracts. We need to be closer before you start mortgaging the future. (I kind of wonder is SF is that close but apparently they think they are)

TommyS
03-05-2007, 04:30 PM
I wanted Clements also - I thought he would fill our biggest hole (couple that with drafting a stud FS in the 1st or 2nd along with adding another DE and OLB - our d would be solid).

But, we are not ready to hand out those contracts. We need to be closer before you start mortgaging the future. (I kind of wonder is SF is that close but apparently they think they are)

like i sort of said above... we need to see clements contract.

as an exageration here - if Clements got a $5mill bonus, salaries at the veteran minimum then $65 million salary in the 8th year, the guaranteed money in the deal might only be 10million! which is a joke. but we dont know how the deal was structured.

TexanAddict
03-05-2007, 04:31 PM
It has been reported that Clements guaranteed money is $22 mil

TexanAddict
03-05-2007, 04:33 PM
The 49ers have signed CB Nate Clements to the biggest contract ever given to a defensive player -- eight years, $80 million, including $22 million guaranteed.

NFL.com (http://www.nfl.com/nflnetwork/story/10033511)

TommyS
03-05-2007, 04:42 PM
thanks...

still unless we know what the yearly salaries are it could be a good deal for the 49ers... for the sake of simple maths i will use round numbers...

$22m over 8 years = $2.75m / year.

$58m in salaries -the job of the FO is to push as much of that out as possible. for argument's sake say $38 million of that is over the last 3 years of the deal. the agent is trying to get as much of that early as possible.

so he makes $4m/year in salary for 5years, cap hit at $6.75 million per year, then the 49ers cut him before 6th year and save themselves nearly half the total value of the contract. and only $2.75m in dead room each year for the last 3 years.

$6.75 million a year for one of the better corners in the league for 5 years? no problem.

i'm just speculating of course, trying to illustrate a point.

Ole Miss Texan
03-05-2007, 05:01 PM
thanks...

still unless we know what the yearly salaries are it could be a good deal for the 49ers... for the sake of simple maths i will use round numbers...

$22m over 8 years = $2.75m / year.

$58m in salaries -the job of the FO is to push as much of that out as possible. for argument's sake say $38 million of that is over the last 3 years of the deal. the agent is trying to get as much of that early as possible.

so he makes $4m/year in salary for 5years, cap hit at $6.75 million per year, then the 49ers cut him before 6th year and save themselves nearly half the total value of the contract. and only $2.75m in dead room each year for the last 3 years.

$6.75 million a year for one of the better corners in the league for 5 years? no problem.

i'm just speculating of course, trying to illustrate a point.

If after 5 years you cut him or traded him...what would their Cap hit be? something like $8.25 million at least? that would hurt.

dalemurphy
03-05-2007, 06:09 PM
i understand that... but isn't it all an accounting standpoint? wouldn't he have basically just gotten that $4million early? If so he could invest that money and really come out on top.

A dollar today is worth 2 tomorrow or a bird or....hmm what's the saying...lol



Your problem is you're dealing in the realm of fairness, logic, etc... You have to think like a spoiled 27 year old millionaire or a greedy sport's agent. In that mindset, the reality is, their incentive to play would already be in the bank... If the team wants him to keep playing, he would need additional incentive.

run-david-run
03-05-2007, 07:21 PM
We are doing at least half of it (if we keep cutting the dead weight): taking the dead money hits (or at least part of them with more possibly coming)

But, if we are still backloading the contracts of players we are signing, then we are going to pay that later. And the extention on AJ does the same thing.

Ahman:
I am not sure what the exact contract numbers are.
If they are salaries like 7, 5, 4, 6 with a minimal signing bonus, then it is front loaded and it will save us money on the back end (I put a large number in the last year in case we need to cut him - but if we did cut him then we would have a zero cap hit instead of the prorated signing bonus hit that year).
If the salaries are 3, 4, 5, 6 with a 4 mil signing bonus, then we are paying a couple of mil less the first two years - which means we pay that back the last two.


The AJ deal:
"The deal is worth $60 million and includes $15 million in guarantees. Johnson had two seasons remaining on the original contract he signed as the Texans' first-round choice in the 2003 draft, at base scheduled base salaries of $5.25 million for 2007 and $7.75 million for 2008. Those base salaries were reduced, replaced in part by the signing bonus, and the Texans gained much-needed cap room with the maneuver. It is believed the extension, which essentially created an eight-year deal counting the two season remaining on Johnson's original contract, carved out more than $6 million in new 2007 cap room."

"Creating" more than 6 million in cap room in "2007" means we will be takign that hit sometime down the road. I am definitely glad we locked him up, but bigger base salaries (in the early years which accle the hit and late years in case he is hurt) would accelerate the hits.But 6 million now is not the same as 6 million 4 years from now, when the cap is going to be significantly larger, it makes sense to do it now.

Ole Miss Texan
03-05-2007, 07:39 PM
How does Green's deal fit into this? It sounds like this is what we're going to do..Is take a bigger hit this year on his deal so it'll free it up the following years.

My question is what if he only plays two years? Would that mean if we released or traded him..cost less for us? and Would we have overpayed for his two years of playing?

TommyS
03-06-2007, 03:35 PM
If after 5 years you cut him or traded him...what would their Cap hit be? something like $8.25 million at least? that would hurt.

http://profootballtalk.com/rumormill.htm

CLEMENTS' REAL DEAL? SIX YEARS, $8.791 MILLION AVERAGE

A league source with knowledge of the contract signed by cornerback Nate Clements with the San Francisco 49ers tells us that, as a practical matter, the deal is, as a practical matter, worth $8.791 million over six years.

The final two years of the deal pay out a total of $27.25 million. By then, Clements will be on the back end of his prime at best, and it's unlikely that he'll ever see that money.

Then again, given the way the market is going, $27.25 over two years might be chump change by 2013.

All in all, the contract is a great one, especially since it pays out $22.6 million in guaranteed money. But it's unlikely that Clements will receive $80 million over the next eight years in San Francisco.