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Cap carryover makes late-season extensions irrelevant

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Changes to the rules regarding free agency and the salary cap often have unintended consequences.  The mere existence of a team-by-team spending limit, which was adopted 20 years ago as players finally achieved their long-coveted ability to move from team to team when their contracts expired, prompted some teams to part ways with a player who never wanted to leave.

More recently, the agreement to allow teams to instantly and easily carry excess cap space from one year to the next has removed a team’s incentive to use it or lose it by signing players to in-season contract extensions.

It’s a concept explained by Pete Dougherty of the Green Bay Press-Gazette within the context of the Packers.  No new contracts were given to players after September 2011, and $5.28 million in remaining cap space was pushed to 2012.

This year, the Packers have $7 million left.  In seasons before 2011, the goal would have been to spend it — or at a minimum to use one of the handful of tactics that would nudge all or part it to the next season, by for example the use of a “likely to be earned” incentive that, as a practical matter, never would have been earned.  The money for the phony incentive hit the cap in the current year, and a refund was applied the next season.

The end result?  Cap space was pushed from one year to the next.

The union balked at restructured contracts aimed primarily at deferring cap space to future years, insisting that the money be spent sooner rather than later.  Now, with teams able to just push the cap space forward, there’s no reason to give raises in the latter days of a given season.

After all, a player signed to a new, long-term contract in December could tear an ACL or pop an Achilles tendon in the remaining weeks of the season.  By taking away the cap incentive to pay the players now, teams will be more inclined to simply wait until the player emerges from the current year unscathed.

Neutralizing, to an extent, the don’t-pay-it-forward mentality is the arrival in 2013 of a per-team spending minimum.  Starting next year, each franchise must actually spend at least 89 percent of the unadjusted cap, on a rolling three-year average.

Still, that allows 11 percent, on average, to not be spent and in turn to be carried over.  In theory, teams could stockpile unlimited millions on a year-to-year basis, creating a rainy-day fund that could be used to load up the roster for a Super Bowl run or, possibly, never used at all.

Some franchises may be inclined to stop carrying the excess 11 percent to future cap years.  Indeed, at some point, the accumulation of annual excesses of more than $13 million (based on the current cap level) will shift from conspicuous to embarrassing.

For now, the lack of in-season contract extensions will continue to be conspicuous, especially since players whose contracts are expiring are inclined to eschew the bird in the hand for a shot at two that may not be in the bush on the first day of free agency.  Meanwhile, with the pre-Bush tax rates set to return, players who may currently be turning up their noses at $10 million signing bonuses need to realize that the same number after January 1 results in another $460,000 landing in Uncle Sam’s piggy bank.

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5 Responses to “Cap carryover makes late-season extensions irrelevant”
  1. cynicalvision says: Dec 19, 2012 4:55 AM

    This is the nerdy stuff I find most worthwhile on your site, too bad I have to sift through endless hyperbole to find it these days.

  2. lawyermalloy says: Dec 19, 2012 7:14 AM

    Just another example of the UNION not fully understanding the economics utilized by NFL teams. The union looks at the “bottom line” and reports back to its membership how salaries have increased under the new CBA instead of calculating what the ramifications will be in a “cap” calculation and the rules that accompany them.
    While the upper echelon of the players(roughly 15%) certainly benefit from the new CBA, the NFLPA really doesn’t adequately care for the majority of their membership in their decision making process.

  3. ccjcsr says: Dec 19, 2012 7:44 AM

    Neutralizing, to an extent, the don’t-pay-it-forward mentality is the arrival in 2013 of a per-team spending minimum. Starting next year, each franchise must actually spend at least 89 percent of the unadjusted cap, on a rolling three-year average

    ——————————————————-

    Where was this last year when teams had 40-60 under the cap to spend?

  4. thehuckster404 says: Dec 19, 2012 8:09 AM

    Teams that consistently compile 7 wins and under should spend that cap space they are hoarding, or risk a public backlash. Fans tolerate a loser, but a loser that has 30 million unspent in the bank is what causes half empty stadiums.

  5. lilrob10201 says: Dec 19, 2012 11:10 AM

    I did not get one thing that article said.

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