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Accelerated "dead" cap -- some of you worry too much


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2 minutes ago, Larz said:

Bro ?

Please just complete these 4 sentences 

cutting Zach pre June 1 is $ in dead money and $ in cap _____( savings or charge )

cutting Zach after June 1 is $ in dead money and $ in cap _____
 

trading Zach pre June 1 is $ in dead money and $ in cap _____
 

trading Zach after June 1 is $ in dead money and $ in cap _____

 

thanks for the effort tho i could never have done that ?

This part at the end:

Quote

The "what" is easy to say in 10 words - ok, that's easier for other people lol - but this is more to explain the "why" than the "what" for anyone who's interested. Also it's for those who claim to not even partially understand, as I've seen "I don't get anything about the cap" as it pertains to how these hits, cuts, & dead cap work. There will be a quiz on Friday morning before New Year's weekend.

But then, you're you. 

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39 minutes ago, Irish Jet said:

If it was a choice to keep anyone between Lawson, Mosley and Tomlinson I’d choose Lawson. 

I’d bet he will be the only one of the three to go. 

I believe all 3 plus Corey Davis go.  All vastly overpaid for their contributions and/or availability.  

What's the bet? 

1. Loser gleefully rushes the field in full Jets attire after the Bills lose a heartbreaker at home in the playoffs 

2. Loser waits for Joe Douglas after the Jets painfully miss the playoffs and thanks him for Zach, Mekhi, Mims, and Mann and then proceeds to call him a fat sh*te loser that he will sue if touched.  Oh wait, I believe one of our recent posters almost committed suicide doing this

3. Other?

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1 hour ago, Sperm Edwards said:

Putting it aside that having dead cap is worse than not having it, it's clear too much is being made of it, at least at these levels (and beyond the indictment that it's typically an indication the team contracted with a player for more than he's worth, otherwise the contract would've reached its natural end with no dead cap).

Why backload contracts in the first place? Isn't that worse, and mortgaging the future?

A GM will backload a contract for one of (or a combination of) two reasons:

  1. More cap space needed right now, or at a particular time, than it'll be needed later
  2. Using inflation to one's advantage, because the cap always rises: $15MM on a $180MM cap is a higher percentage than $15MM on a $220MM cap. 

Either way, the goal is the same: help make the team better (or anyway that's the idea/goal). 

Anyhow, for all of us fans (aka amateur / armchair / fantasy GMs), there are some misconceptions about a player costing more to cut or trade than to keep because of the accelerated "dead" cap hit.

Through all this, getting past the obnoxiousness of speaking in 3rd person, Sperm's Rule to Remember in the back of your mind is the same: absent more guaranteed money still upcoming, it's always much cheaper to cut the player. Always. If you pay a player a dollar, that's another dollar that has to come off the cap. At its core, that's all a salary cap hit really is. When those hits occur can be manipulated for that player or his replacement(s), and it's easier to understand it than to memorize it for every player. BTW, Sperm's 2nd Rule is to always seek an egg cell to gangbang with my sperm buddies. Tomorrow's discussion. 

For players currently being considered potential cap casualties for 2023 (i.e. not worth their upcoming compensation)...

Under-contract player type 1: Zach Wilson (first, because he's by far being discussed the most right now) -- $9.3MM more pay due for 2023-2024:

If he was to get cut, the team still has to pay him the remaining guaranteed salary he's due, so that's not going to happen. They would far sooner make him the NFL's most expensive practice squad QB, now that veterans are permitted on the practice squad. They have to find a trade partner who'd then assume responsibility for paying his remaining guaranteed money. Otherwise they're keeping him, since there's no benefit beyond satiating an online mob.

Trading him -- this seems to trigger a penalty, of sorts; but not really, when you take a longer-term look at it. Many fans might see this new $11MM dead cap and, since that's more than the $9.6MM cap hit he has scheduled, incorrectly conclude it costs more cap space to trade him than to keep him. This is not true, unless this was the final NFL season before it permanently shut down. If they trade him, they will bypass paying him (in very round numbers) $4MM in 2023 and $5MM in 2024. Per Sperm's Rule to Remember above, a team saves this money - and therefore cap space - by not paying it. 

The $11MM "dead" cap was past bonus money already paid to him that hadn't yet come off the cap. So that still has to hit the cap whether he's here or he's traded, because the check's been cashed & Jets are the ones who paid it (which is why the new team's hit for a traded player is less than for his old team; the new team doesn't have any past signing bonus as part of their newly-acquired player's cap hit, unless they then choose to restructure it further on their own). The remainder of ZW's past-paid bonus is currently scheduled to hit $5.5MM in 2023 year and $5.5MM in 2024.

That's the thing that's often overlooked when worrying about the second $5.5MM accelerating to 2023. If an extra $5.5MM accelerates to 2023, it also proportionally clears that same amount that was going to hit in 2024. By accelerating that later $5.5MM hit, less room for 2023 this is now more cap room for 2024. The team can still effortlessly make use of that space in 2023, without waiting: all it means is a new signing (or combo of new signings or restructures) would be structured to have $5.5 more of their hit occur in 2024 rather than 2023. It's the same dollars either way: costs the same, and adds up to hit the same in the end. 

Just like signing bonuses let a team move current spending to the future cap, cutting early does the opposite: moves a future cap hit to the present.

Trading him post-6/1 (keeps the scheduled past-SB cap hit the same for the current year, and the balance accelerates to the following year). In ZW's case he only has 2 years left, so if he was traded post-6/1 it'd only be his 4th season amount that accelerates to 2024. If he had 4 more non-guaranteed years left after 2022 - i.e. $20MM more to come off the cap, at $5MM per season x 4 seasons - then trading him post-6/1 would make $5MM still hit in 2023 and the other $15MM in 2024. Trading him pre-6/1 would mean all $20MM of that accelerates to hit in 2023, but then it clears $15MM from future team caps. It's 6 in one, half-dozen in the other, honestly. I used to make more hay of this myself.

Summary = it saves cap money to trade Wilson, no matter when they do it. That more of the savings will be initially felt in 2024 than 2023 is irrelevant; savings is savings. If they made a new signing's 2-year contract hit $5.5MM more in 2024 than 2023 (as opposed to having $11M hit in 2023 like they otherwise might have done), the resultant combined dead + new cap hit totals, for Wilson + the newly-signed player, end up identical in the end. 

Under-contract player type 2: CJ Mosley, Laken Tomlinson, etc. -- $17MM and $13MM, respectively.

Similar to Wilson, except since neither has any additional guaranteed money coming to him, unlike with ZW the team can trade or cut either player to realize those savings. Both players are on backloaded contracts. Tomlinson was signed that way in the first place; Mosley was restructured to make it that way. Doesn't matter. What it did, in both cases, was to push most of the player's 2022 pay to hit the cap in future seasons instead of the (then) current one. The two work more or less the same way, but let's just look at Mosley first:

On paper his salary cap hit for 2023 is going to be $21.5MM. $17MM of that is new salary ($0 of it guaranteed), plus $4.5MM amortized signing bonus: $1.5MM from his original 2019 signing bonus, plus $3MM is from converting $15MM of his 2022 salary into a new restructure bonus that spread evenly among this year, the remaining 2 seasons, plus 2 more phantom "void" seasons as a new 5-year contract with 2 voidable years at the end.

What that means is, in theory, he has 4 more seasons of $3MM amortized to hit the cap. In reality, rather than in theory, there are no 3rd & 4th seasons. So absent any more maneuvering, his contract ends after 2024 and the last two $3MM hits would both hit the 2025 cap (the 2026 hit accelerating to 2025 as he'd be off the team before 6/1).

It also means if he's cut pre-6/1, all 4 remaining $3MM hits accelerate to 2023, or $12MM. That still means they save a bundle on the cap, but for 2023 that seems like less to someone only focused on the current season's hit. But by clearing that $9MM from 2024-2025 seasons' caps, they can push $9MM of a future signing's 2023 pay to those seasons, and again it ends up the same, with the net being just the amount they don't pay the now-cut player additional monies. In CJM's case, that'd be $17MM. 

So the 2022 summer's CJM restructuring didn't make it any harder to cut Mosley (other than the PR need to absorb more snark from the likes of Cimini). It's messier on paper at first glance, but avoiding his $17MM pay is avoiding his $17MM pay, which avoids adding another $17MM to the cap. See Sperm's Rule. 

Different way it happened, but similar concept for LT3: $13MM due each of the upcoming 2 seasons. None of it is guaranteed, unless he suffers a major injury in these last 2 games that'd trigger an injury-guarantee of his 2023 pay. Cutting him early clears $13MM of his $17MM hit via removing salary. Again, at first glance his future amortized bonus hit accelerates to 2023, leaving $8MM "dead" cap for 2023 (but again, clearing $4MM more for 2024, that can be used in 2023). So while it seems like they only clear $9MM, in reality they are clearing $13MM - his upcoming/due pay for 2023 - plus another $13MM for his 2024 salary. They would be clearing $26MM over the upcoming 2 seasons. That could then be used to pay others because it won't be used on LT3. 

As I noted above, just by structuring someone else differently, it really doesn't matter that much whether the team does it before or after 6/1, except in LT3's case it appears his salary guarantees if he's on the roster on the 5th day of the new season in March. They can still do it anyway if they like, by designating him as a post-6/1 cut (the team can do that, too), but again it really doesn't matter unless they were only making short-term signings for less-significant players so they couldn't offset enough to 2024. It matters for optics, but not for math reasons.

Under-contract player type 3: Lawson, Berrios, etc. -- $15MM and $5MM, respectively

These are the easiest because they both only have 1 non-guaranteed season left on their contracts. You clear their upcoming pay and there's nothing left to accelerate to 2023. Lawson has a $15MM salary upcoming. Cut him and it clears $15MM cleanly this season.

Berrios is nearly as clean. He's due $5.5MM and only $500K is guaranteed. So he clears $5MM not the full $5.5MM, but $500K on a $220MM cap is such a small amount it's like a rounding error, and has no effect on the team's ability to do anything, so it's as though it isn't there at all.

--

I was going to conclude with an "I hope this clears it up," closing, but nearly 2000 words probably doesn't clear up anything :).

The "what" is easy to say in 10 words - ok, that's easier for other people lol - but this is more to explain the "why" than the "what" for anyone who's interested. Also it's for those who claim to not even partially understand, as I've seen "I don't get anything about the cap" as it pertains to how these hits, cuts, & dead cap work. There will be a quiz on Friday morning before New Year's weekend.

Disclaimer: anyone who knows this stuff better than I do - and there are plenty who do - please don't be shy about correcting anything I wrote above, if you bother reading it. I mean, I'll still probably ban you for showing me up publicly, but yeah don't be shy. 

Love this guy. We are lucky to have him.

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While you’re right - I think there is one important caveat:  the person making the call to either move spend into the future or accelerate the future spend into the current year has no incentive to do the latter, unless you’re an owner GM like Jerry.

any GM would be insane to say ‘someone is going to spend this in the future, so I might as well pay the price now’.   Whereas the opposite happens all the time - but is offset by the inflation effect you mention.

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Good work but it didn't clear anything up for me at all to be honest.  

If I am cutting three players instead of having them play out the contact it is because the players are no good and I want to replace them.

I then have to pay three new players money to replace the guys I am ditching.  The guys I am ditching are still counting against the cap in any  dead money for dumping them no?

For slow wits like me take an example with nice round numbers, player makes 10 million a year, certain cap hit if he is released.  Player is released, I bring in another 10 million dollar to replace him.  Is this not making the position being replaced instead of being 10 million it is now 10 million plus dead cap from the previous guy no?

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9 hours ago, Beerfish said:

Good work but it didn't clear anything up for me at all to be honest.  

If I am cutting three players instead of having them play out the contact it is because the players are no good and I want to replace them.

I then have to pay three new players money to replace the guys I am ditching.  The guys I am ditching are still counting against the cap in any  dead money for dumping them no?

For slow wits like me take an example with nice round numbers, player makes 10 million a year, certain cap hit if he is released.  Player is released, I bring in another 10 million dollar to replace him.  Is this not making the position being replaced instead of being 10 million it is now 10 million plus dead cap from the previous guy no?

Well the ones you're ditching are still counting after they're gone, but it's not necessarily a failure per se. Also it looks like you're counting the $ on the cut player twice, which is why it seems like more. 

Take Mosley, for example. The dead cap that accelerates isn't the same as someone who is getting dumped prematurely. It's just the natural consequence of the GM choosing to have $15MM of his 2022 $ hit the cap later instead of this current year. From that standpoint it looks worse on paper than it really is, but in practice it's the same dollars hitting the cap: no more, no less; just hitting it at different times.

--

Likewise, in your example scenario, the answer is no the team wouldn't be paying twice (i.e. once to add dead cap for the cut player and another time for the replacement player). Your premise inadvertently makes the assumption that the dead cap wouldn't have happened if he wasn't cut. which is why it seems to you like the team's paying for the cut and then paying again for the replacement. In practice, any dead cap hit remaining after releasing Player 1 means that "dead cap" amount was going to hit the cap anyway (it's referred to as amortized signing bonus if he's with the team and dead cap if he's off the team, but it's the same thing in practice: cap hit for past bonus money paid). So it was going to hit anyway, in addition to whatever 2023 salary the player was otherwise due - so by releasing him, $0 additional will be hitting the cap. 

To use the Mosley example again:

Cut him and initially it looks like omg $15MM of dead $ now hits the cap, plus however-much for his replacement. The mistake is in not realizing that CJM's $15MM was going to hit the cap anyway, because the team already paid him that money in the past. What is moreover being overlooked here is that, in addition to that $15MM that the team can't get around (because it's already been paid), cutting him avoids an additional $17MM from hitting the cap ($32MM total cap hits to keep him for one more year instead of just $15MM). 

So if there's a team mistake made, the mistake was in fully guaranteeing him 3 years at $17MM in the first place. The restructure late this past summer didn't add any new dollars to the cap; it just moved when $15MM of his $17MM pay for 2022 hit it. 

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15 hours ago, Irish Jet said:

If it was a choice to keep anyone between Lawson, Mosley and Tomlinson I’d choose Lawson. 

I’d bet he will be the only one of the three to go. 

Good teams do not keep players like Carl Lawson, for a variety of reasons.

1.  Easy to get out of his contract

2. HIs production doesnt match his cost

3. Just drafted his replacement

In theory (and I know as jet fans we havent seen this given some of our drafts) but JJ should be able to start 2023 opening day and easily match if not exceed Lawson's production while freeing up $15 million to fill another position, whether that is keeping Huff as a pass rush specialist or fixing the LT3 mistake. 

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1 hour ago, BCJet said:

Good teams do not keep players like Carl Lawson, for a variety of reasons.

1.  Easy to get out of his contract

2. HIs production doesnt match his cost

3. Just drafted his replacement

In theory (and I know as jet fans we havent seen this given some of our drafts) but JJ should be able to start 2023 opening day and easily match if not exceed Lawson's production while freeing up $15 million to fill another position, whether that is keeping Huff as a pass rush specialist or fixing the LT3 mistake. 

I’m not saying we should keep him, just that I’d damn sure keep him ahead of the other two.

He’s a good player - A a far better player than either Mosley or Tomlinson even after an achilles tear and his presence has made a huge difference on the line relative to last year. Johnson may replace him but I wouldn’t say he’ll “easily” match him at all. 

 

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16 hours ago, pointman said:

The cap is a myth. Plenty of teams are deemed in cap hell and still field better rosters than us and still make big time signings. Like Tannenbaum said, its just a numbers game.

I’m not sure about that. It seems like Kansas City took a pretty big step back when they gave mahommes that huge contract.

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