Void Years

[Dunnie]

Can someone cap savy explain void years and their ramifications to the cap. Are void years simply years after the contract is up where the money is still getting paid ?

 

Sent from my Pixel 7 using Tapatalk

 

 

[JETSxWRATH™]

Void years, in the context of NFL contracts, are additional years added to a player's contract for salary cap purposes, but those years are not intended for the player to actually play or receive any compensation. Void years allow teams to spread out the salary cap hit of a signing bonus or guaranteed money over a longer period, thereby creating cap space in the current year.

Here's how it works: When a player signs a contract extension or restructures their existing contract, void years can be added at the end of the deal. These void years have no actual substance and are purely a mechanism to manipulate the salary cap. The player's base salary for those void years is typically set at the league minimum.

The effect of void years is that the prorated portion of the signing bonus or guaranteed money gets spread out over the void years, reducing the immediate cap hit for the team. For example, if a player signs a four-year contract extension with a $10 million signing bonus and two void years, the cap hit for the signing bonus can be spread over six years ($10 million divided by 6) instead of just four years. This creates cap relief in the short term but increases the dead money on the cap in the void years if the player is released or traded.

The ramifications of void years come into play when the contract ends or if the player is released or traded before the void years expire. The remaining prorated signing bonus or guaranteed money accelerates onto the team's salary cap for the current league year, resulting in dead money. The dead money is the portion of the player's cap hit that counts against the team's salary cap even though the player is no longer on the roster.

In summary, void years are essentially "dummy" years added to a contract to spread out the cap hit of a signing bonus or guaranteed money. They allow teams to create short-term cap space but can lead to increased dead money if the player is released or traded before the void years expire.

 

Source: ChatGPT

[OilfieldJet]

Wow.

[bla bla bla]

Signing Bonus' are paid out in a lump sum that is spread evenly over the length of the contract, so for easy math, let's say:

4 year contract with $100m signing bonus

2023 - $25m

2024 - $25m

2025 - $25m

2026 - $25m

 

If you were to add a void year in 2027, it would make the signing bonus portion of the cap hits down to $20m each year + 2027 $20m, in effect saving cap for those first 4 years. The down side to void years is that you can not get a comp pick for a player that is released via void year (since it's not an expiring contract) and the 2027 $20m would hit your cap without the player being on the roster.

 

In short, void years will lower the cap hits while the player is on the team while taking on cap hits when the player is no longer with you.

[FootballLove]

18 minutes ago, bla bla bla said:

 

If you were to add a void year in 2027, it would make the signing bonus portion of the cap hits down to $20m each year + 2027 $20m, in effect saving cap for those first 4 years. The down side to void years is that you can not get a comp pick for a player that is released via void year (since it's not an expiring contract) and the 2027 $20m would hit your cap without the player being on the roster.

 

I read somewhere that up until just recently, that's exactly what teams could do....add void years to a FA contract, then when the player left, team would get a Compensatory draft pick. 

[LIJetsFan]

So the cap really is a joke and all smoke and mirrors.  wow, and I've no doubt the NFL will continue to add sweetheart type clauses to the cap rules going forward.  You don't want to kill the goose who lays the golden eggs. 

[Sperm Edwards]

17 minutes ago, bla bla bla said:

Signing Bonus' are paid out in a lump sum that is spread evenly over the length of the contract, so for easy math, let's say:

4 year contract with $100m signing bonus

2023 - $25m

2024 - $25m

2025 - $25m

2026 - $25m

 

If you were to add a void year in 2027, it would make the signing bonus portion of the cap hits down to $20m each year + 2027 $20m, in effect saving cap for those first 4 years. The down side to void years is that you can not get a comp pick for a player that is released via void year (since it's not an expiring contract) and the 2027 $20m would hit your cap without the player being on the roster.

 

In short, void years will lower the cap hits while the player is on the team while taking on cap hits when the player is no longer with you.

I think FAs with automatically-voiding years do count towards the comp pick formula. The time they don't count (anymore) is when there's an option not exercised (like when NE didn't exercise a $25MM 2015-season for Revis; they still got a 3rd round comp pick in 2016, but they did away with that loophole).

The idea is you get a comp pick if the max # of years is played out. Automatically-voiding years are there in a sense, but in another sense aren't possible to play out with the player married to the team; therefore they do count as comp pick UFAs.

The exception seems to be if a player originally had a 4 year contract, and then after 1 season the balance was renegotiated into a 1-year deal with 2 voidable years: he wouldn't count after that 1 year played out because that was a renegotiation.

https://overthecap.com/collective-bargaining-agreement/appendix/V -- see #8 here:

8. No UFA shall qualify as a CFA unless and until the maximum possible term of the player’s contract (“Maximum Possible Term”) has expired, and all other requirements have been satisfied. The Maximum Possible Term of any Player Contract shall be determined as of the date of such contract’s execution and shall include all years of the contract (including, without limitation, option years and voidable years). Notwithstanding the foregoing, a UFA shall qualify as a CFA if the Maximum Possible Term of the player’s contract failed to expire solely as the result of a provision stating that a specified contract year or years shall void automatically upon a specified day or date or upon the achievement of a roster condition with no additional contingencies (“Automatic Voidable Year”), unless the expired contract is a renegotiated contract that included a new or earlier Automatic Voidable Year within the Maximum Possible Term of the player’s prior contract and such void occurred. For the avoidance of doubt, no UFA shall qualify as a CFA if the Maximum Possible Term of the player’s contract is reduced as the result of the player’s or the Club’s decision to exercise, or not to exercise, any contractual rights, whether individually or in combination. No UFA shall qualify as a CFA if the player’s NFL Player Contract is renegotiated to reduce the Maximum Possible Term of the contract. Notwithstanding anything to the contrary in this Paragraph 9, in the event a Club elects not to exercise a Fifth-Year Option under Article 7, Section 7, nothing in Article 6 or this Appendix shall operate to preclude the player from qualifying as a CFA upon expiration of the fourth year of his Rookie Contract if all other requirements are satisfied.

i.e. a 4 year deal failed to expire after 4 years solely as the result of the last 3 years getting automatically voided = qualifies for a comp pick.

Also if the Jets do not extend Becton for 2024+, after officially declining his 5th year option a month ago, he will count as a CFA (compensatory free agent). That team option for 1st round rookie contracts seems to be a carve-out just for 5th year options alone, but no longer for veteran contracts with a team-option that isn't exercised (like I mentioned NE got with Revis).

It's all in this clause. Interesting stuff if you're nerd enough.  

[Sperm Edwards]

On 6/6/2023 at 9:42 AM, LIJetsFan said:

So the cap really is a joke and all smoke and mirrors.  wow, and I've no doubt the NFL will continue to add sweetheart type clauses to the cap rules going forward.  You don't want to kill the goose who lays the golden eggs. 

In a sense, you can fit anyone you want for the current year. Eventually you do have to pay the piper if you keep parlaying that enough, year after year. At some point, to create enough cap space, a team can simply run out of under-contract veterans to renegotiate.

(Green Bay was close to that situation this year, for example. They renegotiated every under-contract veteran they could so they could absorb the big dead hit from Rodgers before June 1st this year. On the one hand that added more to next year's cap, but they get back cap space by having Rodgers off the books post-2023: he counts $0 next year. It's the same in the end unless they added more money to those being renegotiated).

But yeah, a team with just $5MM cap space can fit a 1-year $17MM free agent by creating a few void (read: fake) years after y1 and pay all but the ~$1MM minimum salary of it as signing bonus. 

• 1 year $17MM + 3 void years, paid as $1MM salary and $16MM SB (sign bonus)
• y1 cap hit = $1MM salary + $4MM amortized SB (1/4 of $16MM)
• y2 = voids automatically before the season officially starts; $12MM of that (the remaining 3/4 of $16MM) accelerates to the y2 cap. 
• y3 team gets a comp pick (if they haven't offset it by signing enough other UFAs who qualify as CFAs).  

That leaves them with $12MM less to spend on others in fake contract y2, but they can then just do the same thing with the next guy they sign. 

GMs have more & more decided - correctly, I'd say - that it's worth their while to not worry about the eventual dead hits way down the road because they could just be saving up cap space for their replacement GMs (see Idzik, John). 

Automatically-voidable years is a relatively new tool that the league is fine with since the team pays out the same $ but just pays more now instead of later. You carry a lot of dead cap space but you can just push that dead cap space - or a lot of it - off to the future yet again by renegotiating veterans (or signing new FAs) with enough void years. 

[Larz]

It’s kicking the can down the road. Can blow up in your face you aren’t careful 

[CTJetsFan]

1 hour ago, Larz said:

It’s kicking the can down the road. Can blow up in your face you aren’t careful 

The Saints have been doing it for years. They always seem to be the team that is significantly over the cap just before the league year starts yet always get under it in time. As long as the cap is projected to see significant increases every year, teams will continue to do it.

[Facts]

1 hour ago, LIJetsFan said:

So the cap really is a joke and all smoke and mirrors

No. There is a limit to how often you can do this, as acceleration will catch up to the team.

[rex-n-effect]

1 hour ago, LIJetsFan said:

So the cap really is a joke and all smoke and mirrors.  wow, and I've no doubt the NFL will continue to add sweetheart type clauses to the cap rules going forward.  You don't want to kill the goose who lays the golden eggs. 

If there was no flexibility in the cap rules, it would be hard to build around great players without lifting the cap significantly. Teams don't want to lift the cap to remove flexible rules because they will have to pay players a lot more. Players can get paid a little better with flexible cap rules than without them. Games are overall more fun to watch when there are good teams in the league. If you're a fan of a historically lousy team (like us), you're really the only people who suffer under the rules because teams need a competent front office to be competitive. 

[bicketybam]

How do void years impact paying an IDL more than 10% of the cap? [emoji28]

[BornJetsFan1983]

10 hours ago, Dunnie said:

 

Can someone cap savy explain void years and their ramifications to the cap. Are void years simply years after the contract is up where the money is still getting paid ?

 

Sent from my Pixel 7 using Tapatalk

 

 

 

They are awesome. You just extend the time period you pay the bill. 5 more void years to pay off that tab. Except you get way more money in the future so paying top dollar now is pennies on the dollar later! Win win!! def nothing can possibly go wrong here.

[BornJetsFan1983]

1 hour ago, bicketybam said:

How do void years impact paying an IDL more than 10% of the cap?

omg the audacity

[Facts]

3 hours ago, bicketybam said:

How do void years impact paying an IDL more than 10% of the cap?

[undertow]

Salary cap experts my favorite online dipsh*ts.

[Bleedin Green]

While I don't disagree with any of what was said above, I think a Jets-specific summation of this might simply be the league decided to make it far more straight forward for everyone to be able to do the same kind of bullsh*t accounting that Tannenbaum made a 20+ year NFL career out of having as his primary skill back when it was more complicated to do.

[More Cowbell]

14 hours ago, JETSxWRATH™ said:

Void years, in the context of NFL contracts, are additional years added to a player's contract for salary cap purposes, but those years are not intended for the player to actually play or receive any compensation. Void years allow teams to spread out the salary cap hit of a signing bonus or guaranteed money over a longer period, thereby creating cap space in the current year.

Here's how it works: When a player signs a contract extension or restructures their existing contract, void years can be added at the end of the deal. These void years have no actual substance and are purely a mechanism to manipulate the salary cap. The player's base salary for those void years is typically set at the league minimum.

The effect of void years is that the prorated portion of the signing bonus or guaranteed money gets spread out over the void years, reducing the immediate cap hit for the team. For example, if a player signs a four-year contract extension with a $10 million signing bonus and two void years, the cap hit for the signing bonus can be spread over six years ($10 million divided by 6) instead of just four years. This creates cap relief in the short term but increases the dead money on the cap in the void years if the player is released or traded.

The ramifications of void years come into play when the contract ends or if the player is released or traded before the void years expire. The remaining prorated signing bonus or guaranteed money accelerates onto the team's salary cap for the current league year, resulting in dead money. The dead money is the portion of the player's cap hit that counts against the team's salary cap even though the player is no longer on the roster.

In summary, void years are essentially "dummy" years added to a contract to spread out the cap hit of a signing bonus or guaranteed money. They allow teams to create short-term cap space but can lead to increased dead money if the player is released or traded before the void years expire.

 

Source: ChatGPT

I'm going to go out on a limb and say @Sperm Edwards has been ChatGPT beta.

[Jetsfan80]

9 hours ago, undertow said:

Salary cap experts my favorite online dipsh*ts.

Lots of Jets fans are salary cap experts because having cap space has been our Super Bowl for over a decade. 

[JetsMetsDevilsPA]

On 6/6/2023 at 9:42 AM, LIJetsFan said:

So the cap really is a joke and all smoke and mirrors.  wow, and I've no doubt the NFL will continue to add sweetheart type clauses to the cap rules going forward.  You don't want to kill the goose who lays the golden eggs. 

That's how i'm taking it as I dig into it more.  Sounds like you can pretty much have as much payroll as you want as long as you have context in the contracts to defer payment.

[JetsMetsDevilsPA]

Just now, JetsMetsDevilsPA said:

That's how i'm taking it as I dig into it more.  Sounds like you can pretty much have as much payroll as you want as long as you have context in the contracts to defer payment and cap hits.

 

[bla bla bla]

On 6/6/2023 at 9:44 AM, Sperm Edwards said:

I think FAs with automatically-voiding years do count towards the comp pick formula. The time they don't count (anymore) is when there's an option not exercised (like when NE didn't exercise a $25MM 2015-season for Revis; they still got a 3rd round comp pick in 2016, but they did away with that loophole).

The idea is you get a comp pick if the max # of years is played out. Automatically-voiding years are there in a sense, but in another sense aren't possible to play out with the player married to the team; therefore they do count as comp pick UFAs.

The exception seems to be if a player originally had a 4 year contract, and then after 1 season the balance was renegotiated into a 1-year deal with 2 voidable years: he wouldn't count after that 1 year played out because that was a renegotiation.

https://overthecap.com/collective-bargaining-agreement/appendix/V -- see #8 here:

8. No UFA shall qualify as a CFA unless and until the maximum possible term of the player’s contract (“Maximum Possible Term”) has expired, and all other requirements have been satisfied. The Maximum Possible Term of any Player Contract shall be determined as of the date of such contract’s execution and shall include all years of the contract (including, without limitation, option years and voidable years). Notwithstanding the foregoing, a UFA shall qualify as a CFA if the Maximum Possible Term of the player’s contract failed to expire solely as the result of a provision stating that a specified contract year or years shall void automatically upon a specified day or date or upon the achievement of a roster condition with no additional contingencies (“Automatic Voidable Year”), unless the expired contract is a renegotiated contract that included a new or earlier Automatic Voidable Year within the Maximum Possible Term of the player’s prior contract and such void occurred. For the avoidance of doubt, no UFA shall qualify as a CFA if the Maximum Possible Term of the player’s contract is reduced as the result of the player’s or the Club’s decision to exercise, or not to exercise, any contractual rights, whether individually or in combination. No UFA shall qualify as a CFA if the player’s NFL Player Contract is renegotiated to reduce the Maximum Possible Term of the contract. Notwithstanding anything to the contrary in this Paragraph 9, in the event a Club elects not to exercise a Fifth-Year Option under Article 7, Section 7, nothing in Article 6 or this Appendix shall operate to preclude the player from qualifying as a CFA upon expiration of the fourth year of his Rookie Contract if all other requirements are satisfied.

i.e. a 4 year deal failed to expire after 4 years solely as the result of the last 3 years getting automatically voided = qualifies for a comp pick.

Also if the Jets do not extend Becton for 2024+, after officially declining his 5th year option a month ago, he will count as a CFA (compensatory free agent). That team option for 1st round rookie contracts seems to be a carve-out just for 5th year options alone, but no longer for veteran contracts with a team-option that isn't exercised (like I mentioned NE got with Revis).

It's all in this clause. Interesting stuff if you're nerd enough.  

Wow interesting, I was under the impression comp picks were only for expiring contracts. Void years a f*cking more gold than I initially thought lol

[GreenFish]

Put simply, void years are years that are voided. 

[Jetsfan80]

8 hours ago, GreenFish said:

Put simply, void years are years that are voided.