Today marks an important day in the business of the NFL, made even more important by the events surrounding it. Let me explain.
Monday after Week 10
The Monday following the 10th week of the NFL season is the deadline for extensions with players that charge money to a team’s 2009 cap without proration into future years. Teams can still extend player contracts through the final Saturday of the regular season, however, those extensions will treat any additional 2009 signing bonus monies as prorated through the length of the contract.
For example, in the event a team wants to give a player $10 million in bonus money to extend his expiring contract four more years, it can – if it wishes – have that entire $10M contained in 2009 rather than prorated out and added to future year cap charges. It can do that only if a contract is completed and submitted by 4 p.m. EST today. A team, however, can continue to add Paragraph 5 amounts (salary) through the rest of the season and have it count only in 2009.
Were that same deal submitted after today, the $10M would be prorated over the five years of the deal, with only $2M of the bonus counting in 2009 and an additional $2M counting in each of the next four years. In any other year besides this one, were that same deal submitted after today, the $10 million would be prorated over the five years of the deal, with only $2 million of the bonus counting in each of the next four years. However, with the uncapped year looming next year, all extensions adding salary to this year will be treated as 2009 Cap charges, rather than being prorated.
Thus, a team with $15M of cap room remaining for 2009 can soak up most of that available room – which is use it or lose it – by consummating a deal such as the one above. In my time with the Packers, we completed these Week 10 deals with players such as Donald Driver, Nick Barnett, Mark Tauscher, Scott Wells and Donald Lee over the years. This is especially valuable for teams that are sitting on large amounts of cap room – Green Bay, Cleveland, Tampa Bay, etc.
Use it or lose it
The use of cap room by NFL teams is more important than ever, both for today and the next seven weeks. With each passing day toward March, the likelihood of a new Collective Bargaining Agreement (CBA) and continued operation of the salary cap lessens. So NFL teams have to prepare as if there will be no cap in 2010.
The prospect of no cap means there are no allowable transfers of 2009 available cap room to 2010. In a typical year, teams with tens of millions of dollars of existing cap room would typically use maneuvers to bring forward cap room into the subsequent year.
For example, entering the 2009 league year, although the designated salary cap for NFL teams was $123 million, there were teams approaching $150M as their adjusted cap figure – their cap room after the addition of the rolled-over room from 2009. This is a technique that allowed teams such as Tampa Bay, Philadelphia, Kansas City, Green Bay and others to enter the 2009 league year with close to or over $40M of available cap room (Tampa Bay had close to $50M).
The silly incentive trick
The cap rollover exercise is typically achieved by renegotiating an expiring player contract by adding an LTBE (likely to be earned) incentive that has no way of being earned yet will serve the purpose of eating up cap room in the present that will be credited in the future.
For example, for several years in Green Bay, I would negotiate with our third-string quarterback the week of the last game that if he completed seven touchdown passes and blocked five punts, he would receive a $5M bonus. The insertion of the incentive would eat up the team’s cap room and end up as a credit toward the following year’s adjusted cap. I negotiated that deal one year with our third-string quarterback, Craig Nall, prior to a game against the Bears which turned out to be meaningless. Nall came in in the second half and threw two touchdown passes. If he threw a third and fourth, I was going to go down to the sideline and pull him out of the game myself!
That tactic is not available this year. Because this is the YBTUY (year before the uncapped year), the rules prevent any phony incentive rollover maneuvers. The rules also prevent any dumping of cap room at all into 2010 since with no cap to account for, there are no defined accounting procedures at all for 2010.
Will anything happen?
So the question becomes: Will there be any or many extensions today? The answer is likely few, if any. With so much uncertainty, not only about whether there will be a cap, the bigger question is who will be a free agent in 2010. Without a cap, six rather than four years of service will be required to reach that status, robbing some 230 players of the free agency they had been looking forward to.
With the increasing likelihood that these 230 players will be restricted, rather than unrestricted free agents in 2010, teams will likely be more cautious in their efforts to extend players today and through the rest of the season.
Lock-In to a CBA?
With these 230 players facing so much uncertainty and the possibility that teams will roll back spending without a cap-spending minimum in 2010, there becomes increasing pressure on new NFL Players Association executive director DeMaurice Smith to work out a deal with the league.
Not that Smith isn’t trying. He has suggested a “lock-in” in January or February if there’s no deal, locking his negotiating team in a room with the NFL for as long as it takes to get a deal done. That request has been met with deafening silence from the NFL.
Who wants a salary cap?
The clear, although silent, message from the NFL is that the league and the teams are not only unafraid of an uncapped year in 2010, but may even embrace it as a way to recover from debt and get their expenses under control. This isn’t a message the union wants to hear.
Thus, we are in this bizarre labor negotiation in football that has the following backward-looking appearance:
The NFL appears to want to play 2010 without a salary cap; the NFLPA appears to want to play 2010 with a salary cap.
We’ll be following this closely. In the meantime, we’ll watch to see what – if any – deals get done today, the last cap deadline day for a year or two, or more.
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