The two perennial NFL Cap spendthrifts – the Redskins and Cowboys -- are being – gasp – fiscally prudent in this uncapped year. They are structuring their biggest contracts in a way that indicates that whenever a new collective bargaining agreement does get negotiated, the NFL will continue in a capped system that rewards sound and prudent Cap management.
Floor not ceiling
I have long felt the story of the uncapped year would not be the lack of a Cap ceiling but rather the lack of a Cap floor, the minimum spending requirement that is a hallmark of a Cap system.
Teams have used the lack of a spending floor to reduce player costs, pay off debt and prepare for the next system, whenever that may be. Teams like the Buccaneers, Broncos, Jaguars, Cardinals and Chiefs have used this uncapped year to reduce Cap spending – if there were a Cap -- to roughly $90 million or less. Compared to the last capped year, 2009, where the Cap spending floor was $109 million, this is striking.
The suspected alpha dogs of the uncapped year, the Redskins and the Cowboys, have done some heavy lifting but certainly not to the level that many were projecting. More interesting than what they have spent is how they have spent it.
Many teams have long structured contracts in a pay-as-you-go mode, taking their Cap hits in the year of contract using devices that do not prorate -- large salary, roster bonuses, etc. -- rather than large signing bonuses that prorate out many years, leaving millions of potential unamortized acceleration when players are released.
The pay-now model tries to mirror cash and cap without stacking future proration that could impair the team later. I tried to always operate like this in Green Bay; other teams using the same method of Cap management include the Chargers, Eagles, Vikings, 49ers, Bears, Chiefs, Buccaneers, Browns and more. Two teams, however, that were never known for conservative Cap management have been the Redskins and Cowboys. Now, however, in this unique year, their biggest deals are structured that way.
ICONHaynesworth's contract was restructured for the Redskins to take all his Cap charge in 2010.
Haynesworth and Hall one-year impact
There is a technical rule of Cap management that if a team inserts a player voidable clause – allowing the player to end his contract early – then a signing bonus following the voidable clause will not prorate through the remainder of the contract. In other words, the Cap charge of the signing bonus will be contained in the year it is earned.
Albert Haynesworth – everyone’s favorite punching bag this year -- had a $21 million bonus this year that was restructured in the manner described above to have the entire amount count in 2010 with no accounting in future years. DeAngelo Hall had a $15 million bonus restructured in the same manner. Both players had voidable clauses in their sole control, allowing them to cut short their contracts assuming they repaid their bonuses (which, of course, they would never do as that money has already been spent).
Thus, for Cap accounting, both amounts count solely in 2010 and are not prorated if and when the Cap returns in 2011 or beyond. That is $36 million of money hitting 2010, the year without a Cap, and no remaining Cap hits on that money in future years. And, perhaps best of all, the Redskins can now dump Haynesworth without Cap consequence next season, a move I fully expect them to make.
Austin all in
Similarly in Dallas, the Cowboys have structured their latest big receiver contract – following a couple disaster contracts for receivers Terrell Owens and Roy Williams – in a similar fashion.
As part of his new contract, Miles Austin will make $17 million in 2010 from the Cowboys. They have frontloaded the money from a cash and – acting as if there were one – Cap standpoint, limiting hits against future Caps.
Kudos to two teams protecting their Cap future that have not previously operated with such forethought. The uncapped year, of all things, has spurred the Cowboys and Redskins to operate more prudently in their Cap management. Who knew?
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