There are plenty of articles out there discussing players who the Browns can cut and trade thus creating salary cap space. This piece will look instead at how 2021 spending can be made by pushing cap spending into later years. All the different techniques the team can use for both Free Agents and players on the roster.
Be warned, these techniques can result in dire consequences in the future, yes, I’m looking at you, New Orleans!
There will be lots of tricks used this offseason to push money into later years so these will be important things to be aware of because when you see your favorite player has reworked their deal. It is much more likely to be an accounting trick rather than them getting extra years, less money, etc.
How Does The Salary Cap Work?
First, we need to take a quick look at how the NFL salary cap operates. Effectively each team has the same budget they can spend each year, it is similar to your annual salary from work. Then any money they don’t spend rolls over to next year, this effectively goes into their personal savings account. This spare money will allow you to spend more than the NFL salary cap next season. If you have, say $15m in cap rollover and spend that all the following season, that will mean nothing is rolled over into the next season and the team will have to cut players or let them walk in free agency to balance this out the next season. Cap rollover, like a savings account, is money you only get to spend once.
In terms of where the Browns stand, 2021 is set to be the fourth season where the team spends more than the annual NFL salary cap. Sashi Brown left behind over $50m in the Browns ‘savings account’ and that has been used year on year to maintain one of the most expensive rosters in the NFL. This is why each year we see their cap space diminish, their years of outspending the league must soon balance out.
The salary cap isn’t quite the same as cash in a bank or to players’ pockets. It is just a way all the teams in the league account for their budgets to bring parity. This is what this whole article is looking at, the tips and tricks to get around one/two-year overspends. It isn’t a sustainable money tree you can keep going to.
Before anyone says, but the cap always goes up every year, let me address this. The salary cap goes up but so do the rookie deals and the veteran deals. If we look at all of these deals as a percentage of the NFL salary cap they are pretty consistent. It is why it is always best to compare deals between different years as a percentage of the salary cap at the time of signing rather than the pure dollar value (For example Tom Brady’s first veteran deal was less than $7.5m per year). All the information on these deals is stored by position here on Over The Cap.
What’s The Catch With These Techniques?
So effectively what you are doing with all these techniques is buy now and pay later. They aren’t the same as a bank loan where you will pay interest on these transactions. More like your car or sofa deals, take this product home today and then split the cost over the next 2-5 years (5 is the max for these techniques).
With any of these moves, you are borrowing money from future years and spending it now. If you free up $10m on a player’s 2021 deal, that charge will spread across your 2022 salary cap and beyond. This money isn’t a pay cut for the player. You’re just moving it around for accounting purposes.
Using this technique to the extremes is exactly what the Saints have done, leading to a massive teardown of the roster this offseason. It is a rare example of where these moves are sensible for a team to make. They have the final 2/3 years of Drew Brees and wanted to maximize that short window. They don’t mind a 1/2 year rebuild post-Brees as teams generally aren’t in a natural position to go from one-star quarterback to the next.
Other teams that have gone all-in on the cap and seen it blow up in their face is the Eagles, it is why the Browns shouldn’t go too heavily down this route unless we are talking about the last 2-4 years before Mayfield retires. The Browns today are almost the opposite of the Eagles cap situation with Myles Garrett being the only veteran player on their roster with a contract that is unmoveable next offseason.
You can also be left paying for players once they have gone, Tom Brady was the third-highest salary cap hit on the Patriots 2020 roster at $13.5m. At the same time, he was quarterbacking the Tampa Bay Buccaneers to the Super Bowl.
1 – Converting Base Salary To A Signing Bonus
The most common technique we see and will hear about this offseason is players converting their base salary into a signing bonus. This will 100% guarantee this player their base salary so they are in favor of it. But it will allow the team to take that money and split it over the remaining years of the deal (we will touch on adding void years later).
Players will still need a base salary but if we take them down to the minimum based on his years in the league (we will say this is $1m to make the sums easier). We then convert the remaining $13.5m of Beckham’s 2021 base salary into a signing bonus, this splits that money into $4.5m in each of the three remaining years. The new cap hits will become:
2021 – $15.75m > $6.75m
2022 – $15m > $19.5m
2023 – $15m > $19.5m
If he was traded or cut during the 2022 offseason then that $9m ($13.5m – 4.5m) we had converted to signing bonus in later years would appear as a dead cap as you can’t move this money to a new team. The money never disappears with this style of moves, it just makes him more expensive in the future.
2 – Option Bonus
Myles Garrett signed a really unusual contract last offseason which was the first time a double option bonus had been used since Joe Flacco in 2013. An option bonus is effectively just another signing bonus that doesn’t happen at the time of signing. This allows the Browns to move his salary cap hits as far into the future as possible rather than in years two and three converting his base salary into another signing bonus.
Myles got a $21m signing bonus in 2020, a 2021 option bonus worth $20.6656m, and a 2023 option bonus worth $17.965m. Plus he was still due $5,064,501 in 2020 as the final year worth of signing bonus from his rookie deal. Let us break these numbers down so you can clearly see them. Remember they can only stretch five years into the future at max.
3 – Backloading Deals
Expanding more on the style of deal that was used for Myles Garrett is backloading contracts to lower the early cap charges, Hooper’s deal is a perfect example.
Here is the below deal that he has signed from a salary cap view. It is a four-year contract (we will mention the void year next), a $10m signing bonus, and a $7m 2021 option bonus. This means his salary cap hits in 2020 & 2021 are both incredibly low at $3.5m & $8.25m respectively.
Let’s take this from the players perspective and the team long term. He knows in his first two years he is going to get $6m in base salary ($1.5m+$4.5m) and $17m in signing/option bonuses. So he has got $23m paid into his bank across the first two years. The Browns then effectively have a team option each offseason of $9.5m if they decide to keep him around for 2023 & 2024.
Here is where the discrepancy between the salary cap and real life comes into play. The Browns have Hooper cheap on the salary cap those first two years as he has only accounted for $11.75m on their books. But at the same time, he has been paid an extra $11.25m in cash on top of this.
This means if they decide to cut/trade him after the 2021 season and say re-sign Njoku, they will still have that $11.25m as a dead cap on the books. So while a team can easily backload a deal, you also have to keep plenty of cap space or cap flexibility else you end up paying an underperforming player on a bad contract longer than you want. Despite Hooper having been paid the cash already, it would only save the Browns $2m during the 2022 offseason to cut him due to the signing and option bonus still being on the cap.
4 – Void Years
Void years are effectively fake years created in a contract so you can stretch that signings bonus we saw above over the maximum of five years rather than the four Hooper had on his contract.
When the Browns signed Jack Conklin they gave him a $15m signing bonus. Rather than this stretch across his three years deal, they added two fake years on the back to make it $3m a year rather than the original $5m a year over the three years.
Without the void years his annual salary cap hits would have been:
2020 – $10m
2021 – $15m
2022 – $17m
2023 – $0m
If Conklin doesn’t sign an extension with the Browns then we will be having to account for $6m against our 2023 salary cap while he plays for another team. Once a player is no longer on a team that future dead cap is accelerated into the most recent year. So the $3m for 2023 & 2024 would count on the 2023 salary cap. If they extended him then those $3m cap charges would be added on top of any new deal in that year.
If the Browns wanted to sign a one year deal worth $6m with a free agent during the 2021 offseason they could use void years to get this number down to $2m for 2021. If they gave the player a base salary of $1m, then a $5m signing bonus and four voidable years on the back of the deal. But this would mean they need to count $4m next year after it voids.
|Year||Base Salary||Prorated Bonus||Cap Number|
5 – Post-June 1st Cuts
If a player is cut/traded after the 1st of June then their dead cap charges for future years are moved to next year’s salary cap. Each year a team can designate a post-June 1st cut (no trades) once during the offseason earlier than that date, this is to maximize cap flexibility and allow players to get to free agency as quickly as possible.
There is no obvious candidate to get this on the Browns 2021 roster so we will use Myles Garrett’s deal as it is a really clear example of how it would work.
He has $8,333,120 worth of signing/option bonus money and $1,019,000 of guaranteed base salary on the salary cap for 2021. Then from 2022 to 2026, he has $47,097,480 remaining in signing/option bonus money.
If you designated him for the post-June 1st cut or cut him after June 1st then the dead cap for the 2021 season would be $9,352,120 ($8,333,120+$1,019,000) and your 2022 dead cap would be $47,097,480. We take the current year’s money now and deal with the rest next offseason.
We will see lots of these techniques used by teams across the NFL due to the unprecedented salary cap reduction due to the COVID-19 pandemic. The salary cap on average has gone up by 6.1% each year meaning teams were planning for the 2021 salary cap to be $210m. Instead, it looks set to be around $180m, this is a $30m cut per team and nearly $1B loss across the NFL.
It will be interesting to see over the coming few years if the tricks the Browns front office used for the deals like Garrett, Hooper & Conklin are here to stay or purely measures use to navigate the pandemic cap impact.
Using lots of these manipulation techniques are helpful in a short window to meet a particular salary cap number but unsustainable over a long period of time. Especially if you miss on a prospect and are tied up with their deal which you can’t move around.
It is why when discussing the salary cap it is better consumed in three to four-year windows as a percentage. These tips and tricks are about minor moves to get through a particular year. Not a strategy to build sustainable success around. I wrote extensively on the bigger picture and what the Browns will face once Myles & Baker’s contracts coincide between 2023 and beyond. You can read that piece here.
I hope you enjoyed the piece, if you have any questions feel free to ask me on Twitter at @JackDuffin, my DM’s are always open.