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The Uncapped Year's Effect on This Year's NFL Salary Cap

This week in Sports Illustrated, Jim Trotter penned an article called "Market Forces" discussing how the economy is changing how teams are run and how the franchise tag may be applied differently this year (it was, as you can see by the huge list of tagged players).  He also discusses how "second tier" free agents like Derrick Dockery and Langston Walker got some pretty big contracts a few years ago, while last year saw Donte' Stallworth, Drayton Florence, and Jerry Porter all inked huge deals while being highly unproven commodities.  Due to the current Collective Bargaining Agreement (CBA), these deals may be harder to come by for these types of players.  Because 2009 is the last capped year under the current CBA, any cap hit a team would normally have pushed to the next year must be accounted for this year, making the salary cap game ever the more interesting.  Teams will have a lot less money than their current cap space dictates.

LTBE and NLTBE Incentives
A big part of many players' contracts are incentives based on performance or playing time.  These must be classified as "likely to be earned", LTBE, or "not likely to be earned", NLTBE, according to league rules.  Examples of the NLTBE incentives are reaching 1,500 rushing yards or finishing in the top five in sacks, according to Trotter.  Normally these unlikely incentives would be applied to the next year's salary cap if earned during a season, while the likely to be earned incentives such as a lineman or a QB playing 50% of the offensive snaps would apply to the current cap year.  With no salary cap next year, all incentives earned by a player must be accounted for in this year's cap

For instance, Thomas Jones may hypothetically have an escalator built into his contract where he gets a $1M bonus for leading the league in rushing.  That would normally be classified as NLTBE, since only one person a year can lead the league in rushing.  In the past, that $1M bonus would be applied to the next year's salary cap under the NLTBE tag.  That no longer applies, because there is currently no cap next year.  If the Jets only have $800K left under the salary cap (just a random number), that bonus takes them over the cap number.  They are now subject to league sanctions for violating the cap where they would not have been in a regular year.  Teams close to the salary cap must factor these bonuses in for the current year, giving teams like the Bills with a lot of free cap space more room to maneuver with incentive-laden contracts.

Cap Hits
When a player signs a contract, the signing bonus is prorated over the life of the contract no matter when it is actually paid to the player.  This is to avoid a super-huge one year cap figure for signing one or two guys.  In the past when a player is traded, released, or retires before June 1, the rest of the signing bonus figure remaining is applied to the coming year's cap.  Anything after June 1 was assigned to the following year's cap.  Once again, the uncapped 2010 season makes it impossible to hold a team accountable next year, so now that money will need to be assigned to this year's cap.  This once again bodes in Buffalo's favor because of the ample cap room available to them.  A guy like Chris Kelsay, who signed a four year deal with an $8M signing bonus, has two years left on that contract.  That would translate to a cap hit of $4M if the Bills release him at any point this year.  For the Bills that's not a big deal.  To use Trotter's example, though, Javon Walker of the Raiders signed a 6 year deal with a $12M signing bonus.  If he is cut right now it's an immediate cap hit of $8M for a guy not even on your roster.  Trotter's point is there are now players on teams that are uncuttable because of the large signing bonus money still left on their deals.

Maximum Pay Increase
The final important thing to know about the last capped year of the CBA is that between '09 and '10, the maximum a player's salary can increase is 30%.  This is to prevent teams from backloading deals to avoid the current capped year but balloon the salary in the uncapped 2010.  Teams with cap room now can sign a player to a big salary each year, but teams without cap room can't sign a guy for peanuts this year but have a massive increase going into year two.  Albert Haynesworth will command a lot of money - $12M per year or so.  That means he will have to make at least $9M this year to be able under the 30% increase to go up to $12M in 2010.  If a team doesn't have the cap room to give him that salary this year, they won't be able to sign him.

Meaning to the Bills
Ralph Wilson was one of two owners that saw this coming.  The Bills are in great shape to handle this last capped year and take action now and into next season if a new CBA is not resolved between the players union and the owners.  We have the room under the cap to give out the incentives should players earn them, including if Jason Peters' or Fred Jackson's next contracts contain heavy incentives.  We have the room under the cap to cut any player on the team and not have it be prohibitive to the current year, cap-wise or talent-wise.  We also use salaries well in the negotiating room, so a player isn't making peanuts in salary while getting a huge signing bonus.  This actually helps us with the cap hit as well as the 30% rule going into 2010.  The Bills are in great shape against the cap regardless of if we get a new CBA or not.