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Howler57

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: January 21, 2009, 01:24:52 AM

could someone enlighten me please....with all the talk of how much cap space we have....i'm wondering why it is assumed that any owner has the actual money to spend.....am i wrong but, i don't believe the cap is a magical "madden game money amount" that owners are given to throw around freely beside the operational overhead and costs....we're talking giant amounts of money on top of inconceivable money.....this is where i get confused reading posts that says we can buy this guy or that guy????........

benchwarmer69

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#1 : January 21, 2009, 02:48:53 AM

There is NFL's shared revenue , then you add that with the owners actual money. At least that's what I know of it.


umguy1999

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#2 : January 21, 2009, 10:11:07 AM

Every team puts a certain set amount of money into a pot and its split between every team, but that amount only covers a percentage of the salary cap. So no the $40M is not necessarily sitting in an account, but money not spent is money in the owners pockets.

At least that how I think it works in a nutshell.

John Galt?

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#3 : January 21, 2009, 11:26:49 AM

The Salary Cap is NOT real money. It has nothing to do with real profits and losses. It is a LIMIT on the amount of money a team can spend on players in order to prevent a Yankees type scenario where wealthy teams can buy all the best players. It is not designed to ensure profits or promote spending, but to ensure parity in the league.

Every team gets revenue from a variety of sources some of which are shared (mostly Network TV deals and merchandising) and some which are unique to that team (ticket sales, stadium licensing, parking, concessions, local radio, etc.).  The Cap is calculated by taking a percentage of the SHARED revenue, which is mostly the Network TV deals. The Cap is the same for EVERY team. It is the maximum amount that any teams total player salaries can be at any point.

The Cap Space is the difference between the league maximum and the sum of a teams current player contracts. For example, if the Cap for a year is $148 million and all the current player contracts add up to $124 million the team has $24 million in Cap Space e.g. they can ONLY spend $24 million MORE on player contracts that year. It does NOT mean that there is a checking account out there with $24 million sitting in it collecting interest, it means that IF the owners have the money, the most they can spend is another $24 mill.

A team with very little Cap Space could have much more REAL money than a team with lots of Cap Space. Things like Stadium leases, Coaches salaries, training staff, front office personell, local taxes, electric bills, etc. are all REAL expenses that require REAL money and have no bearing on the salary cap. Also teams in large markets get far more revenues from licensing, local radio, parking fees, concessions, etc. than teams from small markets (Jax) and none of that REAL money affects the Cap or its calculation.

Another point is that Cap spending is not REAL Dollar spending because some real costs are amortized over time even though REAL dollars are spent immediately. For instance, a FAs new deal may have a $30 million signing bonus (say a 5 year deal). That $30 million is a check the owners write with real $$ coming out of their accounts, but it only counts as $6 million of Cap Spending (that year). Imagine you are an owner and your team is $48 million under the cap. You sign 4 big name FAs with $30 million SBs each. You just shelled out $120 million but the fans are all screaming "We are still $24 million under the cap! Spend that money!"


benchwarmer69

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#4 : January 27, 2009, 01:25:46 PM

The Salary Cap is NOT real money. It has nothing to do with real profits and losses. It is a LIMIT on the amount of money a team can spend on players in order to prevent a Yankees type scenario where wealthy teams can buy all the best players. It is not designed to ensure profits or promote spending, but to ensure parity in the league.

Every team gets revenue from a variety of sources some of which are shared (mostly Network TV deals and merchandising) and some which are unique to that team (ticket sales, stadium licensing, parking, concessions, local radio, etc.).  The Cap is calculated by taking a percentage of the SHARED revenue, which is mostly the Network TV deals. The Cap is the same for EVERY team. It is the maximum amount that any teams total player salaries can be at any point.

The Cap Space is the difference between the league maximum and the sum of a teams current player contracts. For example, if the Cap for a year is $148 million and all the current player contracts add up to $124 million the team has $24 million in Cap Space e.g. they can ONLY spend $24 million MORE on player contracts that year. It does NOT mean that there is a checking account out there with $24 million sitting in it collecting interest, it means that IF the owners have the money, the most they can spend is another $24 mill.

A team with very little Cap Space could have much more REAL money than a team with lots of Cap Space. Things like Stadium leases, Coaches salaries, training staff, front office personell, local taxes, electric bills, etc. are all REAL expenses that require REAL money and have no bearing on the salary cap. Also teams in large markets get far more revenues from licensing, local radio, parking fees, concessions, etc. than teams from small markets (Jax) and none of that REAL money affects the Cap or its calculation.

Another point is that Cap spending is not REAL Dollar spending because some real costs are amortized over time even though REAL dollars are spent immediately. For instance, a FAs new deal may have a $30 million signing bonus (say a 5 year deal). That $30 million is a check the owners write with real $$ coming out of their accounts, but it only counts as $6 million of Cap Spending (that year). Imagine you are an owner and your team is $48 million under the cap. You sign 4 big name FAs with $30 million SBs each. You just shelled out $120 million but the fans are all screaming "We are still $24 million under the cap! Spend that money!"

Galt if I'm ever a HC, I hope you are the GM lol.


HughC

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#5 : January 27, 2009, 02:57:01 PM

Another thing to consider is that the last couple of years several teams have not been spending up or near their cap limit, unlike seasons in the past.  We fans got used to expecting owners to spend to the limit.  Prior to leaving the NFL, Paul Tagliabue convinced owners to give in to contract negotiations.  The source of revenue that is used to determine the cap was expanded, and as a result the cap number has increased dramatically.  With a smaller piece of the pie for non-cap revenue, it took a while but owners started to figure out that they could no longer just spend to the cap and have their budget look the same.  That's part of why the owners are looking for a new contract, opting out of the old one as the NFL heads towards an uncapped season.

John Galt? gave an great explanation of 'real' and 'cap' money; this example may help.  If a player signs a four year contract with an 8-million signing bonus, and annual salaries of $3mil, $1mil, $10mil and $10mil, it gets reported in the paper as a 4-year $32 million contract (the signing bonus plus the four annual salaries).  32 divided by 4 = $8 million, so that's what the cap number for that player is for each of the four years.  In reality though the team is spending $11 million the first year ($8 million in signing bonus + $3 million salary) in 'real' money. 

And if they have no intention of paying him that much money in the last two years of the contract, the player ends up making $6 million per year (rather than $8mil).  However now the team gets $4 million more counted against it's year 3 salary cap.  Why?  Because from that $8 million signing bonus, $2mil was counted against year 1, year 2, year 3, and year 4.  If the player is cut before the end of his contract - in this case after year 2 - the rest of those years' signing bonuses gets accelerated in to the next season - in this case year 3 and year 4.



Bottom line is that this year certain teams like the Bucs and Chiefs can spend a lot of money on free agents if they choose to do so.  Other teams such as the Jets and Colts will not be able to spend very much money on free agents this year due to previous years contracts that are being counted against the 2009 salary cap.

PewterReportHM

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#6 : January 27, 2009, 04:05:30 PM

One edit............cap number = prorated signing bonus spread evenly throughout the contract Plus the actual salary paid in a given year (leaving out incentive bonuses, etc)

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