BGA: 2012 Salary Cap Update 1.0

Over the course of the offseason, I’ll be posting a series of articles analyzing statistics and data rather than game film. I’ll also be revisiting last year’s offseason articles to see whether the conclusions drawn were indicative of what was actually going to happen during the season and using that information to try and determine what 2011’s data tells us about what might happen in 2012. However, before the new league year gets underway, I’m going to address some issues on the salary cap, draft picks, contracts and free agency side of things. Today I’m going to try and set out a realistic projection for what cap room the Jets are likely to have available once the new league year gets underway.

After the jump, I’ll set out the Jets current cap position as far as we are aware, then look at what money they need to spend this offseason, where they can make savings and where this will potentially leave them as the free agent market opens for business.

As ever, if you want to jump in with questions, corrections or speculation, feel free to do so. I am also open to ideas for things you’d like me to cover over the course of the offseason.

We begin with a disclaimer. Our assessment of the cap position and the current value and structure of existing contracts is taken almost entirely from nyjetscap.com. Jason from the site has made every effort to find the exact figures, but the nature of the NFL, especially since the lockout, means that some of his figures include estimates or assumptions and some are based on media reports, which often prove to be incorrect after the fact. However, he’s been doing this long enough that we have the utmost faith in the site being as accurate as possible. Given the uncertain nature of these figures, we can only give a general sense of what the current plans are.

Introduction

In order to determine where the Jets stand, we need to start by establishing salary commitments already in place for 2012 and comparing these with the 2012 salary cap.

On the CBS pre-game show in mid-December, Charlie Casserly reported that the salary cap for 2012 will not increase, or if it does, it will only be slightly. However, one of the conditions of the CBA signed during the offseason was that it definitely cannot go down from 2011, where it was $120,375,000.

Another of the conditions of the new CBA was that teams could “borrow” cap room of up to $3m in 2011 and account for it in a later year (from 2014 to 2017). Most NFL teams took advantage of this, including the Jets, so we can expect them to do the same thing in 2012, where they have the same option, although the amount to be borrowed is restricted to $1.5m. Let’s therefore assume a small raise in the cap, just so we work with a round number by including this borrowed cap space to raise the Jets’ cap up to exactly $122m.

Looking at salary committed for 2012, the current position is outlined here. As you can see, including dead money, the Jets already have $123m of salary commitments for 2012, putting them OVER the projected cap. The other three teams in the division have significantly lower cap commitments, details of which can again be found on Jason’s site.

You can expect the likes of PFT to paint a very grim picture of the Jets’ cap situation over the next few months, but – as ever – the Jets have some flexibility, not least because they don’t have any high-priced free agents to sign this off-season with the possible exception of Sione Pouha. Here, they are better off their division foes.

However, they don’t quite have the flexibility they had in the past few years. It’s clear the Jets expected to come out of this season with minimal needs and look to re-tool their depth with their draft picks (of which we are forecasting they should have between 10 and 12). While I think the way the season ended is making some people overreact slightly to the amount of holes the team has, they definitely have some places they will be wanting to upgrade with veteran talent.

Initial Adjustments

Much was made of the Jets decision to preserve a significant chunk of cap space this season, but it was always likely to be needed in 2012, especially with how they structured the larger contracts they dished out in 2011 so that they had low cap hits in the first year, but higher cap hits thereafter.

One of the rule changes in the new CBA made it easier to carry forward unused cap space into a future year. Whereas in the past you’d have had to do something like placing unattainable performance incentives in contracts to use up the current space and create room in the following year, you can now simply carry it over by electing to do so. This means the unused cap space from 2011 can be credited to 2012.

How much unused cap space is there though? This was originally reported as approximately $10m, but Jason’s final projection was that they had $8.3m left over at the end of 2011.

Call it $8m and this would mean that the Jets are suddenly about $5m under the cap with only Pouha as a must-sign and before they’ve made any cap space creating moves. That makes the position look a lot healthier.

However, Jason warns that the escalators from the 2011 season have not yet kicked in and have not been accounted for in the 2012 numbers, so that could leave things looking decidedly less rosy. Here’s one place where the Jets failure to make the postseason could be a blessing in disguise.

The big one here is Dustin Keller, whose salary could potentially increase by over $3m and although he was a disappointment in some circles, I’d imagine his statistical production would have been strong enough to earn him this in full. Mike DeVito had a possible $2.5m escalator which he may or may not have triggered, given that he missed a few games with his knee injury. Kyle Wilson looks set to earn a roster bonus of just over $1m and Mark Sanchez is likely to have earned $750K, unless they removed that from his contract on the last restructuring. Bearing in mind there’s a lot of speculation involved, let’s call it an extra $6m of cap commitments, putting the Jets back into the red before any moves have been made.

You may wonder why the Jets preserved so much cap space and elected to go with low cap hits in 2011 instead of structuring the deals so they had higher cap hits in 2011 and keeping their 2012 cap commitments down to a more manageable number, but without the cap room to carry over. In the grand scheme of things, I don’t suppose it makes a great deal of difference, but I’d suggest it was all about flexibility. Doing things that way could have (a) enabled them to make a panic trade (and cross the cap consequences bridge when they got to it) if they felt they were a contender and one presented itself, (b) enables them to clear more cap space in the event that they trade any of the newly-signed players in 2012 and (c) gives them surplus cap room at the end of the year so they can take on a dead money hit by cutting a player at that point.

Whether (a) might have been a possibility for an offensive lineman is a debate for another day, but the Jets obviously decided they would sink or swim with the depth they had at the point they opted to put Rob Turner on IR. The most likely way (b) would have been an issue is if Kyle Wilson had blossomed in his second season and made Antonio Cromartie surplus to requirements. Finally, (c) is still a major consideration they have now, as I’m just about to get into.

The Santonio Holmes Dilemma

Based on the figures we’ve seen so far, it’s becoming increasingly clear how damaging it would be to get rid of Santonio Holmes and take on a big dead money cap hit in the process. While it was smart of the Jets to include off-set language in his contract, potentially limiting the damage to their cap, some of the relief may be deferred until a later year, depending on how his new team structures his contract.

If they do decide to cut him, it would likely be before the end of the current league year, because the guarantee for his 2013 salary crystallizes on the second day of the league year in mid-February. This will give rise to a cap hit that wipes out nearly all of the $8.3m estimated 2011 cap space instead of enabling them to roll it over to 2012, although they would receive cap credits based on whatever his new team paid him in terms of guaranteed money (and in respect of any non-guaranteed money as and when it was paid).

Trading him would be a preferable option, because then the cap relief would be immediate and their only dead money would be based on bonus money that hasn’t yet hit the cap (about $5m). However, you’d need to find a team willing to take on his current contract and all the guarantees attached.

If they decided to keep him, I think it’s clear that Holmes doesn’t feel last year’s drop in production is his fault, so that would make it very different to get him to agree to a pay cut. However, it’s not impossible they could convert most of his guaranteed salary for 2012 into bonus money and spread the cap hits over the remainder of his contract to create some more cap room ($4m or thereabouts) in 2012. This would be a very risky move because it might make it more problematic to move him in a future year if the problems that manifested themselves at the end of this year resurfaced again.

Needless to say, however they decide to proceed with the Santonio Holmes situation has a significant impact on their cap situation and while a clean break might be advisable, the decision isn’t as easy as it would be in a year where they had much greater cap flexibility and/or fewer needs.

Getting Under the Cap

As always, there are plenty of options for reducing 2012 cap charges, either by cutting people, trading them, getting them to agree to a paycut or restructuring their contract.

The most obvious pairing are the much maligned Eric Smith and Wayne Hunter. The front office was criticized for giving each of these a multi-year contract in the offseason, but they at least structured each deal in such a way as to enable the Jets to easily get out of the deals at the end of the first year if they did not perform at the level of a competent NFL starter.

Cutting both would immediately free up $4.5m of cap room. Maybe they will opt to retain one or other of them on a minimum salary deal, but that would still create a saving of about $4m.

After that, the decisions start to get tougher. Brandon Moore could save them $3m if he was cut, but he had a solid season in 2011, although he was limited by his hip injury. They’d need to determine how badly the hip and age in general would limit him going forward, because letting him go would create a hole and I can’t really imagine him taking a paycut when he’s only slated to earn $3m in 2012.

Mike DeVito missed a couple of games with a knee injury in 2011 and – although defensive line depth was one of the strengths of the team – they did miss him in the run defense when he was out, although he did struggle at times once he returned. Cutting him could create a saving of almost $3m, but would again leave a hole in the starting lineup. If he did earn his escalator in full, that would mean he was set to earn $5m in 2012, which seems high, so I could imagine them renegotiating it back down to something like his pre-escalator amount ($2.5m).

Mark Sanchez hasn’t developed as fast as the Jets hoped, according to Mike Tannenbaum, so it’s quite possible he could be asked to take a paycut. He’s due to earn $12m and said he was amenable to restructuring his deal last year (although that doesn’t mean he and his agent would be prepared to leave money on the table). In theory, the Jets could threaten Sanchez with his release because they would make a cap saving of over $9m. Surely they can make some kind of compromise to create $3-5m in cap room, even if it means Sanchez has the chance to earn that money back by reaching certain performance incentives.

Other than those mentioned above, the only players on the roster with a potential cap saving of over $1m if cut/traded are Dustin Keller and Ropati Pitoitua. Keller will be in his contract year and could even represent trade bait if he’s not considered to be a fit for Tony Sparano’s offense. It would seem harsh to offload Pitoitua after he was a solid rotation player in his first full season.

The likes of Bart Scott and Calvin Pace have come up in discussions as to potential cuts, but since both have guaranteed 2012 salaries, the Jets wouldn’t create any cap room by releasing either of them, although they have offset language similar to the Holmes deal so once they got picked up by another team, that would hopefully wipe out the dead money arising.

In David Harris and D’Brickashaw Ferguson, the Jets have two players with high 2012 salaries that could potentially be restructured to create some cap room. This is always risky, because – as mentioned with Holmes earlier – it increases future cap charges which can make releasing the player later on more of a cap conundrum. Both are set to earn $10m or more in 2012, so you could perhaps approach them to seek a paycut, which seems feasible in Ferguson’s case after a down-year, but less so for Harris, after the year ended with his head coach campaigning for him to make the Pro Bowl.

Instead, that salary could be re-badged as bonus money and the cap hits can be spread over the remainder of the contract. Jason believes that the Ferguson’s deal is better for the Jets in terms of how easy it might be to restructure and how much leverage the Jets have, but Harris’ deal was only four years, so perhaps they always had the possibility of adding another year in mind, or maybe he will continue to be accommodating as he has in the past. Jason was suggesting a $3-4m saving on Ferguson’s deal would probably be easy to achieve, but a higher saving or an equivalent restructuring to Harris’ deal might be more tricky.

If they were really desperate to create cap room, Antonio Cromartie is due to earn $7m in 2012 and they could maybe get him to allow them to bring down his cap number slightly if it meant he got more money upfront or more guarantees overall. There isn’t much scope for a saving of more than about $1-2m though.

Finally, Darrelle Revis will be in a contract year in 2013 assuming he doesn’t hold out, so the Jets might look to extend his deal now that they are freed from the restrictions of the final eight plan and the uncapped year. It’s possible they could structure such a deal in order to create cap room of up to about $5m in 2012, but that would mean increasing his future cap charges. However, Nnamdi Asomugha’s deal and subsequent lack of impact has settled down the cornerback market somewhat, so perhaps the Jets will eventually end up being able to lock him up for the sort of money they were already budgeting for during the negotiation in 2010.

That’s a lot of information to take in, but basically the Jets have cap-room saving options ranging from no-brainers (Smith, Hunter, Ferguson, Sanchez = about $12m) to risky propositions (Harris, Revis, Cromartie = about $10m) to moves that could be more counter-productive (DeVito, Moore, Keller, Scott, Pace = about $7m). And then there’s Holmes, who is a category unto himself (anything ranging from a $12.5m cap hit to a $4m short-term saving).

Needs Analysis

You can be pretty sure the Jets are going to weigh up their options (most of which were mentioned above) and make the necessary moves to leave themselves with what they will consider to be enough money to meet all their needs. So, how much money will they actually need?

First of all, you need to consider the cost of locking up your own free agents. Bassett did a fine job of summarizing the Jets free agents here, here and here. The general consensus amongst you lot was that they should bring back most of the ERFA’s and RFA’s at a low cost and that the only UFA worth spending significant money on was Pouha.

Jason looked at the likely cost of retaining Pouha here and arrived at a three year, $13.65m deal based on the current market for nose tackles. The article was written in November though, before his strong finish to the season, so perhaps that deserves to be bumped upwards by 10-20%. They could still probably do that deal with a cap figure as low as $2m in the first year, but it could be as high as $3.5m or thereabouts.

Depending on which ones they decide to retain, the Jets’ other free agents will likely not cost very much more than the minimum. Plaxico Burress earned just over $3m in 2011, but even if they brought him back for that much, I can’t see anyone else getting that kind of money. Bryan Thomas could perhaps earn about half that much, but I’d expect the Jets to offer him little more than the minimum. Hopefully he still feels guilty about mailing in the 2007 season. Jim Leonhard and Brodney Pool are probably in a similar boat. Even if they did decide to bring a lot of their free agents back, I’d expect (and hope) the total cost would be closer to $5m than $10m.

One other thing they will have to earmark some of those funds for is the rookie cap. With up to 12 draft picks to be signed, you’d expect that to be pretty high, but over half of those picks will be in the sixth round or later, so basically earning a minimum salary. Even if all 12 made the team, the additional 2012 cap space required to fit them in (after off-loading 12 veterans presumably also earning the minimum to make room on the roster) would likely not exceed $3m.

Either way, it doesn’t look likely to leave them with much in the way of left over cap space to sign impact free agents, unless they dig greedily into the risky proposition pot from those cap-saving options detailed earlier on. However, the Jets proved in 2011 that you don’t necessarily need a ton of current year cap room to make a big signing. Holmes, Cromartie and Harris were signed to deals totalling a maximum of $113m but they were structured in such a way that the initial cap hit was only just over $3m on average.

Therefore, the Jets may only need to find $5-10m of cap room to make a couple of big free agent signings, or $3-5m to make a couple of modest ones. The good news is that in 2013 the cap should go up and the Jets’ current cap commitments are only $112m and you can probably reduce this to $85m once you omit players unlikely to still be on the team then, so they do have the scope to add salary in future years.

Conclusions

I think the draft is going to be crucial this year in terms of re-tooling the roster and I expect the Jets will also hoping for increased contributions from people like Josh Mauga, Jeff Cumberland and Jeremy Kerley next year. I think that was always the plan, but the way the season ended will force the Jets to scramble somewhat.

The Jets have retained some flexibility to create cap room where required, so are unlikely to find themselves in a situation where they are forced to unload talent just to comply with the cap. However, expectations of a big spending spree do need to be tempered. The Jets knew they would need that unused 2011 cap room in 2012 – they just expected to need it to retain what they expected to be a contending team rather than to have to re-tool the roster.

This offseason presents another big challenge for the front office after they had to work around the final eight plan and a lockout-shortened off-season with multiple marquee free agents that couldn’t be signed before the lockout due to the 30% rule and relocation relief provisions. It doesn’t rain, it pours. I’m just glad I have the comparatively easy job of summarizing the situation rather than actually being responsible for the tough decisions that lie ahead.

We will do our best to keep you up-to-date with the cap situation as much as possible over the coming months. As always, thanks to Jason for his input into this article.