Salary Cap Update: Don't Worry…

This post, was written by Bent with an assist from Jason at NYJetsCap.com appeared over the weekend, and deserved getting bumped back to the top today. I’ve also included Bent’s ‘update’ from the comments. — Bassett

Over the last couple of offseasons, we’ve been trying to keep you fully up to date with the CBA, salary cap rules, Final Eight Plan and so on, with a particular eye on the Jets’ situation. As always, we have made every effort to ensure the information contained within this article is as accurate as possible and in the event that any new information comes to light, we will be happy to update you accordingly.

In what’s becoming something of an annual tradition here at TJB – although there was a one year hiatus due to the absence of a salary cap in 2010 – it’s time once again for us to reassure you that the Jets’ salary cap situation is not as bad as it has been reported in the media.

Although he didn’t go so far as to proclaim that they were in “cap jail“, ESPN’s John Clayton did claim that the Jets might be up against it, if the reported $120m-or-thereabouts salary cap comes to fruition in 2011:

Rex Ryan and the Jets have a lot of work to do. They want to bring back cornerback Antonio Cromartie, wide receivers Santonio Holmes, Brad Smith and Braylon Edwards and some key role players. To do that, they will have to clear out some cap room. The Jets are $1.3 million over the salary cap and have the league’s highest payroll at $123.85 million. General manager Mike Tannenbaum has always worked the cap like a puzzle. He would be especially challenged by a $120 million cap.

After the jump, I’m going to break down where these figures may have come from and how they differ from the position as we see it, which is nowhere near as much of a problem.

Introduction

Before we get down to the nitty-gritty, it’s worth noting that it’s not just teams that have gone on lockdown. Since the lockout was announced, it’s been almost impossible to obtain payroll information, because the NFLPA database, which we’ve learned many journalists use as their primary source of salary cap information, has gone offline. This is hardly surprising, considering the fact that the NFLPA “no longer exists”. Fortunately, no transactions can take place during the lockout, so it’s not like we’re missing anything.

It’s also worth noting that salary cap information is pretty hard to come by anyway. Contracts are often discovered to have been structured completely differently from how they had been reported in the media. Since teams rarely leak full contract details, we have to piece together the details based upon what has been reported and anything we can get our hands on “behind the scenes”. It’s a constant moving feast, but we’re confident that the figures presented on Jason’s unofficial Jets cap site are as accurate as possible. Although he sometimes is forced to take an educated guess at some of the smaller bonus numbers – which is easy enough to do, because the Jets don’t often deviate from their usual financial practices – we can be pretty confident that if there are any mistakes there, it can only be because they’ve been reported wrongly.

What do we think the position is?

Bassett’s been writing about cap contingencies for the last couple of weeks (here and here) and with our help, arrived at a current cap number of about $114m, which would put the Jets at around $6m under a proposed $120m salary cap. As he wrote in his second article, there are several simple moves they could make without creating too many ripples, which will get them to $20-25m under the cap and leave them with enough room to sign their free agents or replace them with someone equivalent.

Where does Clayton’s information come from?

Clayton himself says that he is using numbers from “[his] 2011 salary database”. Unfortunately, there’s no way for us to verify or see a breakdown of his figures. It’s worth noting that we have requested a breakdown of cap figures from certain other mainstream media members in the past and they were unable to produce anything of substance. Keeping a database up-to-date is one thing, but understanding what makes up the numbers within that database for all 32 teams would seem to be a near-impossible task.

Breaking down Clayton’s numbers

The two key numbers in Clayton’s quote were that the Jets have “the league’s highest payroll at $123.85m” and that they are “$1.3m over the salary cap”. Let’s look at each of these numbers in turn.

Total Payroll – $123.85m

My first thought on seeing this was that when considering how much cap space you have, team payroll is of little relevance. Instead you need to consider the cap charges falling in 2011. One major item that the Jets are paying in 2011 – so it would be included in Team Payroll – is Darrelle Revis’ $18m option bonus. However, $15m of that bonus doesn’t count against the 2011 cap, because it’s spread equally over the next six seasons. Immediately you can see that total cap charges will fall well below what Clayton reports as “Total Payroll”.

Kudos to Jason, who put this theory to the test and added up all salary and bonuses set to be paid in 2011, regardless of the cap hit. Then he added in $10m because that’s the figure everyone is using as the estimated value of David Harris’ franchise tag. This came to $122.35m. Add on $500K because LaDainian Tomlinson has a likely to be earned performance incentive in his contract and you are left with $122.85m. The difference of exactly $1m presumably relates to an incentive we didn’t know about or that we’ve not included because we figured it was not likely to be earned. Alternatively, with a difference of exactly $1m, it could just have been an arithmetical error or a typo.

Either way, we can be pretty confident that when Clayton talks about the Jets having the highest payroll in the league, he is either misunderstanding the relevance of that number, or is just doing so for effect.

$1.3m over the salary cap

Instead, his assertion that the Jets are $1.3m over the cap becomes the important number. Assuming he is talking about the proposed $120m cap, we think they would be about $6m under. On the assumption that he has tried to piece together the actual cap charges and come up with a figure of $121.3m or thereabouts, here’s where we figure the discrepancies may arise. It could be any or all of these, a combination thereof, or something else altogether, like an arithmetical error:

1. He could be adding dead money onto the cap total for Kris Jenkins, Vernon Gholston, Jason Taylor, Ben Hartsock and Damien Woody. When these cuts were made at the end of the 2010 league year, it was widely reported that there would be no carry-over of dead money cap hits into 2011.

2. He may have tried to be clever and include restricted free agent tenders in his numbers. However, based on Adam Schefter’s report the other day, out of all the Jets who received an RFA tender, only Rob Turner will actually be an RFA.

3. It may be a technicality on the database that Revis’ option bonus currently is shown as counting fully against the cap and will only be spread across six years once the option is actually exercised.

Conclusions

It seems Clayton heard the reports that the cap would be set at $120m and tried to figure out who would benefit from it and who would be put in a bind. He may well be correct in some or all of the other cases but, for the Jets, the level that the cap is set at probably doesn’t make too much of a difference to them. We’ve been saying all along that they have enough flexibility to retain all their main free agents if that’s what they wanted to do, but predicting that they’ll probably let one or more go and spend the money left over on a replacement. If the cap was $130m instead, that would probably only serve to drive up prices across the board and increase the number of potential suitors for their current free agents. Before you know it, you’d end up with pretty much the same amount of cap space anyway.

We’re not bashing Clayton – keeping up with the salary cap is hard…and his job is 32 times more difficult than ours. However, he has been known to make errors before when reporting on the cap – and he’s nowhere near the only one to have done so. Expect a lot of talking heads to pick up on his numbers over the next few days and weeks, but don’t worry because we’re pretty secure with our own take on the situation, which hasn’t changed since before the 2010 season ended.

Update:

Jason did some checking and found out that the numbers that are circulating do currently include dead money. However, his source had previous indicated (and reiterated last night) that the belief is that these amounts will not be charged.

My original breakdown of whether the Jets could afford their free agents included a higher cap, but assumed that the dead money WOULD count, so those two factors more or less cancelled each other out. Of course, we don’t know for sure until the CBA is signed how the dead money will be treated, but when you look at the three parties involved in negotiations, there’s unlikely to be much support for enforcing the dead money cap hits:

Players – If every team has a bunch of dead money charged, it will reduce their available cap space which would have an enormous effect on the pool of money available for salaries, so we know the players will strongly oppose this.

Teams – Since word had circulated that there would be no carry over of dead money into 2011, many teams made cuts. Those teams could now find themselves with no cap space. Consider a team like the Raiders. They improved a ton in 2010, but already lost Asomugha. If the dead money counts, they’d reportedly be about $15m over the cap and forced to release a ton more players just to get under the cap. So we know many teams will strongly oppose this.

The NFL — The NFL reportedly wants teams’ to have a minimum cash spending threshold. The inclusion of dead money in the cap will make it much harder for teams to be able to increase their cash spending and still comply with the cap, so getting rid of the dead money hits should be a positive way of enabling them to enforce that.

Even if the dead money (just under 9m) was charged to the Jets, that still wouldn’t completely rule them out from being able to retain their free agents – they’d just be forced to do some creative restructuring and backloading.

As ever, our thanks go out to Jason from the afore-mentioned Jets unofficial salary cap website for his input. Also, a hat-tip to Sackdance99 for providing us with the link to Clayton’s article.