HEADLINES

PFR Originals News & Rumors

The New TV Deal And The Salary Cap

February 5th, 2014 at 7:56pm CST by Rob DiRe

Earlier today, the NFL announced an agreement with CBS that will see the network produce 2014’s Thursday Night Football games, with half of those broadcasts moving over to CBS from the NFL Network. Most fans will only notice the immediate impact of the agreement based on what channel they tune into each Thursday, but in the longer term, the additional revenue created by the deal will significantly affect the salary cap, creating a bump in spending power for NFL teams, write Mike Florio of Pro Football Talk.

While the exact numbers have not yet been released, Florio estimates that the deal could be in the area of $300MM, and after factoring the loss of advertisement revenue (since the NFL will no longer be the sole provider carrying these games), he believes that the NFL may see a net gain of approximately $250MM. Because the salary cap is calculated based on the previous year’s revenue, the new arrangement will not affect the 2014 cap number. That being said, NFL franchises may have an extra $4MM to work with in 2015.

Having an extra $4MM to work with down the road could be a huge advantage for general managers in tight cap situations this offseason. The Super Bowl champion Seahawks, who are thinking about an extension for Earl Thomas, and eventually Richard Sherman and Russell Wilson, may be able to push some more money for their stars into the future during negotiations this offseason. That way, they could leave room under the cap this year to re-sign key players such as Michael Bennett or Golden Tate, as the team looks to make another run at a championship.

The 49ers are in a similar situation, as they believe their window to win a championship is now. While they talk with Colin Kaepernick about an extension that will certainly pay him like a franchise quarterback, they may be able to keep short-term cap space available for their own free agents.

Another option available to a team looking to improve its roster is the restructuring of veteran contracts. While restructuring is often viewed as a great short-term tool, it can be crippling to a team’s cap situation down the road, as is the case now in Carolina, where the Panthers are trying to find a way to re-sign Greg Hardy despite the dead money already on the cap in 2014. Additional future cap space could alleviate these concerns to a certain extent. One huge restructure has already occurred this offseason, as Larry Fitzgerald and the Cardinals have agreed on a new deal that will benefit both parties. Fitzgerald’s restructured contract will open up $9.4MM of spending money for the Cardinals during this offseason, while it will add an additional $2.35MM each of the next four years. An extra $4MM of cap space from the Thursday Night Football deal should help absorb that blow.

Ultimately, since every NFL club will be playing with the same amount of money, the new TV deal isn’t going to cure any one team’s cap situation, but a good general manager might be able to find a way to use that idea of an extra bit of wiggle room down the road to put the most competitive product on the field in 2014.

Restructuring Contracts

February 5th, 2014 at 5:00pm CST by Luke Adams

When an NFL team finds itself short on cap flexibility and in need of some space, one of the most effective short-term fixes is to restructure a player’s long-term contract. While cutting or trading players can often be solutions as well, a contract restructure allows the team to keep its roster intact while also providing immediate cap relief.

The base salaries of NFL contracts typically aren’t guaranteed, but players can receive guaranteed money in the form of signing bonuses. While those bonuses are considered to be up-front payments, for cap purposes they can be spread out over up to five years of the contract. For instance, if a player were to sign a four-year deal with a $12MM signing bonus, that figure would prorate equally over the four years of the contract, amounting to a $3MM cap hit per year. If a team were to release that player one season into the deal, the club could avoid paying most of the player’s annual base salaries, but would still be on the hook for the remaining bonus money, along with the cap total for that money.

As such, the most common form of contract restructuring involves converting a portion of a player’s base salary for a given year into a new signing bonus. That bonus can then be spread out over several years, moving it away from the current season. This is exactly the sort of agreement the Cardinals and Larry Fitzgerald reached this week. Here’s a breakdown of what the rest of Fitzgerald’s contract looked like before the two sides agreed to restructure it (click to enlarge):

Fitzgerald contract pre-restructure

Taking into account his $12.75MM base salary along with $5.25MM in bonuses, Fitzgerald’s cap number for 2014 was $18MM, an untenable figure for the Cardinals. However, by significantly reducing his base salary for the coming season, Fitzgerald was able to assure himself a spot on the roster, as well as assuring that nearly all of that base salary became guaranteed.

It’s not 100% clear whether Fitzgerald reduced his base salary all the way down to the veteran’s minimum of $955K, but various reports have suggested he bumped that 2014 salary down to $1MM, which is close enough. That would work out to a new $11.75MM bonus, and those are the figures we’ll use to determine his new contract structure, which should look something like this (click to enlarge):

Fitzgerald contract post-restructure

As the final column in that chart shows, restructuring a contract by converting base salary to a signing bonus creates immediate relief ($9.4MM in this case), but also creates problems in future years. A year from now, it seems likely that the Cardinals will have to make another move with Fitzgerald, either cutting him or restructuring his deal again to reduce a $23.6MM cap number for 2015.

There are ways a player can remain under contract with a team while also helping to create or maintain both short-term and long-term cap flexibility. A player agreeing to take a pay cut, for instance, could allow a team to reduce his current cap number without necessarily moving that money further down the line in the contract. However, that generally happens in situations in which the team’s leverage outweighs the player’s leverage.

In most cases then, a restructured contract that sees base salary converted into bonus money is the simplest short-term fix for a club. The bill will come due eventually, but restructuring a deal allows a team to put off a more significant decision for at least one more year.

Note: This is a PFR Glossary entry. Our glossary posts will explain specific rules relating to free agency, trades, or other aspects of the NFL’s Collective Bargaining Agreement. Information from Joel Corry and Over the Cap was used in the creation of this post.

Free Agent Stock Watch: Eric Decker

February 4th, 2014 at 2:00pm CST by Luke Adams

Few receivers put up better numbers during the 2013 campaign than Eric Decker. In his fourth NFL season, Decker established new career-highs in receptions (87) and receiving yards (1,288), while hauling in 10 touchdown passes. All three totals ranked in the NFL’s top 12, and the 26-year-old’s advanced stats were even more impressive — he placed fourth in DYAR among receivers, behind only teammate Demaryius Thomas, Jordy Nelson, and Anquan Boldin.

Eric DeckerThe career year couldn’t have come at a better time for Decker, who is poised to hit unrestricted free agency for the first time this offseason after earning a base salary of just $1.32MM in 2013. He reportedly plans to test the market, which is no surprise given his competition on the market (Boldin and Julian Edelman are the only free agent WRs whose numbers came close to Decker’s 2013 production) and the deals signed by receivers in recent years.

Taking into account Decker’s career totals as well as his 2013 numbers, his resumé arguably looks better than Mike Wallace‘s did when the former Steeler reached free agency a year ago, and Wallace secured a five-year, $60MM contract in Miami, with $27MM in guaranteed money. While Wallace landed the largest free agent deal for a receiver on the open market last year, there were a couple other comparable contracts signed, including Dwayne Bowe‘s five-year pact with Kansas City ($11.2MM per year, $20MM guaranteed) and Greg Jennings‘ five-year deal with the Vikings ($9MM annually, $17.8MM guaranteed). Factoring in Decker’s track record, age, and durability, you could make the case that his stock as he approaches free agency is higher than that of any of those receivers.

Still, as impressive as Decker’s performance to date has been, potential suitors will take notice of a handful of red flags. The fact that Decker had Peyton Manning throwing him the ball helped buoy his overall stat line significantly, and he also benefited from the presence of other receiving threats like Demaryius Thomas, Julius Thomas, and Wes Welker, meaning he frequently faced single coverage. Additionally, there may be question marks about his ability to produce against physical secondaries, particularly after his no-show against the Seahawks in Sunday’s Super Bowl, a game in which he totaled just six yards on one catch.

With or without Manning and the Broncos offense, Decker is a talented playmaker, but the recent history of free agent receivers suggest that interested teams should proceed with caution. After securing big paydays last winter, both Wallace and Jennings failed to put up 1,000-yard seasons, and combined for just nine TDs between them. Wallace was excellent in Pittsburgh playing across from Antonio Brown with Ben Roethlisberger throwing them the ball, while Jennings excelled in Green Bay catching passes from Aaron Rodgers alongside players like Nelson, Jermichael Finley, and James Jones. But being paired with lesser quarterbacks and assuming a number one role limited both Wallace’s and Jennings’ production last season. It’s not hard to imagine Decker’s receiving totals taking a similar hit if he finds himself in a comparable situation in 2014.

As such, it’s possible that teams will temper their enthusiasm for Decker, perhaps submitting bids more comparable to recent deals signed by players like Victor Cruz ($8.6MM per year, $15.63MM guaranteed), Mike Williams ($7.92MM per year, $14.6MM guaranteed), or Antonio Brown ($8.39MM per year, $8.5MM guaranteed). The Jets, Browns, Patriots, Ravens, and Rams are among the teams who could turn to the free agent market for receiving help, though none of those clubs necessarily possess the perfect combination of cap flexibility and offensive firepower that would attract Decker.

If Decker isn’t blown away by any offers on the open market, a return to Denver remains a possibility. The Broncos likely wouldn’t be able to make the most competitive offer in years and dollars, given their limited cap flexibility and the need to take care of several other players who are hitting free agency this year or next. However, the team has the ability to clear some cap space this offseason, and could probably fit Decker in if he were willing to accept a small hometown discount. For his part, Decker recently indicated he loves the city of Denver and hopes he and the team can work something out.

Still, history suggests that there will be at least one team willing to bet the farm on Decker’s ability to be a No. 1 receiver, or at least to share that role with another player. Concerns about whether Decker can sustain his previous level of production on another offense and with another quarterback may keep his price below Wallace’s range, but it’s not hard to imagine the Minnesota native landing a five-year contract worth in the neighborhood of $10MM annually, with between $15-20MM in guaranteed money.

PFR Originals: 1/27/14 – 2/2/14

February 2nd, 2014 at 9:43pm CST by Peter Sowards

With the 2013 season in the rearview mirror, here’s a look back at some original content posted by the Pro Football Rumors staff this past week…