As most of you already know, there's a high-probability that we'll see an un-capped season in 2010 with the unlikeliness of the NFL and the Players' Union reaching a new Collective Bargaining Agreement (CBA). However, for education sake, let's take a (somewhat) in-depth look at the Salary Cap and what goes into it.
Please keep in mind that I'm not an expert on the this subject. So, if you find errors - and you probably will - be nice, dammit! If you care to be bored, grab a beer, sit back, relax and follow me past the jump.
What's a Cap?
In an attempt to dumb it down and have it make sense - the Cap is basically a dollar amount, calculated by a set percentage of the league's revenues, agreed upon by the Players' Union and the league in the CBA, that is divided by 32 (teams), as a maximum amount each team is allowed to spend on player compensation.
Got that, right?
The NFL's cap works a bit differently than it's baseball and basketball counterparts. It has a "hard cap," which means that teams must stay below the maximum allotment. There are no exemptions to this rule and if a team goes over, at any time throughout the year, the NFL has penalties that it can impose in the form of fines, cancellation of contracts and/or loss of draft picks.
The cap allows teams in the lower markets (Arizona, Jacksonville, etc) to be able to compete with the larger market teams (Washington, Dallas, etc.). Therefore, helping to prevent a NFL version of the Yankees, where superior financial teams would have an exclusive advantage over stock-piling the best players by writing the biggest checks.
This concept was originally introduced in 1994, giving teams a ceiling of $34.6 million for that season to spend on it's players. Originally, the cap was determined from the Defined Gross Revenues (DGR), which accounted for ticket sales, merchandising and television contracts. When the new CBA was agreed upon, the cap was re-configured to include the league's total revenue, adding in resources from local advertising, naming rights, etc.
Each year, the maximum and minimum (stay tuned) are adjusted in relation to the league's revenues. In just fifteen years, the NFL Cap has increased about 370% to approximately $128,000,000.
In an attempt to "force" owners to put a decent product on the field for it's viewers and to keep it competitive, the league has also set up a minimum, or floor. As is the cap, the floor also has a "hard" designation, meaning teams are required to spend, at least, a specified minimum of it's revenue on it's players compensation. The floor is currently calculated at 87.6% of the cap and is set at $107,748,000 for 2009.
Who contributes to the Cap?
The Cap is determined by the "team salary," which includes players currently under contract and players that were formerly under contract.
Note: The salaries of coaches, trainers and other personnel DO NOT count toward the Cap figures.
Some teams tend to find creative ways to manipulate the system and stay under the cap (Redskins). One way is by re-structuring a players contract. A lot of the NFL contracts are back loaded (Charles Tillman) and if the players performance falls off in the later years of the contract, teams will likely try to re-work the figures. If the player doesn't want to renegotiate, they have a high chance of being released.
Early on, if a team had a lot of cap space in any given year, a signing bonus was a great way to designate a significant chunk of money to that season's cap. This worked out great for the players and the team. The players would be guaranteed a big pay day up front and the team could free up cap space for the following seasons. However, the NFL made a recent rule where all signing bonuses are pro-rated equally each year of the contract.
What does all that mean? If Player X was given a five-year deal that included a $6,000,000 signing bonus. Previously, the whole $6m could have counted against the first year's Cap. However now, under the new rule, $1.2 million (signing bonus amount / number of years) is applied each year. Subsequently, if they were released from the team after the first season, the team would still have $4.8m that would count against the cap, resulting in "dead money."
Let's put it into a Bears perspective. For example purposes only, let's take a look at Vasher:
Signing Bonus = $9.5 million
2007 - $850,000 base salary | 2 million roster bonus
2008 - $750,000 base salary | 2.5 million roster bonus
2009 - $2.9m base salary
2010 - $2.95m base salary
2011 - $3.45m base salary
If I'm understanding it correctly, let's say the Bears released him in the off-season, and it fell under the new system. To do so, they'd have to eat $3.8m (signing bonus / five years x two remaining years) towards next years cap in dead money.
However, when a player is released, the only number that would count against any future cap figures would be "guaranteed money," such as the signing bonus. Meaning the Bears would not be responsible for Vasher's $6.4m base salary for 2010-11. This is why players tend to hold out for guaranteed money... for financial security.
Some examples of dead money for this year are:
Benson, Cedric - $2,509,000
Metcalf, Terrence - $1,291,520
Orton, Kyle - $700,000
Tait, John - $500,000
Bradley, Mark - $460,000
Bazuin, Dan - $382,000
Okwo, Mike - $308,750
Those players attribute to $6,535,640 (4.8%) in dead cap space. Another factor that will bump that number are the players that were signed to the 80-man roster, but then released during the trim down - this number is typically not that significant of an amount.
Earlier today, CelerySalt posted a great link on current Salary Cap charges for the entire league. Be sure to check it out here. I have it sorted by year, but you can click on 2009 and make assumptions from that.
Now that I've bored everyone to tears... here's something special for those who stayed long enough to see this - Take it away, Dave!