Better ways to model future contracts

**redbarron** · 05-21-2018, 10:36 AM

Looking back to Joe's first extension, (6yrs/120m) it was set up to balloon after two or so years. (relatively low hits in 13 and 14) Looking to the future with the DeCosta regime, should we look to keeping a flat even rate for the duration of the contract or should we utilize Ozzie's methodology of having a growing hit? Looking at both, I can sort of see where Ozzie is coming from in his approach. By having initial relative low hits on the cap at the beginning of the contract (i.e. Joe's first big money contract) it sets the FO up with a cap window to go and sign players that they might not possibly be able to with a major cap hit taking up potential money. However, by backloading a contract the FO has to come to terms with either paying that player at that price (which if the player is balling out, it shouldn't be that bad of a ROI) or kicking the can down the road and lowering immediate cap hits for a bigger payday in the future (IOT get needed FA's now rather than wait later). For you guys would you rather have a flat rate payment for the duration of the contract at say 6yrs 20mil per year or would you have what Ozzie did with Joe's first contract by having initial low cap hits?

**amialeo** · 05-21-2018, 10:43 AM

Given that the total cap limit increases almost every year, I would prefer we backload the contracts. However, I would like us to keep it as a steady progression rather than ballooning up after the first couple of years.

**Laxdad24** · 05-21-2018, 11:06 AM

I like the even pay idea. To be honest ...if the cap allows it I’d ( for certain players) front load the deal. That way the Ravens pay for today’s production and when/if production falls off ...no huge hit if they cut or trade the guy. Ravens have Joe now with a huge cap hit ( declining play) and they’re gonna have BWill in a few yrs with a huge hit and declining play. That kills us. Can’t cut the guys. If we had paid upfront ...we could cut them w/o the big cap hit

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**Jfoh** · 05-21-2018, 12:00 PM

Back loading contracts have a way of making life very hard down the road. It gets worse when you are forced to redo contracts to free up cap space. Those redone contracts get such crazy large number on the backend. Like Smith at cb for 15 mil this year.

The Steelers got so screwed up in cap problems it took them three years to get out of it. Right now everyone thinks cutting Joe next year fixes our cap problems, it does not. The only real way to fix a cap is to draft well and find undrafted free agents every year so more than a half of your team is on rookie or low dollar contracts.

Buying on the free agent market will eat up cap space like nothing else. Keeping declining players on long term contracts is the next worst thing but some positions you are stuck matching the market for contracts. Like qb at 20 plus million for five year. So if your qb looks decent you must keep him like we did with Joe. Hindsight has everyone second guessing that but to be fair there has been no drafted qb coming out we could have gotten who would be any better. We suck because who we are. A missed first round wr, several cast off wr, a mess of a running game and a TE who had one leg.

**Kyle Cactus** · 05-21-2018, 12:24 PM

One advantage to back loading base salaries is that if you move on from a player early you've committed less total cap space. Imagine cutting 2 players, each after 2 years of a 4 year deal with the following base salaries:

Player A - 5 5 5 5
Player B - 2 4 6 8

Player A used up $10M in cap space (accounting only for base salaries) for those 2 years of production. Player B used up $6M. If you keep the players for the full length of the contract they both consume a total of $20M. Player B will eat a lot of cap space that last year, but if you are backloading other contracts along the way it will be balanced out by the contracts that are still in their early years.

The problem can come when the organization sets up a truly large contract (like Flacco's first big deal) so that the team basically has to extend or restructure it before it's over because of large cap hits in later years. That hands over too much leverage to the player, and you end up giving more money on the next deal than you would have needed to. But most players won't have contracts anywhere near Flacco level, so for most players, I think backloading a contract can actually be beneficial.

Restructuring a contract I think is generally not a great thing, and there's always a temptation to do that with backloaded contracts. Unfortunately, the Ravens seem to be giving into it and restructuring a lot of contracts anymore. I'd rather they "live within their means" rather than getting 3 free agent WRs and then having to do a restructure later in the offseason.

**BPF2** · 05-21-2018, 02:12 PM

Originally Posted by Kyle Cactus

One advantage to back loading base salaries is that if you move on from a player early you've committed less total cap space. Imagine cutting 2 players, each after 2 years of a 4 year deal with the following base salaries:

Player A - 5 5 5 5
Player B - 2 4 6 8

Player A used up $10M in cap space (accounting only for base salaries) for those 2 years of production. Player B used up $6M. If you keep the players for the full length of the contract they both consume a total of $20M. Player B will eat a lot of cap space that last year, but if you are backloading other contracts along the way it will be balanced out by the contracts that are still in their early years.

The problem can come when the organization sets up a truly large contract (like Flacco's first big deal) so that the team basically has to extend or restructure it before it's over because of large cap hits in later years. That hands over too much leverage to the player, and you end up giving more money on the next deal than you would have needed to. But most players won't have contracts anywhere near Flacco level, so for most players, I think backloading a contract can actually be beneficial.

Restructuring a contract I think is generally not a great thing, and there's always a temptation to do that with backloaded contracts. Unfortunately, the Ravens seem to be giving into it and restructuring a lot of contracts anymore. I'd rather they "live within their means" rather than getting 3 free agent WRs and then having to do a restructure later in the offseason.

The problem with that scenario is no player or agent would ever take contract B. Who would agree to less now then later, especially knowing years 3 & 4 of that contract are likely not happening? So you get what the Ravens have done which is a low first year salary and a signing bonus to make up the cash value in the low salary years.

**blah3** · 05-21-2018, 02:14 PM

Backloading is not necessarily a problem. Teams use it as a way to get out of a contract early. Problem with the Flacco contract was there was no way they were going to cut a franchise QB, so in that particular instance, it was poorly structured for the Ravens.

**blueridgemtnman** · 05-21-2018, 02:24 PM

A wise oldtimer I used to work for had a saying that went something like this: "Never water the mule before he pulls the plow". I'll leave it at that.

**GreatWhiteNorthRaven** · 05-21-2018, 02:38 PM

Once we get out of cap hell...or maybe I should say if we get out of cap hell...we should start looking at front loading for some guys. Get the pain out of the way.

**JAB1985** · 05-21-2018, 02:50 PM

I think there should be a good mix. If you do all the same its just not taking advantage of the pros/cons of each. we spend up to cap regardless, so whether its flat or some sort of adjustment with front/back loading to fit within that cap doesnt much matter to me. Its more about who we spend it on than how. You only get into cap hell when the guys you invested heavily in didnt perform to expectation.

**redbarron** · 05-21-2018, 03:57 PM

One thing that should be a big goal for DeCosta and company moving forward is that the timing of signing our guys. Instead of letting guys (particularly first rounders) get to the end of their 5 year contracts and then begin negotiating, the FO needs to get ahead of contracts. If they can do this, they get ahead of the curve when it comes to matching similar contracts (CJ's impending deal and how Mychal Kendrick's deal).

**blueridgemtnman** · 05-21-2018, 04:16 PM

Originally Posted by redbarron

One thing that should be a big goal for DeCosta and company moving forward is that the timing of signing our guys. Instead of letting guys (particularly first rounders) get to the end of their 5 year contracts and then begin negotiating, the FO needs to get ahead of contracts. If they can do this, they get ahead of the curve when it comes to matching similar contracts (CJ's impending deal and how Mychal Kendrick's deal).

Today, so many of those types of players are in no hurry to sign new contracts. They bet on themselves, knowing that the market can escalate to more money. Why sign and then see another player get a whole lot more? Flacco did this, for one (waited). Julio Jones w/Atlanta already wants more money (allegedly) from a contract he signed in 2015. He sees how many other WR's are getting more money (10, I think). On and on it goes.