Ballooning Contracts

[redbarron]

I'm no capologist nor do I try to be however looking at past contracts (Joe's Post SB, Jimmy's, BWill's) I don't understand the reason for these cap numbers to rise during the basis of a player's duration. Usually with age, play declines ever so slightly till when the player's contract is up their not their best versions of themselves. So why does the FO decide to have these types of contracts? Is it for incentives for player's to stay on their at the time level IOT keep ROI? Is it due to player's agents and how they negotiate? I'd love to hear everyone's opinions/insights.

[Shrubbs]

I'm no capologist nor do I try to be however looking at past contracts (Joe's Post SB, Jimmy's, BWill's) I don't understand the reason for these cap numbers to rise during the basis of a player's duration. Usually with age, play declines ever so slightly till when the player's contract is up their not their best versions of themselves. So why does the FO decide to have these types of contracts? Is it for incentives for player's to stay on their at the time level IOT keep ROI? Is it due to player's agents and how they negotiate? I'd love to hear everyone's opinions/insights.

I really think it's because the team always believes it's in a position to make a run, and therefore wants all the cap space this year to go out and fill holes and make a push. I don't think we've really seen the team just blatantly rebuild since the SuperBowl. They're always confident, so they always want the money that year so they can make that push.

[organizedchaos21]

I'm no capologist nor do I try to be however looking at past contracts (Joe's Post SB, Jimmy's, BWill's) I don't understand the reason for these cap numbers to rise during the basis of a player's duration. Usually with age, play declines ever so slightly till when the player's contract is up their not their best versions of themselves. So why does the FO decide to have these types of contracts? Is it for incentives for player's to stay on their at the time level IOT keep ROI? Is it due to player's agents and how they negotiate? I'd love to hear everyone's opinions/insights.

TLDR: they were in bad cap shape, needed to sign the SB MVP, kept trying to put off taking the cap hit, spiraled out of control, and now we're preparing for them to take the hit they should have take 5 years ago (plus interest).


When they signed Joe, they were incredibly tight on cap space (due in large part to dead money from Rice/Ngata/Pollard/etc). So, they signed him to a deal that kept his cap number low in 2013, but increased significantly over time.


That contract (among others) kept them close to the cap for the next 5 seasons. To deal with it, they kept using the same method of kicking the can down the road. For example:


The second method they used to alleviate cap pressure involved restructuring current contracts. Doing so creates instant cap room, basically by borrowing from future cap. I find the number of restructures in recent years astounding, and I'd be willing to bet it's unlike any other time in the Ravens history.


Source for contract data: RSR's Brian McFarland

[PeterB58]

TLDR: they were in bad cap shape, needed to sign the SB MVP, kept trying to put off taking the cap hit, spiraled out of control, and now we're preparing for them to take the hit they should have take 5 years ago (plus interest).

Incorrect.

They have already taken the hit by the relative cap inflexibility over the last few years.

If/when they cut several key veterans (Weddle, JSmith and Flacco, for instance), they gain over $25M in cap savings.

The cap will not (should not) be an issue this off-season and they will not (should not) have to restructure any contracts.

[blah3]

I think ballooning contracts are an agent thing as well. It makes it look like they got a player a huge deal, when in reality, often times the player will just get cut when he's supposed to make that big balloon salary.

[BPF2]

The Ravens policy has always been to spend close to the cap, with a bit left over for use during the season for injuries or other signings. That's in line with the philosophy of always wanting to be in competition for the playoffs, not winning/losing/winning/losing like what happened under Billick's latter years. What has killed them really since the SB is 1) draft picks needed to fill holes not working out (Elam, Brown, Brooks, Perriman etc), 2) injuries to talented producers in their second or 3rd contracts (Webb, Jimmy, Pitta, Yanda, etc), 3) replacing them with high priced free agents (Weddle, Jefferson, Carr, Crabtree, Brown, Sneed), 4) Rice, 5) replacement free agents who sucked (Kendrick Lewis, Maclin, etc). That list is by no means all-inclusive, just for demonstration purposes.

The ballooning contracts is in salary - you can pay a big signing bonus up front, which counts only proportionally against the cap that year (a 5 year deal, you only take 1/5 of the bonus) with a smaller salary. But no player wants less cash year after year, so the salary portion of the last 4 years is going to be much higher in Year 2 and progressively more in 3-5. Teams are willing to do this because they need the player now with low cap space, the cap gets higher every year traditionally, and the players rarely see the latter end of those contracts. Players and agents know this too, so they try to structure it in a way to give them the most safety they can.

[Jfoh]

Back end loaded contracts are common in the NFL. You see a five year 50 million contract with 20 million up front which gets averaged to 4 million a year over 5 years and a salary which goes from 1-2-4-10-13 million a year by year 5. So that’s a 5 year, 50 million contract with a cap charge of 5 the first year, 6 the second year, 8 the third year, 14 the fourth year and 17 the last year. It gives the team a lot of cap space years 1-3 but eats it up in years 4&5.

The concept is that if a player is worth a third contract you do it in year 3-4 and kick the cap hit down the road. Or if you decide the player is not worth the contract you cut him in year 4, create 8 million in dead money which you can split into two year charge off on cap space.

So you need to decide when to keep them and when to let them go. BWilliams and JSmith have big cap numbers because we redid their contracts to get more cap space early but all that has gone is lock in a lot of dead money cap charges on the backend. Some years cutting a non productive player cost a team more money than keeping him. So you keep them, there’s no point in cutting a player, paying him anyways and eating up more cap space than keeping him would cost.

Teams need to purge their bad contracts every few years to free up cap space. We have not done it in a decade. Always thought we were close enough to a SB run keep kicking the van down the road. When you do purge contracts you become a truly dreadful team for a year or two. You go from 7-9, 8/8, 9-7 to 3-13 or worse. Few teams are willing to get that bad anytime sooner than they can avoid it.

[organizedchaos21]

Incorrect.

They have already taken the hit by the relative cap inflexibility over the last few years.

If/when they cut several key veterans (Weddle, JSmith and Flacco, for instance), they gain over $25M in cap savings.

The cap will not (should not) be an issue this off-season and they will not (should not) have to restructure any contracts.

Suppose we disagree about what the hit is. I would say that cutting those contracts constitutes taking a hit.

[PeterB58]

Suppose we disagree about what the hit is. I would say that cutting those contracts constitutes taking a hit.

Releasing under-performing players and freeing up cap space is not a "hit" in my book. Your mileage may vary....

[GOTA]

I can definitely see this being a purge year similar to when Heap and others were cut

If there is a new coach it's pretty much a given. New coaches always evaluate players differently and have no problem getting rid of players they didn't bring it.

[Paintballguy]

They need to do flatter contracts going forward instead of backloading to get the lower cap hits up front.

[WrongBaldy]

pat sould be fired