2012 RULES: Long-Term Contract Details

[soonertf]

The SB figures aren't annual figures? So if the player avg salary is $5m and you sign him to two years, wouldn't his signing bonus be $2.5 per year or just $2.5 in total? If it's the latter then I agree we are too low on the signing bonuses.

[soonertf]

Also, I think we need to have it ignore restructured contracts in the calculation (it should take the original annual amount. If not, then a stud like Demarcus Ware could be inked for a little over $6M per season. Rookie contracts could strew the numbers lower as well.

[Ben C.]

I am wondering if the SB rates are high enough. I'm thinking out loud here, but while the 50/100/150/200 levels seem nice and orderly mathematically, they really aren't when you look at the yearly result. From what I am seeing, the 5 yr option is a value over the other levels assuming you think the player will play out most of his contract. I'll try to break down the number nicely:

I think the signing bonuses are fine given the salary levels we're dealing with. Ideally, I'd like to see slightly smaller salaries and slightly larger signing bonuses for these deals.

But I am ready to move on from this discussion and use what we've come up with for this year. Let's agree to revisit it again next offseason to see how things worked.

I agree about the distinction in roles, but what happens for guys who are NT/DT versus DT/NT? What about G/T? The current tool would compare him to other Guards despite the fact that he could be playing tackle for you. The franchise tag lumps offensive positions together. I agree that CB and S are different, and I think there should be a different contract number for CB and S, but how do you handle LTC numbers for DB/S vs FS/S vs CB/S vs DB/CB vs CB/DB (all of which we have). Even if we completely clean up the player ratings across the board, guys who play multiple positions are a headache.

This is an issue with the programming I think. Should be an easy fix - have the system look up the highest salaries for players under any of the given player's positions. For example, Kendall Langford is listed as DE/DT. So have the system bring up the top 10 salaries for DE and DT combined.

Problem may come in with how the positions are setup in the database since we only have one field. But that can be rectified by an if-then statement. For example, "if [position]=DE/DT, then -bring up top 10 salaries of- DE AND DT" I'm not a programmer but I think you can get the idea from that.

[Ben C.]

The SB figures aren't annual figures? So if the player avg salary is $5m and you sign him to two years, wouldn't his signing bonus be $2.5 per year or just $2.5 in total? If it's the latter then I agree we are too low on the signing bonuses.

If the player avg salary is $5m, the contract options look like this:

2 years - $1.25 mil SB/year, $5 mil salary = $6.25 mil cap hit (about 5.2% of total cap)
3 years - $1.66 mil SB/year, $5 mil salary = $6.66 mil cap hit (5.6% of cap)
4 years - $1.875 mil SB/year, $5 mil salary = $6.875 mil cap hit (5.7% of cap)
5 years - $2 mil SB/year, $5 mil salary = $7 mil cap hit (5.8% of cap)

That seems reasonable to me. Those are pretty significant cap figures.

[soonertf]

I can live with the SB, but I think a bigger issue is the rookie contracts and restructured contracts (especially restructured). Perhaps that will take care of itself, since the LTC will occur based on the new year and before contracts can be restructured. I vote too that we go with this and hone it year to year.

[Ulrich82]

This is an issue with the programming I think. Should be an easy fix - have the system look up the highest salaries for players under any of the given player's positions. For example, Kendall Langford is listed as DE/DT. So have the system bring up the top 10 salaries for DE and DT combined.

Problem may come in with how the positions are setup in the database since we only have one field. But that can be rectified by an if-then statement. For example, "if [position]=DE/DT, then -bring up top 10 salaries of- DE AND DT" I'm not a programmer but I think you can get the idea from that.

I generally agree. It is just something we should be aware of. I'm playing devil's advocate a bit here, but there are some potential snags. For example, a player with a G/T rating who is primarily a G in the NFL (for example, Robert Gallery washed out at T and isn't likely to be moved back by a real NFL team) would possibly be more expensive to LTC than a similar player with just a G rating since the G/T will be compared to G and T players (I am assuming T's who are rated similarly to G's have high contracts, but that may not be true). This may or may not be a problem. It certainly isn't an argument against introducing this, but it is potentially something to revisit.

[Ulrich82]

The SB figures aren't annual figures? So if the player avg salary is $5m and you sign him to two years, wouldn't his signing bonus be $2.5 per year or just $2.5 in total? If it's the latter then I agree we are too low on the signing bonuses.

If the player avg salary is $5m, the contract options look like this:

2 years - $1.25 mil SB/year, $5 mil salary = $6.25 mil cap hit (about 5.2% of total cap)
3 years - $1.66 mil SB/year, $5 mil salary = $6.66 mil cap hit (5.6% of cap)
4 years - $1.875 mil SB/year, $5 mil salary = $6.875 mil cap hit (5.7% of cap)
5 years - $2 mil SB/year, $5 mil salary = $7 mil cap hit (5.8% of cap)

That seems reasonable to me. Those are pretty significant cap figures.

They are significant cap figures, but the difference between the 5 year and 2 year deal isn't that great. Obviously, the greater the base salary, the greater the difference, but for the extra .75 mil, I'll take the 5 year deal anytime. The numbers I proposed actually don't change the 2 and 3 year deals very much (even the 4 year is only slightly more expensive), but they make the 5 year option expensive enough that it isn't the obvious best value. You should have to pay a higher premium to lock the guy up for 5 years.

On the flip side, I am looking at this for 4 or 5 million base salaries. The difference there just isn't that great. When you talk about a 20 million QB, the difference per year from a 2 year to 5 year deal grows to $3 million. Under my scenario, the 5 year deal would cost $10 million more per year. That might be too much. Then again, maybe it helps promote shorter deals and more people hitting the market.

I just think it makes sense to make the SB growth rate per year be constant. Right now, it decreases as you add years, which makes longer deals more "valuable" (still more expensive, but not as much as you would expect).

[Ben C.]

But consider the length of contract in relation to how fast the signing bonus depreciates. In other words, the longer the deal, the more risk the team is taking in signing because the signing bonus will cause a cap hit if the player is cut prematurely.

A $5 mil salary, 5 year contract would have the following cap hits if the player is cut in the following years:
1st year - $10 mil hit
2nd year - $8 mil hit
3rd year - $6 mil hit
4th year - $4 mil hit
5th year - $2 mil hit

Since the cap figure for the player is $7 mil, the team is pretty much stuck with the player for at least 2 years, unless they want to pay more to get rid of them than they would if they keep the player. This is taking on risk. Case in point, I signed Johnny Jolly to a long term contract a few years ago and the next week he was arrested. Now he is serving a 6 year prison term but I'm stuck carrying him because of the way the contract was structured.

Alternatively, a 2 year deal doesn't carry the risk. Here are the cap hits in that one:
1st year - $2.5 mil hit
2nd year - $1.25 mil hit

Here, it would be cheaper for the team to cut the player either year.

To compensate for the additional risk involved in a long-term deal, the team shouldn't be punished by having a significantly higher cap number also.

[Ulrich82]

I get your point, I just disagree. I think if you are willing to sign a 5 year deal, you should do so under the assumption that the player will play out the contract (otherwise, he should have a fair shot at the FA market). The longer contracts carry more risk, but also more reward. As a result, I think they need to be more expensive (and increased risk) in order to devalue them. I believe that we want to ensure players hit free agency as much as possible so long term deals should be expensive, risky, and not necessarily cap convenient for teams.

The June 1 rule allows us to break cap hits in half over two years. So in your example, a team could cut the player in season two at just a $4 million cap hit for two years. Such a cap hit isn't ideal, but it is the risk you take in locking up a player long term.

Under the numbers I suggest, a team might prefer a 3 or 4 year contract so as not to take on the higher risk, which would get the player to the FA market sooner. I just think LTC's should be carefully thought out by teams. I had to think about the risk/reward when signing Ronde Barber and Jeff Saturday last season knowing each of them were likely to retire soon and trigger high cap numbers. That influenced how much SB I was willing to give either of them (and influenced the offers my competitors were willing to offer). I would rather not see a setup where the 5yr LTC option is a no brainer for a team.

Its really up to the league members though. I just want to present my thoughts. It is generally in our team's best interest to have attractive LTC options, but I think it is in the best interest in the league to promote the FA market.

[tkienast]

I get your point, I just disagree. I think if you are willing to sign a 5 year deal, you should do so under the assumption that the player will play out the contract (otherwise, he should have a fair shot at the FA market). The longer contracts carry more risk, but also more reward. As a result, I think they need to be more expensive (and increased risk) in order to devalue them. I believe that we want to ensure players hit free agency as much as possible so long term deals should be expensive, risky, and not necessarily cap convenient for teams.

It seems (if we are trying to stay close to real-life) your model is pulling away from that even more (in my opinion).

I would say that most LTC's in real-life add that last year on to stretch out the cost of the LTC so it isn't as big of an annual hit on their salary caps and does make it more cap friendly. The player and teams go in knowing the last year of the contract isn't likely to happen because that is when their salary escalates.

I'm not a huge fan of the LTC right now but am willing to give it a try as it is constructed so far. If the SB was increased even more I'd be firmly against doing it at this time.