2006 NFL Salary Cap to be set at $94.1 million

[Money]

2006 CAP NUMBER COULD STILL BE $98 MILLION

 

After a two-day delay, the NFL finally has announced the official cap numbers for 2006.

 

Per a league source, the per-team limit will be $94.1 million. There's a possibility, however, that the number will move to $98 million, pending the outcome of a grievance relating to certain television money.

 

If the CBA is extended before Friday, the cap will definitely shoot past $100 million, and possibly past $105 million.

 

Profootballtalk.com

[Dragon]

Profootballtalk.com

I humbly admit that I am even more confused by the salary cap than ever.

[gateb]

I humbly admit that I am even more confused by the salary cap than ever.

You're among friends with that. I do think that I'm starting to gain somewhat of a grasp over this nonsense. All the things the NFLPA and the owners are negotiating is what has me confused but I don't need to know what they are talking about.

[Dragon]

My whole thing is how is it that someone's cap number can be like $5Million but if they're released they only free up like $1.2Million?

[gateb]

My whole thing is how is it that someone's cap number can be like $5Million but if they're released they only free up like $1.2Million?

Don't take my word for it completely but I believe it is for guaranteed money, bonuses, etc.

[Money]

My whole thing is how is it that someone's cap number can be like $5Million but if they're released they only free up like $1.2Million?

 

I'll explain through the use of an example.

 

---------------

 

A player's cap number for a given season is the combination of that player's salary for that season and the amount of money from his signing's bonus due to him that season.

 

Let's say Will Allen re-signs with the Giants. His contract is 5-years, $20 million with a $5 million signing bonus. The distribution of his salary may look something like this (hypothetically):

 

2006: 2,000,000

2007: 3,000,000

2008: 4,000,000

2009: 5,000,000

2010: 6,000,000

 

The distribution of his signing bonus would look exactly like this, as signing bonus is evenly distributed over the duration of the contract ($5.0 million / 5 years = $1.0 million per year):

 

2006: 1,000,000

2007: 1,000,000

2008: 1,000,000

2009: 1,000,000

2010: 1,000,000

 

Thus, Allen's cap number during the contract will look exactly like this:

 

Year: Salary + Signing Bonus = Cap Number

 

2006: 2,000,000 + 1,000,000 = 3,000,000

2007: 3,000,000 + 1,000,000 = 4,000,000

2008: 4,000,000 + 1,000,000 = 5,000,000

2009: 5,000,000 + 1,000,000 = 6,000,000

2010: 6,000,000 + 1,000,000 = 7,000,000

 

So, if someone were to say "in 2008, Will Allen's cap number is $5.0 million," they are saying that Will Allen is taking up $5 million in cap space. In other words, if the salary cap (maximum amount a team can spend on player's salaries) for 2008 is set at $100 million, $5 million is going to Will Allen.

 

---------------

 

Seems simple, right? It gets a little more complicated. The important distinction is that salaries are not guaranteed, but signing bonus is guaranteed. Thus, if a team cuts a player, they have to pay him the remaining money from his signing bonus. But, they do not have to pay him his salary.

 

I'll return to the Will Allen example. Let's say that in March 2008, the Giants decide to cut Will Allen. At that point, only $2 million of his original $5 million bonus has been paid to him ($1 million in 2006, and $1 million in 2007). So, if they cut him, the remaining $3 million owed to him gets accelerated in the form of a "cap hit" (and Will Allen basically gets a check for $3 million).

 

However, Will Allen does not see $.01 from the $4 million salary he is set to make in 2008. Since player salaries aren't guaranteed, that $4 million is wiped off the books ... disappears. In this hypothetical situation, although the Giants took a $3 million cap hit (aka "dead money") by releasing Will Allen, they also save $4 million because his $4 million salary is erased. Thus, cutting Will Allen results in a net cap saving of $1 million ($4 million salary erased - $ 3 million cap hit).

 

In this situation, Will Allen's cap number prior to release was $5 million, but cutting him freed up $1 million.

 

Hope that makes sense. Any questions?

 

(Bottom line: don't become a capologist!)

[Dragon]

I'll explain through the use of an example.

 

---------------

 

A player's cap number for a given season is the combination of that player's salary for that season and the amount of money from his signing's bonus due to him that season.

 

Let's say Will Allen re-signs with the Giants. His contract is 5-years, $20 million with a $5 million signing bonus. The distribution of his salary may look something like this (hypothetically):

 

2006: 2,000,000

2007: 3,000,000

2008: 4,000,000

2009: 5,000,000

2010: 6,000,000

 

The distribution of his signing bonus would look exactly like this, as signing bonus is evenly distributed over the duration of the contract ($5.0 million / 5 years = $1.0 million per year):

 

2006: 1,000,000

2007: 1,000,000

2008: 1,000,000

2009: 1,000,000

2010: 1,000,000

 

Thus, Allen's cap number during the contract will look exactly like this:

 

Year: Salary + Signing Bonus = Cap Number

 

2006: 2,000,000 + 1,000,000 = 3,000,000

2007: 3,000,000 + 1,000,000 = 4,000,000

2008: 4,000,000 + 1,000,000 = 5,000,000

2009: 5,000,000 + 1,000,000 = 6,000,000

2010: 6,000,000 + 1,000,000 = 7,000,000

 

So, if someone were to say "in 2008, Will Allen's cap number is $5.0 million," they are saying that Will Allen is taking up $5 million in cap space. In other words, if the salary cap (maximum amount a team can spend on player's salaries) for 2008 is set at $100 million, $5 million is going to Will Allen.

 

---------------

 

Seems simple, right? It gets a little more complicated. The important distinction is that salaries are not guaranteed, but signing bonus is guaranteed. Thus, if a team cuts a player, they have to pay him the remaining money from his signing bonus. But, they do not have to pay him his salary.

 

I'll return to the Will Allen example. Let's say that in March 2008, the Giants decide to cut Will Allen. At that point, only $2 million of his original $5 million bonus has been paid to him ($1 million in 2006, and $1 million in 2007). So, if they cut him, the remaining $3 million owed to him gets accelerated in the form of a "cap hit" (and Will Allen basically gets a check for $3 million).

 

However, Will Allen does not see $.01 from the $4 million salary he is set to make in 2008. Since player salaries aren't guaranteed, that $4 million is wiped off the books ... disappears. In this hypothetical situation, although the Giants took a $3 million cap hit (aka "dead money") by releasing Will Allen, they also save $4 million because his $4 million salary is erased. Thus, cutting Will Allen results in a net cap saving of $1 million ($4 million salary erased - $ 3 million cap hit).

 

In this situation, Will Allen's cap number prior to release was $5 million, but cutting him freed up $1 million.

 

Hope that makes sense. Any questions?

 

(Bottom line: don't become a capologist!)

 

Thanx. Makes it a lot easier to understand. I think I'll be taking your advice and never become a capologist though.

[gateb]

Out of sheer curiousity, where do you learn this stuff? Sports management in college?

[Currency]

I learned that in madden.

 

The first time I played madden, I had no clue about what a 'cap' was. During free agency, I signed the best players and then it said 'no cap space, please release players.'

 

Then I learned by experimenting in madden.

[gateb]

I learned that in madden.

 

The first time I played madden, I had no clue about what a 'cap' was. During free agency, I signed the best players and then it said 'no cap space, please release players.'

 

Then I learned by experimenting in madden.

Speaking of that, why don't you start playing some games with our sportswrath team?

[Money]

Out of sheer curiousity, where do you learn this stuff? Sports management in college?

 

This webpage was very helpful ... non of my SM classes at college have discussed the ins and outs of the salary cap.

 

The frightening thing is ... that was just a basic model. There are tons of other things that factor in that I don't even fully understand.

[uconngiants]

Great explanation of the cap money helped out a lot

[Dragon]

I now have a sudden urge to beat the holy hell out of whoever thought up the cap system.

[BigPete]

I'll explain through the use of an example.

 

---------------

 

A player's cap number for a given season is the combination of that player's salary for that season and the amount of money from his signing's bonus due to him that season.

 

Let's say Will Allen re-signs with the Giants. His contract is 5-years, $20 million with a $5 million signing bonus. The distribution of his salary may look something like this (hypothetically):

 

2006: 2,000,000

2007: 3,000,000

2008: 4,000,000

2009: 5,000,000

2010: 6,000,000

 

The distribution of his signing bonus would look exactly like this, as signing bonus is evenly distributed over the duration of the contract ($5.0 million / 5 years = $1.0 million per year):

 

2006: 1,000,000

2007: 1,000,000

2008: 1,000,000

2009: 1,000,000

2010: 1,000,000

 

Thus, Allen's cap number during the contract will look exactly like this:

 

Year: Salary + Signing Bonus = Cap Number

 

2006: 2,000,000 + 1,000,000 = 3,000,000

2007: 3,000,000 + 1,000,000 = 4,000,000

2008: 4,000,000 + 1,000,000 = 5,000,000

2009: 5,000,000 + 1,000,000 = 6,000,000

2010: 6,000,000 + 1,000,000 = 7,000,000

 

So, if someone were to say "in 2008, Will Allen's cap number is $5.0 million," they are saying that Will Allen is taking up $5 million in cap space. In other words, if the salary cap (maximum amount a team can spend on player's salaries) for 2008 is set at $100 million, $5 million is going to Will Allen.

 

---------------

 

Seems simple, right? It gets a little more complicated. The important distinction is that salaries are not guaranteed, but signing bonus is guaranteed. Thus, if a team cuts a player, they have to pay him the remaining money from his signing bonus. But, they do not have to pay him his salary.

 

I'll return to the Will Allen example. Let's say that in March 2008, the Giants decide to cut Will Allen. At that point, only $2 million of his original $5 million bonus has been paid to him ($1 million in 2006, and $1 million in 2007). So, if they cut him, the remaining $3 million owed to him gets accelerated in the form of a "cap hit" (and Will Allen basically gets a check for $3 million).

 

However, Will Allen does not see $.01 from the $4 million salary he is set to make in 2008. Since player salaries aren't guaranteed, that $4 million is wiped off the books ... disappears. In this hypothetical situation, although the Giants took a $3 million cap hit (aka "dead money") by releasing Will Allen, they also save $4 million because his $4 million salary is erased. Thus, cutting Will Allen results in a net cap saving of $1 million ($4 million salary erased - $ 3 million cap hit).

 

In this situation, Will Allen's cap number prior to release was $5 million, but cutting him freed up $1 million.

 

Hope that makes sense. Any questions?

 

(Bottom line: don't become a capologist!)

 

A good analysis, it gives a general idea of how it works.

 

 

Although to confuse things more, often the media will include the signing bonus in their reporting (they get more hype that way)

 

for the Will Allen example, it would be a 5 year $25 million contract that includes a $5 million signing bonus

 

Also there are bonuses such as roster bonuses, performance bonused etc

[gmenroc]

I'll explain through the use of an example.

 

---------------

 

A player's cap number for a given season is the combination of that player's salary for that season and the amount of money from his signing's bonus due to him that season.

 

Let's say Will Allen re-signs with the Giants. His contract is 5-years, $20 million with a $5 million signing bonus. The distribution of his salary may look something like this (hypothetically):

 

2006: 2,000,000

2007: 3,000,000

2008: 4,000,000

2009: 5,000,000

2010: 6,000,000

 

The distribution of his signing bonus would look exactly like this, as signing bonus is evenly distributed over the duration of the contract ($5.0 million / 5 years = $1.0 million per year):

 

2006: 1,000,000

2007: 1,000,000

2008: 1,000,000

2009: 1,000,000

2010: 1,000,000

 

Thus, Allen's cap number during the contract will look exactly like this:

 

Year: Salary + Signing Bonus = Cap Number

 

2006: 2,000,000 + 1,000,000 = 3,000,000

2007: 3,000,000 + 1,000,000 = 4,000,000

2008: 4,000,000 + 1,000,000 = 5,000,000

2009: 5,000,000 + 1,000,000 = 6,000,000

2010: 6,000,000 + 1,000,000 = 7,000,000

 

So, if someone were to say "in 2008, Will Allen's cap number is $5.0 million," they are saying that Will Allen is taking up $5 million in cap space. In other words, if the salary cap (maximum amount a team can spend on player's salaries) for 2008 is set at $100 million, $5 million is going to Will Allen.

 

---------------

 

Seems simple, right? It gets a little more complicated. The important distinction is that salaries are not guaranteed, but signing bonus is guaranteed. Thus, if a team cuts a player, they have to pay him the remaining money from his signing bonus. But, they do not have to pay him his salary.

 

I'll return to the Will Allen example. Let's say that in March 2008, the Giants decide to cut Will Allen. At that point, only $2 million of his original $5 million bonus has been paid to him ($1 million in 2006, and $1 million in 2007). So, if they cut him, the remaining $3 million owed to him gets accelerated in the form of a "cap hit" (and Will Allen basically gets a check for $3 million).

 

However, Will Allen does not see $.01 from the $4 million salary he is set to make in 2008. Since player salaries aren't guaranteed, that $4 million is wiped off the books ... disappears. In this hypothetical situation, although the Giants took a $3 million cap hit (aka "dead money") by releasing Will Allen, they also save $4 million because his $4 million salary is erased. Thus, cutting Will Allen results in a net cap saving of $1 million ($4 million salary erased - $ 3 million cap hit).

 

In this situation, Will Allen's cap number prior to release was $5 million, but cutting him freed up $1 million.

 

Hope that makes sense. Any questions?

 

(Bottom line: don't become a capologist!)

 

Nicely explained!

 

Also noteworthy is the significance of the June 1st date. That's the day that the signing bonus is paid. So in the Will Allen example previously noted, if he were cut June 1st, 2008 instead of March 2008, he'd get paid the 1,000,000 bonus that year and the remaining 2,000,000 salary cap hit would take affect the following year. So, in that case, he received 3 million of the original 5 million bonus (2006, 2007, and 2008). The remaining 2 million would hit in 2009. So we would lower his cap number from 5 million to 1 million THIS YEAR, saving 4 million. But, he'd have a 2 million hit NEXT YEAR.

 

I think I got that right. I'd also agree on the not becoming a capologist.

[Gspotter]

Thanks for the info, it was clearly stated and made clear that which is unecessarily messy.

[gateb]

This webpage was very helpful ... non of my SM classes at college have discussed the ins and outs of the salary cap.

 

The frightening thing is ... that was just a basic model. There are tons of other things that factor in that I don't even fully understand.

So what specifically do you cover in sports management?

[gateb]

I'll explain through the use of an example.

 

---------------

 

A player's cap number for a given season is the combination of that player's salary for that season and the amount of money from his signing's bonus due to him that season.

 

Let's say Will Allen re-signs with the Giants. His contract is 5-years, $20 million with a $5 million signing bonus. The distribution of his salary may look something like this (hypothetically):

 

2006: 2,000,000

2007: 3,000,000

2008: 4,000,000

2009: 5,000,000

2010: 6,000,000

 

The distribution of his signing bonus would look exactly like this, as signing bonus is evenly distributed over the duration of the contract ($5.0 million / 5 years = $1.0 million per year):

 

2006: 1,000,000

2007: 1,000,000

2008: 1,000,000

2009: 1,000,000

2010: 1,000,000

 

Thus, Allen's cap number during the contract will look exactly like this:

 

Year: Salary + Signing Bonus = Cap Number

 

2006: 2,000,000 + 1,000,000 = 3,000,000

2007: 3,000,000 + 1,000,000 = 4,000,000

2008: 4,000,000 + 1,000,000 = 5,000,000

2009: 5,000,000 + 1,000,000 = 6,000,000

2010: 6,000,000 + 1,000,000 = 7,000,000

 

So, if someone were to say "in 2008, Will Allen's cap number is $5.0 million," they are saying that Will Allen is taking up $5 million in cap space. In other words, if the salary cap (maximum amount a team can spend on player's salaries) for 2008 is set at $100 million, $5 million is going to Will Allen.

 

---------------

 

Seems simple, right? It gets a little more complicated. The important distinction is that salaries are not guaranteed, but signing bonus is guaranteed. Thus, if a team cuts a player, they have to pay him the remaining money from his signing bonus. But, they do not have to pay him his salary.

 

I'll return to the Will Allen example. Let's say that in March 2008, the Giants decide to cut Will Allen. At that point, only $2 million of his original $5 million bonus has been paid to him ($1 million in 2006, and $1 million in 2007). So, if they cut him, the remaining $3 million owed to him gets accelerated in the form of a "cap hit" (and Will Allen basically gets a check for $3 million).

 

However, Will Allen does not see $.01 from the $4 million salary he is set to make in 2008. Since player salaries aren't guaranteed, that $4 million is wiped off the books ... disappears. In this hypothetical situation, although the Giants took a $3 million cap hit (aka "dead money") by releasing Will Allen, they also save $4 million because his $4 million salary is erased. Thus, cutting Will Allen results in a net cap saving of $1 million ($4 million salary erased - $ 3 million cap hit).

 

In this situation, Will Allen's cap number prior to release was $5 million, but cutting him freed up $1 million.

 

Hope that makes sense. Any questions?

 

(Bottom line: don't become a capologist!)

I just have one other comment about your assessment. I thought that usually, players get their bonuses immediately, not distributed over the course of their contract evenly.

[njsmalls]

I'll explain through the use of an example.

 

---------------

 

A player's cap number for a given season is the combination of that player's salary for that season and the amount of money from his signing's bonus due to him that season.

 

Let's say Will Allen re-signs with the Giants. His contract is 5-years, $20 million with a $5 million signing bonus. The distribution of his salary may look something like this (hypothetically):

 

2006: 2,000,000

2007: 3,000,000

2008: 4,000,000

2009: 5,000,000

2010: 6,000,000

 

The distribution of his signing bonus would look exactly like this, as signing bonus is evenly distributed over the duration of the contract ($5.0 million / 5 years = $1.0 million per year):

 

2006: 1,000,000

2007: 1,000,000

2008: 1,000,000

2009: 1,000,000

2010: 1,000,000

 

Thus, Allen's cap number during the contract will look exactly like this:

 

Year: Salary + Signing Bonus = Cap Number

 

2006: 2,000,000 + 1,000,000 = 3,000,000

2007: 3,000,000 + 1,000,000 = 4,000,000

2008: 4,000,000 + 1,000,000 = 5,000,000

2009: 5,000,000 + 1,000,000 = 6,000,000

2010: 6,000,000 + 1,000,000 = 7,000,000

 

So, if someone were to say "in 2008, Will Allen's cap number is $5.0 million," they are saying that Will Allen is taking up $5 million in cap space. In other words, if the salary cap (maximum amount a team can spend on player's salaries) for 2008 is set at $100 million, $5 million is going to Will Allen.

 

---------------

 

Seems simple, right? It gets a little more complicated. The important distinction is that salaries are not guaranteed, but signing bonus is guaranteed. Thus, if a team cuts a player, they have to pay him the remaining money from his signing bonus. But, they do not have to pay him his salary.

 

I'll return to the Will Allen example. Let's say that in March 2008, the Giants decide to cut Will Allen. At that point, only $2 million of his original $5 million bonus has been paid to him ($1 million in 2006, and $1 million in 2007). So, if they cut him, the remaining $3 million owed to him gets accelerated in the form of a "cap hit" (and Will Allen basically gets a check for $3 million).

 

However, Will Allen does not see $.01 from the $4 million salary he is set to make in 2008. Since player salaries aren't guaranteed, that $4 million is wiped off the books ... disappears. In this hypothetical situation, although the Giants took a $3 million cap hit (aka "dead money") by releasing Will Allen, they also save $4 million because his $4 million salary is erased. Thus, cutting Will Allen results in a net cap saving of $1 million ($4 million salary erased - $ 3 million cap hit).

 

In this situation, Will Allen's cap number prior to release was $5 million, but cutting him freed up $1 million.

 

Hope that makes sense. Any questions?

 

(Bottom line: don't become a capologist!)

 

Long winded...but actually simple enough.

[Money]

I just have one other comment about your assessment. I thought that usually, players get their bonuses immediately, not distributed over the course of their contract evenly.

 

No, they don't get that money immediately. But it is guaranteed, so they will see every penny of it at some point.

[Money]

So what specifically do you cover in sports management?

 

Since I'm just finishing up my sophomore year, I've only taken 3 Sport Management classes. The way it works at U of M, at the end of our sophomore year, we are suppossed to apply to the Level 2 of the Sport Management Program. People who don't get into Level 2 have to go find another major. Here is a brief description of the classes I've taken and what Level 2 entails...

 

SM 101 was a Public Speaking and Small Group Communication course which was as easy as it sounds. Pretty useful, though.

 

SM 111 was an introductory course that discussed the :sociological basis of sport" ... race issues, gender issues, age issues, sexuality issues, and all that stuff.

 

SM 203 is my sport business class and it focuses specifically on the business of sport. The day after the Super Bowl, we dedicated an entire class to discussing the commericials. Here is the professor's description of the class on our syllabus:

 

This course is designed to provide students with an overview of the basic organizational and business structure of the sport, fitness and leisure industries. The content areas include Professional, Olympic, and Intercollegiate sport, as well as the health/fitness and recreation business sectors. This course is intended to provide the foundation knowledge necessary for upper division courses in SM.

 

For the NFL, we discussed how the NFL is essentially a monopoly and how it has crushed all other competitors (XFL, USFL, AFL), how the owners dominate the sport in both finances and power, revenue sharing, CBA, salary cap (only it's relevance), draft, how it differs from other business structures, and many other important concepts relevant to the NFL and other pro sports. Currently, we are discussing the Olympics.

 

--------------------------

 

Once in Level 2, classes in the Sport Management program include things like Sports Law, Sport Marketing, Sport Advertising, Sports and the Media, and a lot of other interesting courses. It's a really flexible major, as people can use Sport Management to work in management (i.e. General Manager), marketing, advertising, and even finance and accounting. Essentially Sport Management is Business School with a focus on the sporting sector.

 

People who apply to Level 2 of Sport Management also must take prerequisites in Psychology, Economics, Accounting, Statistics, and English.

 

Hope that helps. It is currently the fastest growing program at the University of Michigan, and one of the fastest growing nation-wide.

[gmenroc]

No, they don't get that money immediately. But it is guaranteed, so they will see every penny of it at some point.

 

Actually, when it comes to signing bonuses, the players do get that money up front. However, when it comes to accounting for it against the salary cap, Money's example was spot on.

 

The one thing that confuses me more than anything are the performance incentives that players can hit depending upon their play on the field, the multi-tiered bonuses, roster bonuses, and how these are counted against the cap.

[gateb]

Since I'm just finishing up my sophomore year, I've only taken 3 Sport Management classes. The way it works at U of M, at the end of our sophomore year, we are suppossed to apply to the Level 2 of the Sport Management Program. People who don't get into Level 2 have to go find another major. Here is a brief description of the classes I've taken and what Level 2 entails...

 

SM 101 was a Public Speaking and Small Group Communication course which was as easy as it sounds. Pretty useful, though.

 

SM 111 was an introductory course that discussed the :sociological basis of sport" ... race issues, gender issues, age issues, sexuality issues, and all that stuff.

 

SM 203 is my sport business class and it focuses specifically on the business of sport. The day after the Super Bowl, we dedicated an entire class to discussing the commericials. Here is the professor's description of the class on our syllabus:

For the NFL, we discussed how the NFL is essentially a monopoly and how it has crushed all other competitors (XFL, USFL, AFL), how the owners dominate the sport in both finances and power, revenue sharing, CBA, salary cap (only it's relevance), draft, how it differs from other business structures, and many other important concepts relevant to the NFL and other pro sports. Currently, we are discussing the Olympics.

 

--------------------------

 

Once in Level 2, classes in the Sport Management program include things like Sports Law, Sport Marketing, Sport Advertising, Sports and the Media, and a lot of other interesting courses. It's a really flexible major, as people can use Sport Management to work in management (i.e. General Manager), marketing, advertising, and even finance and accounting. Essentially Sport Management is Business School with a focus on the sporting sector.

 

People who apply to Level 2 of Sport Management also must take prerequisites in Psychology, Economics, Accounting, Statistics, and English.

 

Hope that helps. It is currently the fastest growing program at the University of Michigan, and one of the fastest growing nation-wide.

That did help. I probably will be interested in pursuing something like that later but I don't need to worry about that now. I just wanted a taste to see what really goes on in that class.