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How the Giants went from 11 million over the cap, to spending 200+ million and being under the cap.


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Good article, you need a subscrpition to go to the website but some lovely reddit user posted it online.

https://theathletic.com/2478020/2021/03/26/the-giants-had-no-cap-space-heres-how-they-spent-200-million-on-free-agents/

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March 26, 2021

" The salary cap outlook was grim across the NFL this offseason. Lost revenues from COVID-19 caused the cap, which was projected to be around $210 million before the pandemic, to plummet to $182.5 million.

The Giants were caught in that crunch. Or so it seemed. They were projected to be $8 million over the cap when the $182.5 million figure was finalized on March 10. The front office, led by assistant general manager and cap expert Kevin Abrams, got to work.

Over the past two weeks, the Giants have managed to award contracts to three players — wide receiver Kenny Golladay, defensive lineman Leonard Williams and cornerback Adoree’ Jackson — worth a combined $174 million.

So how did they afford their unexpected spending spree? Here’s a step-by-step look at the moves the Giants made to make room for their expensive additions:

1. WR Golden Tate released (March 3). Cutting the veteran wide receiver two years into his four-year, $37.5 million contract resulted in $6.1 million in cap savings with $4.7 million in dead money.

Cumulative cap space created: $6.1 million.

(Note: The actual savings is $6.1 million minus the cost of the player who replaced Tate in the top-51 cap accounting, which is approximately $850,000. But we’re already getting pretty deep into the salary-cap weeds here, so we’ll just use the total savings from the cut player to give an approximate reflection of the savings.)

2. LB David Mayo released (March 3). Cutting the backup linebacker one year into his three-year, $8.4 million contract resulted in $2.3 million in cap savings with no dead money.

Cumulative cap space created: $8.4 million.

3. WR Cody Core released (March 8). Cutting the wide receiver, who is recovering from a torn Achilles, one year into his two-year, $4 million contract resulted in $2 million in cap savings with no dead money.

Cumulative cap space created: $10.4 million.

4. TE Levine Toilolo pay cut (March 8). Toilolo’s cap charge dropped from $2.95 million to $1.6 million with the pay cut, creating $1.35 million in cap savings. Toilolo gained $650,000 in guarantees, which increases his odds of sticking on the roster.

Cumulative cap space created: $11.75 million.

5. OL Kevin Zeitler released (March 10). Cutting the starting right guard with one-year remaining on his contract resulted in $12 million in cap savings with $2.5 million in dead money.

Cumulative cap space created: $23.75 million.

6. OL Nate Solder pay cut (March 16). Solder’s cap charge dropped from $16.5 million to $9.5 million with the pay cut, which slashed his salary from $10 million to $3 million (fully guaranteed). A $6.5 million cap charge remained from prorated bonuses from the four-year, $62 million contract Solder signed in 2018. The final year of Solder’s contract was voided, so he’ll become a free agent after the season and the Giants will eat $4 million in dead money in 2022.

Cumulative cap space created: $30.75 million

7. DL Leonard Williams extension (March 16). The Giants franchise-tagged Williams on March 9. The tag carried a $19.4 million cap charge for 2021. The sides reached an agreement on a three-year, $61 million extension on the second day of free agency. The backloaded contract lowered Williams’ 2021 cap hit to $11 million for a cap savings of $8.4 million. Williams’ cap hits are $26.5 million in 2022 and $25.5 million in 2023.

Cumulative cap space created: $39.15 million

8. CB James Bradberry restructure (March 24). The Giants “kicked the can” to create immediate cap space by restructuring Bradberry’s contract: $8 million of his $13.9 million salary for 2021 was converted into a signing bonus, which gets prorated over the two remaining years on his contract. The restructure created $4 million in cap savings by lowering Bradberry’s 2021 cap hit from $17 million to $13 million. Conversely, his 2022 cap hit increased from $16.5 million to $20.5 million. There’s no downside to the restructure for a player. He gets the same amount of money he was already due and typically gets it sooner in a lump sum rather than in weekly paychecks during the season.

Cumulative cap space created: $43.15 million

9. LB Blake Martinez restructure (March 24). The Giants did the same type of restructure with Martinez, converting $7 million of his $8.1 million salary for 2021 into a signing bonus. That created $3.5 million in cap savings by lowering Martinez’s 2021 cap hit from $10.2 million to $6.7 million. His 2022 cap hit increased from $10.5 million to $14 million.

Cumulative cap space created: $46.65 million

It only took nine relatively simple moves to clear $46.65 million in cap space. Cutting the steady Zeitler from an unproven offensive line was the toughest pill to swallow, and it likely wouldn’t have happened if the cap didn’t plummet.

The most important — and challenging — step was reaching an agreement with Williams. Having a $19.4 million charge from the franchise tag on the cap was going to be restrictive. Ultimately, Williams landed the lucrative long-term deal he was seeking and the team got some much-needed, immediate cap relief.

The Giants took the $46.65 million in cap savings and used it to sign 12 free agents with a cumulative cap charge of $34 million for 2021. That figure doesn’t include the cap hits for Jackson, who signed a three-year, $39 million contract, and defensive end Ifeadi Odenigbo, who signed a one-year, $2.5 million contract. When those contract details become official, the total cap charge from the free-agent signings should equal roughly $44 million.

Though the Giants may have been more aggressive due to the depressed cap, none of the moves listed above — releases, pay cuts, restructures — are unusual. The Giants make those maneuvers every offseason to get their cap in the best possible shape.

But there were three measures the Giants used this offseason to stretch their cap space as much as possible that were departures from their standard operating procedures:

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" 1. The Giants structured contracts to have significant gaps between the cap hits in Year 1 and future years.

It’s been standard practice for the Giants to have lower cap hits in the first year of long-term deals. For instance, Solder had a $10 million cap hit in the first year of the contract he signed in 2018. His cap hits jumped to $12 million, $19.5 million and $20.5 million in subsequent years. But the Giants made the contrasts far greater in the contracts they handed out this year. Williams’ cap hit is $11 million this year before jumping to $26.5 million in 2022 and $25.5 million in 2023. Golladay’s cap hit this year is just $4.5 million before jumping to $21.15 million in 2022, $21.4 million in 2023 and $21.4 million in 2024.

It’s easy to structure contracts to minimize the Year 1 cap hits. The players get a base salary at or near the minimum in Year 1 (around $1 million). The salaries then increase significantly in subsequent years. Signing bonuses are prorated evenly over the life of a contract, so Williams’ $22.5 million signing bonus only has a $7.5 million cap charge in 2021. Combined with his $3.5 million base salary, his cap hit is $11 million. The same $7.5 million cap charge from the signing bonus exists in 2022, but his cap hit rises significantly because his base salary jumps to $19 million.

Players don’t mind the lower salaries in the first year because they get the signing bonus up front, so they’re receiving a substantial payment in Year 1. The Giants typically guarantee most/all of the lucrative Year 2 salaries in big contracts, so the players get the majority of the guaranteed money within two years of signing.

The Giants still would prefer to structure “flat” contracts, where the cap hits are relatively even year to year. That’s the “pay as you go” method, which eschews bonus prorations and leaves no dead money if a player is cut/traded during a contract. But they couldn’t switch to that approach while adding talent this offseason due to the cap constraints.

2. The Giants joined the “void year” fad this offseason. Golladay’s four-year contract includes a fifth “dummy” year. The purpose is to spread his signing-bonus proration over the maximum five years to lower the cap hit in each year. So Golladay’s $17 million signing bonus will count $3.4 million on the cap in each of the next five years.

The benefit: The Giants save $850,000 per year on the cap over the next four years. The downside: The Giants will have $3.4 million counting on the cap in 2025 when Golladay is no longer on the roster (unless he signs an extension).

Void years aren’t new. The Saints have used them for years to stretch their cap hits. But they’ve become more popular this year because teams are so desperate for cap space. The Giants joined the club with Golladay’s contract.

3. The most creative change the Giants made was instituting early roster-bonus triggers in Golladay’s contract. He has a $4.5 million roster bonus in 2022, a $4.5 million roster bonus in 2023 and a $3.5 million roster bonus in 2024.

Typically, roster bonuses are triggered if a player is on the roster on the third day of that league year. The change with Golladay’s contract is that his 2022 and 2023 roster bonuses are guaranteed for injury at signing, which means he’ll collect that $9 million even if he’s released after suffering a major injury. The $4.5 million 2022 roster bonus is paid if he’s on the roster on the first day of the 2022 league year. The twist is that his $4.5 million 2023 roster bonus becomes fully guaranteed if he’s on the roster on the third day of the 2022 league year. The $3.5 million 2024 roster bonus reverts to the typical structure: He earns it if he’s on the roster on the third day of the 2024 league year.

All of those accounting maneuvers essentially guaranteed Golladay an additional $9 million at signing — there’s no chance the Giants will cut him after one season — without putting it into a signing bonus that would be prorated and therefore increase the Year 1 cap hit. Roster bonuses count fully on the cap in the year they’re earned with no proration.

Abrams likely needs an appointment with a chiropractor after stretching the numbers as much as he did this offseason.

If the Giants could create this much cap space this year, an obvious question is why don’t they do the same moves to the extreme every offseason? The answer is that the bill eventually comes due for teams that continuously kick the can down the road.

The Saints had to cut quality players and let others leave in free agency because of their lack of cap space this year. The problem with their approach was exacerbated by the cap, which had been increasing by roughly $10 million per year, dropping $17 million this year.

The Giants are obviously banking on the cap rising in the coming years due to the NFL securing over $100 billion in new media deals last week. Those deals should cause the cap to skyrocket in the future, but they don’t officially kick in until 2023. So it’s not clear how 2022 will be impacted since there are still losses from 2020 that will be offset next year.

Over The Cap projects a $203 million cap for 2022. The Giants currently have $187 million in cap charges committed to 38 players in 2022. They can play the restructure game again with players like Williams and Golladay to create more space, but then they would be further inflating the cap hits in already backloaded contracts.

The Giants have spent big in free agency in recent years because of how poorly they’ve drafted. Wide receiver Sterling Shepard (four years, $41 million) is the only Giants draft pick on a second contract with the team.

The Giants will likely need to start budgeting for extensions for their own young players. Tight end Evan Engram, safety Jabrill Peppers and the 2018 draft class are set to hit free agency next offseason, although the team will control running back Saquon Barkley’s fifth-year option for 2022.

The 2019 draft class will be eligible for extensions next offseason. The Giants are hoping quarterback Daniel Jones performs well enough this season to command an extension. But if he does, their cap outlook will change since franchise quarterback contracts are exorbitant.

The Giants showed this offseason that teams always have methods to create cap space. But they need their big investments to pay off because the cap can only be stretched so far and the Giants have gone all-in with a handful of players over the next few seasons. "

Dan Duggan is a staff writer for The Athletic covering the New York Giants. He previously covered the Giants for two years for The Star-Ledger. He has also worked for the Boston Herald.

Follow Dan Duggan on Twitter: https://twitter.com/DDuggan21?s=09

 

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Just now, mastershake said:

So we're basically fucked in 2022-2023.

Caps projected to be over 250 million by 2022.

These 20 million contracts will be the new norm by then.

We will see QBs signing 40 million a year contracts by then.

 

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1 minute ago, BlueInCanada said:

Caps projected to be over 250 million by 2022.

These 20 million contracts will be the new norm by then.

We will see QBs signing 40 million a year contracts by then.

 

Damn 250 mill? 

Okay I take that back.

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2 minutes ago, mastershake said:

Damn 250 mill? 

Okay I take that back.

This year the NFL signed an 11 year 110 billion dollar TV deal.

110 BILLION.

They get 10 billion a year.

For the next 11 years lol 

Before any jersey is sold any ticket is paid for, any beer is bought.

The NFL has a cool 10 billion dollars in revenue.

The league is fucking nuts yo.

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13 hours ago, BlueInCanada said:

This year the NFL signed an 11 year 110 billion dollar TV deal.

110 BILLION.

They get 10 billion a year.

For the next 11 years lol 

Before any jersey is sold any ticket is paid for, any beer is bought.

The NFL has a cool 10 billion dollars in revenue.

The league is fucking nuts yo.

Leonard Williams for 3 years $63mm now seems like a bargain.

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This off-season was the rare case that the deferred bonus structure makes great long term sense. 

I don't think the new TV deal will impact the cap until 2023, but even so the Giants should be in good shape in 2022 if the cap returns almost to what it would have been pre-pandemic.

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