paul w

Can someone explain what this is and how it works ?

byron

http://www.webskins.org/cap.html

BAJ

scoop

It would be easier to explain nuclear physics...

byron

-<paulfoel_remove_this_bit@hotmail.com> wrote: -
->Can someone explain what this is and how it works ?
->
-
-It would be easier to explain nuclear physics...

No it's not. The salary cap is a hard spending limit for teams for player
salaries and bonuses, including signing, roster, and incentives. Yearly salaries
are counted against the current cap, while signing bonuses are spread out
over the life of the contract. So a $21 mil 6 year deal with a $9 mil signing
bonus, the $9 will be spread $1.5 mil/year over the 6 year contract, but the
player gets the $9 mil when they sign. Then the salary is often structured
to escalate so that small amounts are paid early in the contract, while the
salary increases over the life of the contract.

You then add a couple of items. One is that if the player is released, traded,
or retires, the remainder of the signing bonus becomes due. If this occurs
before June 1st, it becomes all due now. So in our example if the player is
released after 3 years, then the remaining $4.5 mil of the signing bonus
gets added to the current cap if the player is released before June 1st.
However teams that release players after June 1st can spread the "cap hit"
over 2 years, which is why "cap casualties" often occur after June 1st. Note
that the remaining salary for the player is not guaranteed and therefore no
longer counts against the cap. That's why players hold out for high signing
bonuses: it's the only guaranteed money they'll ever see. And teams like
signing bonuses because they can spread out that cost over the life of the
contract.

Often escalating salaries later in the contract will put a team in a bind. The
typical response is to renegotiate the contract with the player by offering
them another signing bonus and extending the length of the contract. So say
in our example above that in the 3rd year the player is due $4 mil of the $12
mil salary part of the $21 mil contract. Put it puts the team over the cap.
The team offers to renegotiate the contract, extending it another 3 years,
paying the player a $3 mil signing bonus and reducing the salary to $1 mil.
So instead of taking a $4 mil salary cap hit for the year, the mix gets changed
to a $1 mil salary + $1 mil bonus ($3 mil bonus / 3 years) which ends up a
$2 mil cap hit for the year. But the player still gets $4, with $3 mil
guaranteed.

The final concept is "dead money". That's cap money for players no longer on
the team due to trade, release, or retirement. Since teams benefit on the cap
by splitting signing bonuses over the life of the contract, more and more dead
money gets created at the end of those contracts. Too much dead money can strap
a teams cap so that they have difficult times signing players at the market
rate.

But in general long contracts with big signing bonuses, that are renegotiated
when the salaries at the end of the contract become too large are a standard
technique of cap managment. Along with after June 1 cap casualites, a GM
can manage the cap while paying the players the salaries (and bonuses) they
demand.

BAJ

paul w

Complicated, but seems like a good idea to stop the teams with the most
money buying all the best players !!!!

Could do with something like this in rugby in Wales !!!

Paul.

strap

market

renegotiated

standard


they

heavyarms

Sorry for the top-post. You just said that it was easy to explain the
Salary Cap, and went on to write 5 paragraphs explaining it!

strap

market

renegotiated

standard


they

byron

-Sorry for the top-post. You just said that it was easy to explain the
-Salary Cap, and went on to write 5 paragraphs explaining it!

But it's still easier than Nuclear Physics, which was the original claim. BAJ -
-"Byron A Jeff" <byron@cc.gatech.edu> wrote in message -news:bu648l$rcg@cleon.cc.gatech.edu...
-> In article <tq4c001rshqoldqh2d3qjlsv3v4cj847je@4ax.com>,
-> Scoop <mike-murray@sbcglobal.net> wrote:
-> -On Wed, 14 Jan 2004 14:42:21 +0000 (UTC), "Paul W"
-> -<paulfoel_remove_this_bit@hotmail.com> wrote:
-> -
-> ->Can someone explain what this is and how it works ?
-> ->
-> -
-> -It would be easier to explain nuclear physics...
->
-> No it's not. The salary cap is a hard spending limit for teams for player
-> salaries and bonuses,...

[SNIP]