The NFL trade deadline is a week away. That, a rash of injuries, and a whole bunch of unmet expectations have fans wondering about the St. Louis Rams' salary cap situation. It was reported last week that the Rams had $6 million in available cap space. If only it were that simple. Rams Executive Vice President of Football Operations and Chief Operating Officer Kevin Demoff took some time to explain the team's cap situation with us recently.
In reality, the Rams are approximately $1.345 million under the cap, in terms of "true salary cap dollars," according to Demoff. Those numbers reflect the most recent additions of WR Nick Miller and CB Brian Jackson.
The discrepancy in the reported amount versus what Demoff calls the "true salary cap dollars" stems from the September restructure of Chris Long's contract, which freed up $4 million in space. Except it didn't free up $4 million in cap space.
"While we freed up $4 million in the Chris Long grievance resolution, that is for a few remote salary cap contingencies that could kick in at the end of this year," Demoff explained. "So we always have to save that $4m for the end of the season. The likelihood is that $4 million will not be used this year and will roll over into 2012, which means the actual accounting of the Chris Long contract will not change as a result of the re-structure (we add $4 million in charges next year and get a $4 million credit for next year - a wash)."
If the Rams do end up using that $4 million for contingencies this year, it would translate into a reduction in salaries owed in the 2012 season. The bottom line, however, is that money is not available for random additions, etc. this season. "The $4m was never designed to be "used" in 2011," said Demoff. "We entered the regular season with $3m of salary cap space and that should be enough to get through the season."
The NFL salary cap is a complex beast. After the jump, Demoff explains the cap in a little more detail, and paints a picture of the Rams' cap situation for 2012.
That $4 million aside, Demoff says that the Rams will be tight on cap space for the 2012 season, for the same reasons as this year.
Our salary cap through 2012 is somewhat constricted because we had very high draft picks in 2008-2010. When you factor in those contracts, they account for nearly 32% of our salary cap, which means the remaining 50 players, IR and practice squad and cuts have to fit in the rest of the 68%. Factor in Steven Jackson and that number jumps to roughly 40%.
According to Demoff, the Rams expect to have about $10 million in cap space for 2012, assuming a relatively flat cap and players returning on their current contracts as well as signing draft picks. It's also worth pointing out that most of the Rams' free agent additions this year are playing under one-year contracts. Demoff noted that it's too soon to start thinking about re-signing those players.
Demoff explained that the decision to operate so close to the cap this year and next has more to do with freeing up space over the ensuing years, as well as a look at the players on the market.
Although we are tight in 2011 and 2012, that is because we took our lumps in 2010 and 2011 knowing the market would be limited in terms of top tier free agents. This was a conscious choice versus re-negotiating contracts and pushing our pain into the future. We also didn't want to do what is called a "simple re-structure", converting salary into signing bonus, with our top guys because we wanted to preserve maximum flexibility in the future.
Having money available in starting in 2013 is important because of the building block players whose contracts expire after 2012 and in subsequent years. "We told our fans we would be able to re-sign our own I believe that will be the case," said Demoff. Right now, the Rams expect to have roughly $40-45 million in cap space for 2013, money that will be needed to re-sign those core players, including Ron Bartell, Bradley Fletcher, Chris Long and James Laurinaitis, whose contract expire after 2012.
Tomorrow, I'll get into more of the conversation about restructuring player contracts and the team's plans for the future. For now, I want to leave you with a few more answers from Demoff which will go a long way toward understanding the NFL salary cap.
Give us a basic explanation of how the cap works.
The simplest way to figure out the cap is to assume that everything paid to a player in a given year counts against the cap except for signing and option bonuses, which are pro-rated across the life of the contract. The only tricky part can be incentives, which are categorized as likely to be earned or not likely to be earned. That determination is based on what the player accomplished in the previous season. The other important thing to remember is a salary cap is a credit card - what you don't have to pay now you have to pay later. There are no payments that disappear.
What forms of player compensation count against the cap, e.g. salary, bonuses, etc.? How is it determined what money counts during a specific period? For instance, when they Sam Bradford counts for approximately $19 million against the cap this year, where is that figure coming from?
All forms of compensation count against the cap. The most common forms of payment are salary (Paragraph 5 Salary), signing bonuses, roster bonuses, option bonuses and incentives. For example, Sam Bradford's contract this year accounts for his base salary, his signing bonus pro-rated over 5 years (because it kicked in during 2011) and his $8.5m one-time rookie incentive which also counts this year. The way Sam's contract was structured was typical of the way previous rookie contracts were structured, where $3m counted in the first year and $75m counts in the next 5 years. Any payment made to a player, whether the player is on your 53-man roster, IR, PUP or no longer with your team, counts against the salary cap.
How is guaranteed money in a player's contract normally scheduled to be paid. Do you front load it or back load it to manage the cap?
When money is paid to a player it does not necessarily affect how it counts against the salary cap as much as how it is categorized. The most common difference in how many counts against the cap is a signing bonus versus a roster bonus. A roster bonus in most cases counts in the year it is scheduled to be earned (unless it is guaranteed in which case it is pro-rated) and a signing bonus is pro-rated over the life of the deal. I prefer to pay guaranteed money in roster bonuses if possible because that means you pay as you go rather than put off the charges into future years. With the exception of two contracts (Jason Brown and Quintin Mikell), nearly all of our contracts have had roster bonuses as the focus of the guaranteed money to prevent dead money or large cap charges in the future.
Again, a big thanks to Kevin Demoff for taking time to answer our questions. I've got much more to share in the days ahead.