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Thread: Now for Some Really True Words about the Jets Cap Situation

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    Now for Some Really True Words about the Jets Cap Situation


  2. #2

    Lost in the Myths
    By Smackdad on Feb 21, 6:38p
    USA TODAY Sports

    An attempt to shed some light on certain points of confusion regarding the NY Jets.

    There seems to be a certain amount of confusion regarding the Darrelle Revis situation, the Jets' cap situation, restructuring contracts, and various and sundry other messy details. I'm going to attempt to address many of the most common misconceptions being spread by the media and others and shed some light on what is really going on. Read on if you can stand exploring some of the arcane details necessary for a better understanding of these issues.

    Myth #1: The Jets cannot restructure Mark Sanchez' contract (or fill in the blank with your favorite outsize contract) because he would be a fool to accept less money.

    Reality: Restructuring contracts more often than not does not involve the player accepting less money. It CAN, and sometimes does, but more often restructuring a contract leaves the total guaranteed $ in place. What happens is base salary (which is always fully applied to the current year salary cap) is converted into signing bonus (which can be spread out in equal annual amounts over up to 5 years). So, as an example, if player X has a 2013 contract with a base salary of $12 million, all guaranteed, all of that $12 million would count against the 2013 cap. But if we converted $10 million of it into a signing bonus, the cap hit for that $10 million would be spread out over 5 years, making the cap hit as follows: 2013 $4 million ($2 million in remaining base salary plus $2 million prorated signing bonus). 2014-2017 $2 million each year in prorated signing bonus. Thus player X still gets all his guaranteed money, but the cap hit for 2013 is reduced from $12 million to $4 million. If you really want to get creative, you can even delay payment of the signing bonus until 2014 (or later), further reducing the 2013 cap hit to just $2 million, at the cost of further extending the cap hit into later years.

    The point here is Sanchez (or anyone else) does not have to be a fool to restructure his contract and provide the Jets cap relief. Restructuring contracts need not cost the player a cent. Whether or not it is advisable for the Jets to push out the cap hits into later years is an entirely different issue. It may well be the Jets would be fools for restructuring certain contracts -- the players, however, should not have a problem with it. That brings us to...

    Myth #2: Santonio Holmes (or David Harris, or choose your favorite outsized contract) is untradable because his contract is so large no team would want to take it on.

    Reality: No player who still is capable of playing in the NFL is completely untradable. As we discussed above, any player can have his contract restructured. The acquiring team in a trade picks up base salary and any currently unearned roster, workout and reporting bonuses. All prorated signing bonuses stay with the team trading the player, and are immediately accelerated into the current cap year.

    Trading any player with any value as a player (i.e., maybe not Tebow, or Sanchez) is not impossible. You simply have to get the cap figure for the acquiring team down enough to make the player attractive at that cap figure. The way to do that is to convert base salary into signing bonus. So, as an example, Santonio Holmes has a 2013 cap figure of $12,500,000, with $11 million in base salary. Any team acquiring that contract would be taking on $11 million in cap space, too much for a player like Holmes. But convert say $8,000,000 of his base salary into a signing bonus, and the cap hit for the acquiring team becomes a very manageable $3 million. Just like that, an untradable player becomes eminently tradable.

    There are two caveats to this. First, doing a deal like this creates dead money. In the Holmes example, we now have $8 million on the cap which is going to a player no longer on the team -- dead money. It is not ideal, and you can only do so much of this kind of thing before half the cap is being spent on other teams' players, but in small doses for the right trades it works. The other caveat is that you have to convince the player to restructure. As a monetary matter this shouldn't be difficult, as the restructuring preserves all of the player's money and in fact gets it to him faster. However, the player in effect has a no trade clause, in that if he hates the idea of playing for the new team, he has only to refuse to restructure. In that case you either have to find a more palatable team to trade with or sweeten the pot for the player. In most cases it should be doable, if the Jets are highly motivated to get the deal done, but the player can and occasionally does throw up a roadblock to a trade.

    Myth #3: The Jets are in salary cap hell in 2013 and simply have no way of affording anything other than bargain basement players.

    Reality: The Jets can afford to be major players in the free agent market, if they are so inclined. The Jets right now are already under the cap by enough to afford their draft class and sign one pretty good free agent. If the Jets want to go all in for 2013, they have significant room under current contracts to restructure and create ample space under the cap. Sanchez, Harris, Holmes, Cromartie, Ferguson, Mangold collectively represent as much as $40 million in base salary, roster bonuses, workout bonuses and reporting bonuses that can be restructured into signing bonuses that are prorated, moving as much as $32 million into later years' cap. This may or may not be something the Jets should do, and it may or may not be something Idzik decides to do, but it is most definitely something the Jets CAN do. If the Jets only sign bargain basement players in 2013, it should be understood that this was a CHOICE the Jets made after considering what was in the best interests of the organization, not something forced on them by an impossible cap situation.

    Myth #4: The Jets cannot afford to re-sign Revis under the 2013 cap.

    Reality: Revis is signed through the end of 2013. Any extension will rip up the voidable years of his contract (2014-2016) and replace them with something much larger in $. But it will only effect the 2013 cap figure if the Jets choose to structure it this way. If the Jets choose it is not at all difficult to restructure in such a way that 2013 remains untouched. It is even possible, though unlikely, to restructure in a way that LOWERS the 2013 cap figure (for example, by converting some of his $6 million in base salary and non-proratable bonus money in 2013 into a signing bonus, and prorating this into future years). Affording Revis will not be easy, but the current cap situation should not pose any impediment to getting it done. And 2014 cap room is more than ample to fit Revis in. The Jets can afford Revis. The question is, do they want to?

    Myth #5: Sanchez's contract impacts the Jets' ability to fit Revis under the cap.

    Reality: Sanchez's contract is structured in such a way that all his guaranteed money will be paid out by the end of the 2013 season. By 2014 the Jets can afford to cut Sanchez. Since Sanchez only has an outsize effect on the Jets cap in 2013, and a new Revis contract would only effect the Jets cap space in 2014 and beyond, the two are completely unrelated issues. So long as the Jets don't move most of Sanchez's cap $ into 2014, Sanchez's contract will have no effect on the Jets' ability to fit Revis under the cap.

    Myth #6: If Revis is traded he will bring back a package of 2013 draft picks.

    Reality: It's possible but not probable.

    Revis is unlikely to be traded before the 2013 draft. Here’s why.

    First, he will not even be running until early April at the earliest. That’s straight line running, no cuts. No doctor in the world can at that stage of the recovery accurately predict how the knee will hold up in game conditions, hence no meaningful medical approval is possible. All they can say is he is progressing reasonably well so far. Teams will want to see him actually play cornerback. AP is NOT a template. Peterson's recovery was such an outlier in terms of how quickly he came back it was pretty much a medical miracle. This is the gold standard of recoveries -- it is silly to think all future recoveries will follow the same miraculous course. Revis is already 2 1/2 months behind AP. Plus a significant % of guys NEVER return to their former form.

    Putting aside the health issues, which I think almost everyone is WAY too confident about, there is an even more fundamental reason Revis will not be traded for 2013 picks: his contract. If Revis is traded PRIOR to June 1st, all cap ramifications flow into the 2013 cap. Those ramifications are as follows: a net $4 million INCREASE to the Jets cap #, even after accounting for the trading partner picking up his base salary and roster bonus, due to the prorated bonus money which will be immediately accelerated. Bottom line, as of now Revis counts $9 million against the 2013 cap. If he is traded prior to June 1 he will count $13 million against the 2013 cap.

    It gets worse. Suppose he is traded for a single #1 pick. That pick will cost an additional $2 million or so against the cap, bringing the total cap hit to $6 million, and in effect meaning Revis will cost us $15 million in 2013 cap space. If we got more high picks, the effect would of course be even worse.

    Compare that to simply waiting until after June 1. Then all prorated cap money would be counted against the 2014 cap. Bottom line: $9 million in prorated money would be accelerated into the 2014 cap, not the 2013 cap. Revis would then count only $4 million against the cap, and the picks would be 2014 picks, counting zero against the 2013 cap. Net result: simply waiting until after June 1 to trade him will save the Jets a whopping $11 million or more (depending on the return package of picks) in 2013 cap space.

    The Jets may be hell bent to trade Revis as soon as possible and take the entire cap hit in 2013. If so it pretty much signals that Idzik is writing off the 2013 season. I consider this highly unlikely, but not impossible. By simply waiting until after June 1 to trade Revis, if that is what the Jets wish to do, the Jets save at least $11 million in 2013 cap space, at the cost of that cap hit taking place in 2014. Since the Jets are in far better shape cap wise in 2014, I consider it far more likely that if Revis is traded, he will be traded for 2014 picks.

    Myth #7: If Revis is lost to free agency, the Jets will get a 3rd round compensatory draft pick.

    Reality: The Jets will receive a 3rd round pick as compensation for Revis ONLY if the Jets do not sign any notable free agents in 2014. Compensation is intended to be for NET losses; i.e., weighing how much a team gained by signing FAs vs. how much they lost by other teams' signing their FAs. Since as it now stands the Jets will have considerable cap space in 2014, the likelihood of the Jets failing to sign any notable free agents is pretty low. If they do sign high end free agents of their own, then the compensation for Revis will be reduced accordingly. If the Jets sign enough FAs in 2014, then they may get no compensation at all for Revis.

    Myth #8: The Jets cannot cut Player X because it would leave them with too much dead money.

    Reality: Teams don't like dead money. It's money that counts against the cap being spent on players no longer with the team. In an ideal world you would never have any dead money. But the reality is dead money is already spent, and will count against the cap whether or not Player X is cut. So the only real issue is, does cutting Player X help the team? If it does, Player X can be cut, regardless of dead money. I can think of at least 2 scenarios where this is the case. The first: cutting Player X frees up enough cap space to make the dead money worthwhile. So, for example, if Player X is no longer good enough to play, and cutting him will result in $4 million in dead money but $7 million in cap savings, Player X should be cut, dead money or no dead money. The second scenario is where having a player on the team would result in a fractured locker room, or the player is a terrible influence on the team or undermines the coaches' authority. Then you have to get rid of him, dead money or no.

    Dead money is always a consideration, and too much dead money cripples your cap situation, but there is always the possibility that cutting a player and eating the dead money is in the best interests of the team.

    Myth #9: The Jets talk too much.

    Reality: This may be the most pervasive and pernicious myth of all Jets myths. The truth is, Tone talks some. Cro talks some. Scott talks some. But none of them are over the top. And.. and... who else? The Jets don't talk any more than almost any other team. Richard Sherman does more talking than all the Jets players combined, and I don't hear anything about how the Seahawks talk too much.

    There is one reason and only one reason this myth got started: Rex Ryan. Rex in the early days did nothing but run his mouth. However, even Rex doesn't really talk much these days, other than to compliment other teams. The notion that the Jets talk too much is a tired and outdated caricature that should be put to rest permanently.

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    I almost had to stop after the first three.

    I would have a conniption if we restructured Sanchez, Holmes or Harris.

    Of course there is a chance we can trade someone. There is always a chance. There is a chance that Sanchez becomes a HoFer.

    If we have to trade Revis, I would prefer it be for 2014 picks. So that is good news to me.

  4. #4
    Unwritten in this article is a discussion of Woody's willingness to turn future $$$ into signing bonuses requiring multimillion dollar checks today. Woody's in a cash crunch these days. Bet on it. He has one of the highest debt service costs of any owner in the league, a declining product which means declining revenues, a significant amount of unsold pricey PSLs which he was relying on to meet revenue goals, and now the writer expects Woody to write $10-$14 million dollar checks so the team can cut players that the original GM and current coach lobbied for in the first place? IMO, that isn't happening. In fact, I think the sole reason that Rex is still the coach is not that Woody hasn't seen through his inadequacies, it's that he's still under contract for 2 years. Keep in mind that Woody fell out of the billionaire's club this past year. He's not feeling flush these days.

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    Quote Originally Posted by GuidoYaztremski View Post
    Unwritten in this article is a discussion of Woody's willingness to turn future $$$ into signing bonuses requiring multimillion dollar checks today. Woody's in a cash crunch these days. Bet on it. He has one of the highest debt service costs of any owner in the league, a declining product which means declining revenues, a significant amount of unsold pricey PSLs which he was relying on to meet revenue goals, and now the writer expects Woody to write $10-$14 million dollar checks so the team can cut players that the original GM and current coach lobbied for in the first place? IMO, that isn't happening. In fact, I think the sole reason that Rex is still the coach is not that Woody hasn't seen through his inadequacies, it's that he's still under contract for 2 years. Keep in mind that Woody fell out of the billionaire's club this past year. He's not feeling flush these days.
    LOL....so you do the books for the Jets right now?? When has Woody shown an unwillingness to spend?? Please explain the high debt service costs for us and how they are preventing Woody from signing players?

  6. #6
    Quote Originally Posted by GuidoYaztremski View Post
    Unwritten in this article is a discussion of Woody's willingness to turn future $$$ into signing bonuses requiring multimillion dollar checks today. Woody's in a cash crunch these days. Bet on it. He has one of the highest debt service costs of any owner in the league, a declining product which means declining revenues, a significant amount of unsold pricey PSLs which he was relying on to meet revenue goals, and now the writer expects Woody to write $10-$14 million dollar checks so the team can cut players that the original GM and current coach lobbied for in the first place? IMO, that isn't happening. In fact, I think the sole reason that Rex is still the coach is not that Woody hasn't seen through his inadequacies, it's that he's still under contract for 2 years. Keep in mind that Woody fell out of the billionaire's club this past year. He's not feeling flush these days.

  7. #7
    Quote Originally Posted by Carlton View Post
    Solid rebuttal. About par for you I guess.

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    Quote Originally Posted by GuidoYaztremski View Post
    Unwritten in this article is a discussion of Woody's willingness to turn future $$$ into signing bonuses requiring multimillion dollar checks today. Woody's in a cash crunch these days. Bet on it. He has one of the highest debt service costs of any owner in the league, a declining product which means declining revenues, a significant amount of unsold pricey PSLs which he was relying on to meet revenue goals, and now the writer expects Woody to write $10-$14 million dollar checks so the team can cut players that the original GM and current coach lobbied for in the first place? IMO, that isn't happening. In fact, I think the sole reason that Rex is still the coach is not that Woody hasn't seen through his inadequacies, it's that he's still under contract for 2 years. Keep in mind that Woody fell out of the billionaire's club this past year. He's not feeling flush these days.
    Resident financial advisor right here folks.

  9. #9
    Quote Originally Posted by sec.101row23 View Post
    LOL....so you do the books for the Jets right now?? When has Woody shown an unwillingness to spend?? Please explain the high debt service costs for us and how they are preventing Woody from signing players?
    Both the Jets and Woody are private concerns so yes, it's mostly speculation and purely my opinion. I didn't think that needed to be pointed out.

    I'd be interested where you see a flaw in the hypothesis rather than just a cursory discarding of the conjecture. For instance, I think Rex is still the coach because of his contract. You? I think upper deck seats have been slashed less than half the original price because Woody badly needs the revenue. You?

  10. #10
    Quote Originally Posted by JetsfanfromtheBURGH View Post
    Resident financial advisor right here folks.
    Another solid rebuttal. Tell me, do you honestly think when a billionaire falls out of the club and is no longer one, that he doesn't care and still spends as freely?

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    Quote Originally Posted by GuidoYaztremski View Post
    Both the Jets and Woody are private concerns so yes, it's mostly speculation and purely my opinion. I didn't think that needed to be pointed out.

    I'd be interested where you see a flaw in the hypothesis rather than just a cursory discarding of the conjecture. For instance, I think Rex is still the coach because of his contract. You? I think upper deck seats have been slashed less than half the original price because Woody badly needs the revenue. You?
    LOL...it is because you are full of s**t and when questioned to prove what you wrote you pretty much admitted you were full of s**t. When you have Woody's revenues and KNOW his debt service costs and how they are effecting the team, then say so. Until then, continue to look foolish.

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    Quote Originally Posted by GuidoYaztremski View Post
    Another solid rebuttal. Tell me, do you honestly think when a billionaire falls out of the club and is no longer one, that he doesn't care and still spends as freely?
    Just bustin your balls a tiny bit. You have valid points.

  13. #13
    Even if all this stuff from someone who doesn't work in an NFL building are true, there's no reason to move all sorts of money into future years to save one year. None.

  14. #14
    Quote Originally Posted by GuidoYaztremski View Post
    Solid rebuttal. About par for you I guess.
    Really after your pathetic attempt in the Revis/Sherman thread? I figured it wasn't worth my time anymore. He is worth $3.5 billion dollars and has never once shown to be anything but extremely generous wrt to Jets spending. But no obviously you have inside sources into his current financial status.

  15. #15
    Quote Originally Posted by GuidoYaztremski View Post
    Unwritten in this article is a discussion of Woody's willingness to turn future $$$ into signing bonuses requiring multimillion dollar checks today. Woody's in a cash crunch these days. Bet on it. He has one of the highest debt service costs of any owner in the league, a declining product which means declining revenues, a significant amount of unsold pricey PSLs which he was relying on to meet revenue goals, and now the writer expects Woody to write $10-$14 million dollar checks so the team can cut players that the original GM and current coach lobbied for in the first place? IMO, that isn't happening. In fact, I think the sole reason that Rex is still the coach is not that Woody hasn't seen through his inadequacies, it's that he's still under contract for 2 years. Keep in mind that Woody fell out of the billionaire's club this past year. He's not feeling flush these days.
    bunch of bull****, sorry...but what you are saying is that woody is looking to save $$$ as opposed to doing whats best to put a good product on the field...when in reality putting a good product on the field is that makes an NFL owner money. he has no option to "keep trying" with an inferior front office/coaching staff.

    If i am a photographer, and i have disposable income, would i continue to shoot with a ****ty camera because the amount of money i make for the photos is not good enough...or do i get a better camera to shoot better pictures to charge more money?

  16. #16
    Quote Originally Posted by Carlton View Post
    Really after your pathetic attempt in the Revis/Sherman thread? I figured it wasn't worth my time anymore. He is worth $3.5 billion dollars and has never once shown to be anything but extremely generous wrt to Jets spending. But no obviously you have inside sources into his current financial status.
    Oh SNAP!

    Caltron talkin Football!!

  17. #17
    Quote Originally Posted by FF2® View Post
    Oh SNAP!

    Caltron talkin Football!!

  18. #18
    Quote Originally Posted by sec.101row23 View Post
    LOL...it is because you are full of s**t and when questioned to prove what you wrote you pretty much admitted you were full of s**t. When you have Woody's revenues and KNOW his debt service costs and how they are effecting the team, then say so. Until then, continue to look foolish.
    LOL...Admitting it is my opinion isn't the same as admitting I'm full of s**t. YOUR opinion has no more credibility or validity than mine. I admit I don't know how his debt service costs are "effecting" (sic) the team, but I do remember reading about an article about it in one of the financial magazines (Forbes or Bloomberg News likely, can't find the source now) that discussed it after the final, ridiculous price tag of the new stadium was pegged at $1.6 billion. Add that to the oft discussed lack of sales of the highest price PSLs, the hack and slash pricing of the upper deck seats, and the exodus of PSL holders, and it doesn't take a genius to hypothesize that Woody's feeling a squeeze. It's not ME who's looking foolish here.
    Last edited by GuidoYaztremski; 02-23-2013 at 12:34 PM.

  19. #19
    Quote Originally Posted by Carlton View Post
    Really after your pathetic attempt in the Revis/Sherman thread? I figured it wasn't worth my time anymore. He is worth $3.5 billion dollars and has never once shown to be anything but extremely generous wrt to Jets spending. But no obviously you have inside sources into his current financial status.
    Where's your source of his net worth. I'm guessing it's one of many sites Google comes up with stating he's a founding member of Johnson & Johnson and is worth $3.5 billion. Neither is true. He fell off the Forbes list in 2011. I'll go with that.

    http://espn.go.com/blog/new-york/jet...llionaire-club

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    Quote Originally Posted by GuidoYaztremski View Post
    LOL...Admitting it is my opinion isn't the same as admitting I'm full of s**t. YOUR opinion has no more credibility or validity than mine. I admit I don't know how his debt service costs are "effecting" (sic) the team, but I do remember reading about an article about it in one of the financial magazines (Forbes or Bloomberg News likely, can't find the source now) that discussed it after the final, ridiculous price tag of the new stadium was pegged at $1.6 billion. Add that to the oft discussed lack of sales of the highest price PSLs, the hack and slash pricing of the upper deck seats, and the exodus of PSL holders, and it doesn't take a genius to hypothesize that Woody's feeling a squeeze. It's not ME who's looking foolish here.
    Relax bro. Getting all crazy here does make u look foolish. Sit back, relax and crack open an ice cold Iron City beer and chill. Trust me, you will love it.

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