Cap affect of paying as you go vs pushing out and having dead space

[RashanGary]

This is what 4 year contracts do to the salary cap when you pay as you go vs pushing into the future.

Let’s say in both cases the player earns 20M per season for 4 seasons. (4 years 80M)

The first team pushes the larger hits later and takes 10M dead the year after the player leaves.

Cap hit 10M
Cap hit 15M
Cap hit 20M
Cap hit 25M
Cap hit 10M dead

The second team pays as they go
Cap hit 20
Cap hit 20
Cap hit 20
Cap hit 20
No dead money

But every year we add a new contract with the same structure. The first team keeps adding contracts to push out and the second team keeps paying as they go.

Salary caps are the same for both teams as the years go by. We’ll stop the pattern when it starts repeating and shows the full effect of each strategy.

100
100
120
120
145
145
170
170
200
200
240
240
290
290

1st team (team Gute)

Year 1 (Salary Cap 100M)
Player A counts 10M (10% of cap)
10% of cap used in total

Year 2 (Salary Cap 100M)
Player A counts 15M (15% of cap)
Player B counts 10M (10% of cap)
25% of cap used in total

Year 3 (Salary Cap 120M)
Player A counts 20M (17% of cap)
Player B counts 15M (12.5 of cap)
Player C counts 10M (8% of cap)
37.5% of cap used total

Year 4 (Salary Cap 120M)
Player A counts 25M (20% of cap)
Player B counts 20M (17% of cap)
Player C counts 15M (12.5% of cap)
Player D counts 10M (8% of cap)
58% of cap used total

Year 5 (Salary Cap 140M)
Player A counts 10M dead (7% of cap)
Player B counts 25M (18% of cap)
Player C counts 20M (14% of cap)
Player D counts 15M (11% of cap)
Player E counts 10M (7% of cap)
57% of cap used total

Year 6 (Salary Cap 140M)
Player A off books
Player B 10M dead (7% of cap)
Player C 25M (18% of cap)
Player D 20M (14% of cap)
Player E 15M (11% of cap)
Player F 10M (7% of cap)
57% of cap used total

Year 7 (Salary Cap 160M)
Player A off books
Player B off books
Player C 10M dead (6% of cap)
Player D 25M (16% of cap)
Player E 20M (13% of cap)
Player F 15M (9% of cap)
Player G 10M (6% of cap)
50% of cap used total


Team Polar Bear

Year 1 (Salary Cap 100M)
Player A 20M (20% of cap)
20% of cap used total

Year 2 (Salary Cap 100M)
Player A 20M (20% of cap)
Player B 20M (20% of cap)
40% of cap used total

Year 3 (Salary Cap 120M)
Player A 20M (16.5% of cap)
Player B 20M (16.5% of cap)
Player C 20M (16.5% of cap)
50% of cap used total

Year 4 (salary cap 120M)
Player A 20M (16.5% of cap)
Player B 20M (16.5% of cap)
Player C 20M (16.5% of cap)
Player D 20M (16.6% of cap)
67% of cap used total

Year 5 (salary cap 140M)
Player A off books
Player B 20M (14% of cap)
Player C 20M (14% of cap)
Player D 20M (14% of cap)
Player E 20M (14% of cap)
57% of cap used total

Year 6 (salary cap 140M)
Player A off books
Player B off books
Player C 20M (14% of cap)
Player D 20M (14% of cap)
Player E 20M (14% of cap)
Player F 20M (14% of cap)
57% of cap used total

Year 7 (salary cap 160M)
Player A off books
Player B off books
Player C off books
Player D 20M (12.5% of cap)
Player E 20M (12.5% of cap)
Player F 20M (12.5% of cap)
Player G 20M (12.5% of cap)
50% of cap used



This is the comparisons, same players paid the exact same dollar amounts and how it affects the cap

Year 1
Gute 10% cap used
Polar Bear 20% cap used

Year 2
Gute 25% of cap used
Polar Bear 40% cap used

Year 3
Gute 37.5% cap used
Polar Bear 50% of cap used

Year 4
Gute 58% of cap used
Polar Bear 67% of cap used



And here is where the dead space should start eating us alive


Year 5
Gute 57% of cap used
Polar Bear 57% of cap used

Year 6
Gute 57% of cap used
Polar Bear 57% of cap used

Year 7
Gute 50% of cap used
Polar Bear 50% of cap used

[Joemailman]

You need a hobby.

[RashanGary]

So pushing money into the future, you end up with the same players using the same amount of cap space as you would paying as you go.


If you stick with Tex’s plan of always pushing out, it’s true, you do no worse, but this clearly shows that you do no better after a few years of doing it, it catches up. The big downside of always being max pushed is that you can run into situations where you can’t take advantage of a really good opportunity because you’re always stretched thin.


The better strategy would be to stay in a spot where you have flexibility. As you can see above, the person pushing out gets no more talent than the person who’s responsible. So if you stay in the flexible area as your normal operating position, you have the option to make a push when you love your window or to just take advantage of good opportunities as they arise. Pushing ahead as a regular strategy has absolutely zero benefit.

[RashanGary]

You need a hobby.

I couldn’t picture how it would all work out. Since I was putting in the work, might as well share the results. But typing it on my phone is a lot more work than a sheet of paper, haha

[RashanGary]

But I think you can clearly see, if you always front load, or always back load, you’re really getting the same amount of talent. The only time you would see an advantage or disadvantage would be when you shift strategies and that would only be for a couple years one way or the other.

[sharpe1027]

This is too simplistic. One problem is players know that money in future years is not guaranteed, so all things being equal they take money now over the same amount several years out.

So, in order to push money into future years teams give large signing bonuses. In pay as you go, you can cut an underperforming player with little consequences. With a large signing bonus, you have dead cap if you cut them.

[Frozen Tundra]

I couldn’t picture how it would all work out. Since I was putting in the work, might as well share the results. But typing it on my phone is a lot more work than a sheet of paper, haha

Whoa.... wait a minute.... you're saying you did that all on your phone??

Holy cats. I, for one, am deeply impressed. I'm totally useless on those damned things. Takes me 6 minutes just to dial a number... and that's using speed dial.

[run pMc]

The other thing to consider is that if you're talking about extensions or FA, other teams are also bidding for this player, and they may have a completely different philosophy on spending.
You can't just assume you can sign a player to a pay as you go contract... very few players will take that because they know they can be cut and see none of that money. For them it's all about how much guaranteed money they can get. In many cases they will take less if a larger portion is guaranteed because they know they are getting that no matter what happens.

[RashanGary]

Right, this was very simplistic in structure. It was intentionally simple to show that really small cap hits early pay for dead cap once you’re in the habit of pushing ahead more than what is common.

Roster bonuses that trigger the day of the signing are guarantees. The first years base is pretty much a guarantee. There are ways to take a bigger cap hit early or late and still give the same up front.

If you’re in the habit of really pushing it out, and taking the tiniest hits possible early, you end up with dead space. What’s shown here is that you can function without a disadvantage as long as you’re continually pushing out to the same degree.

So Tex was right that you just keep pushing out to fix it.
He was wrong that it’s an advantage because after a few years, the dead cap nullifies any advantage you might have had when you went to the new way.

The common view was wrong that it cap straps you because like Tex always said, you just keep doing the same thing.



I was glad to see it in practice. Pushing out more is no advantage if it’s your regular practice. It’s better to be in a flexible spot as your main operation and then use the pushing out when there is a window or a special opportunity.

[Fritz]

This is too simplistic. One problem is players know that money in future years is not guaranteed, so all things being equal they take money now over the same amount several years out.

So, in order to push money into future years teams give large signing bonuses. In pay as you go, you can cut an underperforming player with little consequences. With a large signing bonus, you have dead cap if you cut them.

Thank you for using the word "simplistic" mostly correctly. It bugs me that people don't understand or seem to understand the difference between "simple" and "simplistic."

Hmm. Maybe I need a hobby, too.

[sharpe1027]

Thank you for using the word "simplistic" mostly correctly. It bugs me that people don't understand or seem to understand the difference between "simple" and "simplistic."

Hmm. Maybe I need a hobby, too.

You're welcome, mostly. Are you using "mostly" mostly correctly, or is there something wrong with my use of the word "simplistic"? I think the analysis was over simplified in a way that can be misleading.

[sharpe1027]

Right, this was very simplistic in structure. It was intentionally simple to show that really small cap hits early pay for dead cap once you’re in the habit of pushing ahead more than what is common.

Roster bonuses that trigger the day of the signing are guarantees. The first years base is pretty much a guarantee. There are ways to take a bigger cap hit early or late and still give the same up front.

If you’re in the habit of really pushing it out, and taking the tiniest hits possible early, you end up with dead space. What’s shown here is that you can function without a disadvantage as long as you’re continually pushing out to the same degree.

So Tex was right that you just keep pushing out to fix it.
He was wrong that it’s an advantage because after a few years, the dead cap nullifies any advantage you might have had when you went to the new way.

The common view was wrong that it cap straps you because like Tex always said, you just keep doing the same thing.



I was glad to see it in practice. Pushing out more is no advantage if it’s your regular practice. It’s better to be in a flexible spot as your main operation and then use the pushing out when there is a window or a special opportunity.

You're missing the point. if you push out cap into future years with signing bonuses, you'll have less money in those future years than if you don't. This gets worse when you factor in that when you don't push out cap you can get rid of underperforming players and bring in better players with the money you have extra due to less dead space. Add to that injuries and trades as being more problematic because they can accelerate cap and you start to see why large signing bonuses to push out cap are riskier.

[sharpe1027]

Thank you for using the word "simplistic" mostly correctly. It bugs me that people don't understand or seem to understand the difference between "simple" and "simplistic."

Hmm. Maybe I need a hobby, too.

Was I being redundant?

[Fritz]

Was I being redundant?

Yeah. I'm nitpicking. Since "simplistic" already means so simple that it denotes a lack of understanding of the issue, the use of "too" is, well, too much.

But your overall point - which is the main thing - is a good one.

As for the thread topic, well, this is definitely not my area of expertise. I just know I don't like credit card debt. And the Packers definitely seemed constrained last year and this year, thanks to Guter "running it back" a couple years ago.

[RashanGary]

Thank you for using the word "simplistic" mostly correctly. It bugs me that people don't understand or seem to understand the difference between "simple" and "simplistic."

Hmm. Maybe I need a hobby, too.

Now I gotta due some diggin