Cap Control

At the NFL meetings this week my sense is things were a bit, uh, awkward. Earlier docked $36 million and $10 million, respectively, for Cap “abuse”” during the uncapped year of 2010, the Redskins' Dan Snyder and the Cowboys' Jerry Jones -- faced with a 29-0 vote from ownership approving the sanctions against them -- raised the stakes, filing a grievance against the NFL challenging the imposition of such penalties.

Beyond vague comments from Giants owner John Mara about the teams “violating the spirit of the uncapped year”, the league has been mum on details. Here is the best I can surmise as to what is behind this dispute.

The background

As NFL teams entered the uncapped year of 2010, many wondered if teams such as the Redskins and Cowboys would be “Steinbrenneresque” in their spending with none of the previous limits that the Cap had imposed in previous years.

As it turned out, the Cowboys and Redskins did not engage in disproportionate cash spending. However, they did engage in disproportionate Cap spending. To the league, therein lies the problem.

The deals

The Miles Austin contract caught the attention of the NFL.

Notorious for writing large signing bonuses to push out proration into future years and keep the first-year Cap number as low as possible, the Cowboys went the other way with Miles Austin. They loaded all $17 million of what would have ordinarily been a “bonus” into salary, thereby containing the Cap hit in 2010 alone.

Interestingly, this is the kind of Cap management that I have lauded, one being used in Tampa with their recent deals for Vincent Jackson and Carl Nicks. This structure, however, was completely out of character for the Cowboys, and has been out of character since.

The Redskins, in contrast, did not front load new contracts in 2010, as the Austin deal described above. Rather, they restructured existing contracts, negotiated in 2009, to bring forward future proration amounts from the “out” years into 2010. Restructured contracts for DeAngelo Hall and Albert Haynesworth alone accelerated $15 and $21 million of future Cap into the uncapped year. That $36 million just so happens to be the amount the Redskins have been docked.

At the time, I noted how two teams that traditionally have pushed their Cap problems into the future had become more prudent. As it turned out, they were ignoring warnings not to do so.

The warnings

I remember the NFL Management Council starting to advise clubs as far back as 2007 that, in the event of an uncapped year, they could not press “File Delete” in 2010.

These warnings continued with more urgency in 2009, that it would be “taking unfair advantage” of the uncapped year in gaining a competitive edge by Cap-dumping into a year without a Cap.

Let’s look at the arguments from each side.

Warnings

The Cowboys and Redskins will argue that there were no written warnings against what they did.

The NFL will argue that there were repeated and strident verbal warnings as far back as three years prior to the uncapped year.

Approvals

The Cowboys and Redskins will argue that the front loaded negotiations and Cap restructures were approved by the NFL -- as all contracts must be -- which represented a tacit approval of their structure.

The NFL will argue that it is irrelevant that the contracts were approved. There was no Salary Cap and thus no Salary Cap rules to manage.

Competitive edge

The Cowboys and Redskins will argue that the league should look into teams like the Buccaneers and Chiefs, teams that underspent in 2010, and their competitive edge gained by under spending.

The NFL will argue that teams were not advised to spend or not to spend; only to not engage in accounting practices that took advantage of a unique year on the calendar.

The arbitration will be an intriguing study of the interplay, alliances and coalitions among NFL owners and the league office.

Whither the NFLPA?

Interestingly, the penalties to the Cowboys and Redskins were part of a joint agreement between the NFL and the NFLPA. The union’s primary concerns were to ensure (1) no reduction in Cap room league-wide, and (2) the team Cap number would exceed-- if only barely -- the number from 2011 (it did, with a $120.6 million number compared to $120.375 in 2011).

The problem for the NFLPA is that, in their zeal to prop up the 2012 Cap number, the NFLPA have borrowed from the future. Thus, the Cap “spike” that some project in 2014 when the new television contracts activate may not materialize the way the union, players and agents are hoping.

Fun times this week in South Florida this week. The faces of Jones and Snyder were quite red, a skin tone from anger rather than the sun.

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