By now, if you read this blog regularly, you already know who J.I. Halsell is and how highly I hold him in respect and regard. J.I. is The Guy when it comes to making the salary cap easily understandable by layman, and we’ve had him on to answer a few questions I’ve submitted in the last couple weeks.
However, today he’s answering a question that was submitted by Troy Chapman of TexansCap.com.
I’ve seen a few former GMs on Twitter speak about keeping cash spending in line with cap spending. With the 140-character limitation on Twitter there is not much follow-up on this statement. Could you explain? Would you include dead money in the cap spending as part of this statement? I follow the Houston Texans and there is a good $15 million difference in cap spending versus cash spending for 2015 (excluding the $12.9m dead money).
J.I.: “During the Mark Dominik regime in Tampa, the Bucs became the poster child for matching cap dollars with cash dollars. This approach to contract structuring and cap management is aimed at reducing – if not, eliminating – the risk of incurring “dead money” (dollars counting on your cap for players no longer on the roster) from traded or terminated contracts. Eliminating dead money ensures that your cap space is maximized through utilization on players currently on your roster.”
“For example, Ndamukong Suh currently takes up 6.7% of the Lions’ 2015 salary cap though he’s no longer a member of the club; this dead money on the Lions’ cap reduces the salary cap resources the club can use for players currently on their roster. The 9.7M of cap accounting dollars left by Suh with the Lions (which perhaps would be better utilized on offensive line help) are a result of signing bonus and option bonus cash dollars that have already been paid to Suh by the Lions but were allocated into future years from a salary cap accounting standpoint, as mandated by the CBA.
“Therefore, clubs who seek to keep cash equal to cap do so by not having cash dollars allocated into the future (this is achieved by not using signing bonus and option bonus mechanisms in contracts), as it is these future allocations that become dead money when a contract is terminated. By keeping cash as close as possible to cap, clubs maximize the amount of their cap space allocated to players who are currently on the roster and currently addressing the club’s needs.”