"You are educated when you have the ability to listen to almost anything
without losing your temper or self-confidence." - Robert Frost

Thursday, August 25, 2011

2011 NFL Predictions

Although I always seem to make a fool of myself when I do this, I keep hoping to hit the lottery and look like a genius if everything comes together like I predict.  You can't win unless you bet so they say.

So without further ado, here is my 2011 NFL Season Predictions and how I see the playoffs happening.  I'm sorry Steelers fans for having us lose to San Diego at home.  That might be my way of not being overly cocky going into the season ;-)

AFC East

New England                           12-14 Wins
This team remains a juggernaut on offense and as the defense improves (I love the move to a 4-3 system), I see no way they don’t continue their recent regular season dominance.  The only thought in New England’s mind this year is Super Bowl of bust.  They have to start winning playoff games again.

New York Jets                          9-11
The most telling statistic for the Jets?  A minus .6 in passer rating differential.  Until I see the Jets offense be able to step up and be a 90+ passer rating team, I can’t imagine a situation where they squeak out more than 11 wins.  A flamboyant coach and complex defensive schemes can only get you so far.

Miami                                     6-8
Chad Henne is fortunate to get another year to prove himself.  Defensively, the Dolphins are big, physical and solid in all areas.  But 30th in scoring is a problem that I don’t see addressed this offseason enough to make a huge difference vs. last year’s performance.  Even an improvement to 20th likely yields a .500 record.

Buffalo                                    4-7
Buffalo is like the knife at a gun fight.  While you want to like them, their talent, firepower and resources just lack in comparison to the other teams in their division.  How long can Gailey’s feel good message work as the losses continue to pile up and the reality of no playoffs and in a division with three established big-market teams sinks in?

AFC North

Pittsburgh                                11-13
The 2011 schedule is favorable and similar to last season.  They return all 22 starters that are familiar with the offensive and defensive systems. This is one of the few teams that consistently places in the top-10 both offensively and defensively. I predict Roethlisberger gets serious MVP consideration as the Steelers stay in contention for the #1 seed most of the year.

Baltimore                                8-12
A tough team for me to predict because the vibe I’m getting out of Raven’s camp is really sketchy right now.  Questionable roster decisions have made for a weaker team on paper and contract situations (Flacco, Ngata) still seem outstanding.  While a collapse back to mediocrity seems unlikely, I can’t rule it out completely at this point.

Cleveland                                7-10
The Browns are poised to make a surprise run if Baltimore or Pittsburgh falter.  This team is still behind on experience and talent, but there is enough there to catch a little lightning in a bottle if the cards play right.  Colt McCoy seems just gritty enough and just tough enough to shut some people up if taken lightly.

Cincinnati                                3-5
Unless Palmer materialized to save Andy Dalton from himself, this is a train wreck waiting to happen.  Almost every piece of the puzzle looks to have question marks and the whole organization seems hanging by a thread.  It just wouldn’t surprise me at all if Cincinnati was the worst team in the league this year, Dalton’s play leads to more questions than answers, and Marvin Lewis finally gets fired.  If any team seems headed for a complete makeover, it’s the Bengals.

AFC South

Houston                                   8-11
Is this the year?  Does Wade Philips weave some defensive coordinator magic?  Is it even possible to allow a 100.5 passer rating two years in a row as a defense?  In 2009, the defense allowed an 83.2 passer rating.  If Philips can find that unit, this team will win its first division title.

Indianapolis                             8-10
Peyton Manning’s vague injury clouds what will happen to the organization this year.  Is their regular season run finally hitting the wall?  I know Bill Polian gets a lot of props, but they have had some serious management question marks over the past three seasons and look thin and undertalented in numerous areas.  Manning is the ultimate deodorant for poor GM work and I wonder if we will finally see how talented a team Indianapolis really is without Manning under center.

Tennessee                               6-9
Tennessee’s season will be determined by how quickly they realize they are going nowhere with Hasselbeck and plan for next year throwing Locker to the wolves.  I have no doubt Hasselbeck can squeak out 8 or 9 wins under the right circumstances, but that still doesn’t do anything for the organization (nor likely make the playoffs).

Jacksonville                             6-8
Similar to Tennessee the final season record will have more to do with when they stop “trying” with Gerrard for the sake of getting experience for Gabbert.  That will have as much to do with mid-season record, how Indy and Houston are doing and how the starters perform than any prediction I can make about their off-season or roster.

AFC West

San Diego                                11-13
San Diego is too good on both sides of the ball not to have a huge bounce back season and soundly win the NFC West.  This is one of the few teams that have the talent to be a #1 seed (along with New England and Pittsburgh).  All the key statistical indicators point to 2010 being a crazy unlucky season for the Chargers that won’t be duplicated.

Oakland                                   7-9
Despite all the criticism Al Davis gets, his teams always seam loaded with talent, fast and intimidating walking off the bus.  Too bad they don’t have a quarterback I can trust.  While the Raiders were 6th in league scoring last year, they were only 16th in points per possession.  Something’s fishy and a crash back to reality on the offensive side of the ball seems likely.  Expect another .500 season.

Kansas City                              6-8
The Chiefs went 2-4 in its division and still squeaked out the title.  And unlike last year, their out-of-division schedule is murder (playing the AFC East and NFC Central).  No way this team is even in the picture after @Patriots-Steelers-@Bears-@Jets-Packers in Nov./Dec.  Say goodnight.

Denver                                    3-7
As with many bad teams, how often they switch quarterbacks and give up on mediocrity can determine everything.  The same applies to Denver, where any hiccup at all by Kyle Orton will cause the fan base to yell for Tim Tebow.  An easy early schedule might buy time for the Fox/Orton marriage to work, or it could backfire with a few bad losses and lead to a disaster season.

NFC East

Philadelphia                            9-12
The darling of the business season, the Eagles are loaded with a mishmash of talent.  The more relevant questions remain how major changes at offensive line, defensive coordinator and who wears the “green dot” on defense affect this team long-term.  In no way to I see this team as a lock for anything.  Not in the crazy NFC East.

Dallas                                      8-11
Like San Diego, there is too much talent on this team and too many statistical indicators of success not to expect a bounce back season.  I like the combination of Garrett/Romo steadying the offense and Rob Ryan improving the defense.  I  strongly think this team will be in the mix for a playoff spot until the end.

New York Giants                     8-10
No team oozes “above average” more than the Giants.  Every year they seem the same with a couple good or bad plays from Eli Manning determining their fate.  And every year they seem involved with some weird “what if” game that could have changed history.

Washington                             6-8
While the Redskins clearly have the worst QB in this division, Shanahan still could pull a rabbit out of his hat and come up with an 85+ rating for the team.  The problem isn’t the offense, it’s the defense where I am not at all sold on Haslett as a coordinator, the new 3-4 system, or see improvement in their woeful 90.0 QB rating allowed.

NFC South

New Orleans                           11-14
I really like how under-the-radar New Orleans has been this off-season.  While Atlanta seems to be “going all in”, the Saints are improving the foundation blocks of the team long term.  There are no chance injuries at running back that will derail this team like 2010 and almost every aspect of the team seems poised to improve.  I think the opening night game vs. Green Bay will be talked about come December as deciding the #1 seed in the NFC.

Atlanta                                    9-10
There is growing pressure internally (based on their aggressive offseason) to take the next step, but I’m just not convinced the talent level is there; particularly on the defensive side of the ball.  Unless Julio Jones is the next Randy Moss style rookie sensation I still see a conservative offense and average defense that lacks explosive plays on both sides of the ball.

Tampa Bay                              7-9
Tampa Bay had a perfect storm of success in 2010.  And on many levels, I like the upside of their top-end talent better than Atlanta.  But this is a young team that will be hard pressed to catch the same magic they did in last year.  Josh Freeman is a favorite of mine (I like him better than Matt Ryan), but a small step back might be what this team needs most.

Carolina                                  3-5
There has been a lot of hope among Panther fans for a solid running game, good defense and a Roethlisberger-type rookie season from Cam Newton, but that’s a pipe dream.  This team lacks playmakers everywhere and the defense is below average.  All signs point to a struggling season for rookie head coach Ron Rivera in perhaps one of the toughest divisions in football.

NFC North

Green Bay                               12-14
There hasn’t been a team more poised to repeat since New England in 2004.  Green Bay is stacked with talent and has a premier, playoff tested quarterback in Aaron Rogers.  I see little to no weaknesses on the roster.  Only injuries will derail a deep playoff run for this team in my opinion.

Minnesota                               6-9
The Vikings pin their hopes on another aging quarterback, this time Donovan McNabb.  I do think this is McNabb’s best fit and see the potential for a very average to good offense this season.  If the aging defense can hold it together up front and on the back end, sneaking into playoff contention might not be impossible.

Chicago                                   7-8
As much as indicators tell us to expect bounce back seasons from Dallas and San Diego, all signs point to Chicago taking a big step back and missing the playoffs.  This team has a history of not maintaining their flashes in great defense and I suspect a drop off in 2011.  If that happens, I don’t see an offense capable of making up the difference.

Detroit                                     6-8
The Lions ended the 2010 season with four straight wins and spawned growing optimism for this upcoming season.  But this is still mostly the same team that was 2-10 on December 5th.  How much can a healthy Matt Stafford help a 26th ranking YPA passing attack?  Or a 20th ranking YPC rushing attack?  Detroit continues to make strides, but the metrics say they still have a long way to go before becoming a playoff caliber team.

NFC West

Arizona                                    8-10
Even an average season from Kevin Kolb should stabilize this team enough to reach .500 this year.  The Cardinals remain a well coached team with a decent roster that plays the most physical of any NFC West franchise.  While their ideal peak season might not be as high as the Rams, they are the safer bet to retake the division title in my opinion.

St. Louis                                   7-10
St. Louis is the media darling, underdog selection of the 2011 season.  Many pundits are citing the growing maturation of Sam Bradford as the reason the Rams soon separate themselves from their opponents in the NFC West.  But I still see more holes and inexperience than on the Cardinals and think this division will once again go down to the wire.

Seattle                                     5-8
Tavaris Jackson and Charlie Whitehurst have combined for 178 passes thrown in the NFL with a 65.0 passer rating since the end of 2008.  To try and guess how the next 550 throws Seattle attempts will work out (and by whom) is a crap shoot.  Pete Carroll has gutted this roster in two seasons but whether it’s for the better is completely up in the air.

San Francisco                          4-7
Another team in the Andrew Luck sweepstakes in my opinion, the 49er’s decision to stand pat with Alex Smith lends itself to a rather conservative prediction of the “same” heading into 2011.  As a fan of Jim Harbaugh I could see a surprising run to a .500 record but could also see Smith booed off the field and growing pains for the new coach.

Playoff Predictions:

Wildcard Weekend
San Diego (#3) over Indianapolis (#6)    30 - 23
New York Jets (#5) over Houston (#4)   19 - 17

Philadelphia (#3) over Atlanta (#6)   23 - 22
Dallas (#5) over Arizona (#4)   27 - 24

Divisional Weekend
New England (#1) over New York Jets (#5)   27 - 23
San Diego (#3) over Pittsburgh (#2)   24 - 21

Green Bay (#1) over Dallas (#5)   34 - 17
New Orleans (#2) over Philadelphia (#3)    31 - 14

Conference Championships
New England (#1) over San Diego (#3)   31 - 24
Green Bay (#1) over New Orleans (#2)   30 - 20

Super Bowl 46

Green Bay (NFC) over New England (AFC)    33-28

Friday, August 19, 2011

The NFL Salary Cap System 101

The NFL Salary Cap System 101

What is the salary cap?

The NFL Salary Cap is quite simply an accounting method for recording player salaries that is distinct and different than cash accounting. 

It is very important to understand that what makes the NFL system very different from other professional salary caps is that every dollar spent on players salaries MUST eventually be accounted for in the salary cap system (i.e. there is no buy-out or way to circumvent the amounts spent).

This is the Golden Rule:  Every dollar given to a player will eventually get to the salary cap!

In general, the portion of a player’s salary that is subject to accounting differences is something called a “signing bonus”, which is normally a lump sum payment to a player at the time the contract is signed or at other specific times during the deal (sometimes signing bonuses are split over two or more seasons).

The signing bonus is distinct from other types of salary an NFL player gets from ownership.  We must understand each of the basic types as follows because to understand the salary cap we must understand cash flow.

1.  Annual Salary (or Base Salary)
Each NFL player must have a minimum base salary.  This salary is paid out in 17 equal pay checks, each week, during the NFL season (including the bye week).  For young players (those with 3 years or less in service), annual salary is NOT guaranteed at any time.  So a 2-year veteran that is released after week 10, would only receive (in cash), 10/17th of his base salary.  After week 10, he receives nothing.  For a veteran player (4+ years of service), their annual salary is guaranteed the minute they make the opening 53-man roster (they would continue to get a weekly paycheck, even if released during the year).  Note if a veteran player is signed after week 1, then their salary is NOT guaranteed and really becomes a week-to-week pay as you go salary.

2.  Roster Bonus or Workout Bonus
I lump these type of bonuses together because both CAN NOT be amortized (I’ll get to that more later).  These lump sum payments occur between March and the start of the season and can be triggered for any reason agreed to by the parties.  Most roster bonuses trigger before free agency on the league calendar to force a team to make a cash decision on the player as soon in the league year as possible.  For accounting purposes, Roster and Workout Bonuses CAN NOT be amortized on the salary cap books.

3.  Signing Bonus
As stated above, a signing bonus is a lump sum payment either at the time of signing or elsewhere that CAN be amortized for the purpose of salary cap accounting.  The mathematics behind how to apply signing bonuses to the salary cap books is really the heart and soul of understanding the NFL salary cap.

4.  Performance Bonus
For the purpose of understanding the basics of the salary cap, we don’t need to dwell on performance based bonuses.  In general, on a year-to-year basis, a performance based bonus is either considered likely to be earned (and thus projected on the salary cap books like roster bonus) or not likely to be earned (not projected anywhere in the salary cap books at all).  If what you “guessed” at the beginning of the year (likely or unlikely) changes, a team must make adjustment to their salary cap accounting the following year (by either adding or subtracting money to their overall salary cap).  There is no amortization of performance bonuses.  Performance bonuses are paid AFTER the season (in the window between the Super Bowl and the end of the league year).

Remember, once a contract is signed, it is more a matter of following the CASH and knowing how to get the cash onto the salary cap books that is most important to understanding the salary cap.

Let’s look at the simple parts of a typical NFL contract:

Here is how Alan Faneca’s contract looked when he signed as a free agent with the New York Jets in 2008:

Base Salary = $1.0M
Signing Bonus = $4.2M
Roster Bonus = $3.8M

Base Salary = $7.0M
Roster Bonus = $250k

Base Salary = $7.5M

Base Salary = $8.0M

Base Salary = $8.25M

This contract is a fairly typical 5-year, $40 million deal.  From the perspective of cash, this contract pays Faneca $9 million in 2008, then $7.25M, $7.5M, $8M and $8.25M.  If cash and salary cap accounting were the same, this is what the salary cap values would also be.  But that is not the case.

As stated above, the $4.2M signing bonus can be amortized for up to FIVE YEARS over each year of the contract.  So for salary cap accounting, that $4.2M is divided by 5 years and allocated on the salary cap books as $840k/year.

Therefore the projected salary cap charges for Faneca are:  $5.64M, $8.09M, $8.34M, $8.84M and $9.09M respectively from 2008 to 2013.

Please note (important!) that the TOTALS of both cash accounting and salary cap accounting equal $40M million!

Let’s show another example:

Dunta Robinson signed a 6-year, $57 million contract in 2010 with the Atlanta Falcons.  His contract is structured as follows:

Base Salary = $5.0M
Roster Bonus = $7.0M

Base Salary = $5.5M
Signing Bonus = $5.00M

Base Salary = $6.0M
Signing Bonus = $3.0M

Base Salary = $7.0M

Base Salary = 9.0M

Base Salary = $9.5M

Again, the values above that can be amortized are the signing bonus in 2011 ($5 million) over the remaining 5 years of the contract AND the signing bonus in 2012 ($3 million) over the remaining 4 years of the contract.

The $5 million gets applied as a $1 million salary cap charge from 2011 to 2015, while the $3 million get split up as $750k each year from 2012 to 2015.

So here is cash vs. salary cap accounting of the Dunta Robinson contract:

2010:  $12M cash, $12M salary cap
2011:  $10.5M cash, $6.5M salary cap
2012:  $9M cash, $7.75M salary cap
2013:  $7M cash, $8.75M salary cap
2014:  $9M cash, $10.75M salary cap
2015:  $9.5M cash, $11.25M salary cap

Once again, the important realization is that both cash AND cap will equal the same $57 million value if and only if the contract is completed.  There are no tricks to avoid this.

If you have followed along to this point, we are now ready to expand what we know into situations that arise during contracts.  As always, the key to remember is cash HAS TO eventually equal cap.

Contract Termination

One of the most common things to happen in the NFL is a players release during a contract.  This happens to dozens of players each off-season and can happen any time from the beginning of the league year up to deciding the team’s final 53-man roster (and even during the season).

When a player is released (or traded), the difference between that players’ CASH accounting and SALARY CAP accounting must be realized.  If any signing bonus was amortized at all there will be a difference.  This difference is often called “dead money”.

How “dead money” is applied to the salary cap books can be a bit complex, but understand teams HAVE to even out the difference over a maximum TWO-YEAR window on the books.  In the first year (the year of release), a team can short-change the amount down to the previously amortized signing bonus amount, with the remainder on the 2nd year salary cap books.  But teams can also choose to apply ALL of the dead money that first year.  This decision really depends on what is best for the clubs and their books.

For example, let’s look at Sean Mahan, the center signed by Pittsburgh in 2007 for 5-years, $17M contract.  Mahan’s contract was simple:

2007:  Base Salary = $650k, Signing Bonus = $4M
2008:  Base Salary = $2.175M
2009:  Base Salary = $3.175M
2010:  Base Salary = $3.5M
2011:  Base Salary = $3.5M

Mahan earned $4.65M in pay during 2007 from the Steelers, but his salary cap charge was only $1.45M (the $4M signing bonus was amortized into five 800k parts).

When Sean Mahan was traded in August of 2008 back to Tampa Bay, a correction to the salary cap books HAS to take place because Mahan’s CASH expense to date was $4.65M while his salary cap allocation to date was only $1.45M.  There is a $3.2M difference that becomes “dead money” for the Steelers to account for.  The rules also state, this “dead money” must be taken care of in the next two fiscal years.

The Steelers choose to account for $800k on their 2008 salary cap books (which is 1/5th of Mahan’s signing bonus) and the remaining $2.4M onto their 2009 books.  Note the Steelers could have chosen anything from $800k up to all $3.2M that first year, but selected the minimum amount due to other salary cap issues.

Again, when looking back in history at Sean Mahan alone, we see a CASH accounting of $4.65M all in 2007 but a salary cap accounting of $1.45M, $800k and $2.4M over a 3-year historic window.  There were no “tricks” to get out of the golden rule.  The money the Steelers paid Mahan did eventually get onto the Steelers salary cap books at some point.  It is just a matter of when.

Contract Renegotiation

When a player renegotiates with a team mid-way through a contract, what is effectively happening is the OLD contract is ripped up and a NEW contract is signed, but the previous allocations of signing bonuses stay in place.

Renegotiations fall into three categories (and using the correct vocabulary term will help your understanding of what is happening):

Restructuring is when a team agrees to pay the player the exact same amount of money for a season but changes how that money is paid for amortization purposes.  This means turning a high base salary into a combination of signing bonus and lower base salary (remember, every player has to have a minimum base salary based on his years of service).

Extensions are when the new contract adds years to the contract.  This is most often (not always) is associated with a pay raise and agreement with a player well liked in the organization.  The media likes to discuss “new money”, but I strongly encourage you to realize an extension is actually a NEW contract and the old contract is in fact ripped up.  All that remains from the previous contract is the amortized values of previous signing bonuses.

Renegotiations, although a catch-all phrase, really means among NFL executives a new contract that changes the scheduled compensation to the player for that year.  Renegotiations can go up but often are used to lower player salaries instead of releasing that player.

There is no simple way to show renegotiations without examples.  The math is still the same, but you often start dealing with multiple signing bonuses and their amortized values.  Remember that a signing bonus can only be amortized over a maximum 5 year period.

In some cases veteran players go through MANY renegotiations during their career.  Renegotiations happen for the following main reasons:

1.  To give a raise or lock up a player to a long term contract BEFORE the player becomes a free agent.  This is common as the player gets his deal (and signing bonus) often a year or more earlier, avoids risk of injury and in return might give the team a slight discount than what he would gain negotiating with multiple teams.

2.  To renegotiate a lower base salary for a player if he is not performing up the level of his projected salary and is likely headed for release/trade.

3.  To make short-term salary cap room by converting BASE SALARY into SIGNING BONUS, thus making salary that was previously unamortorized into an amortized amount over the remaining years of the contract.  This often does NOT include adding years onto the contract, but can be combined with reason #1 or #2 if necessary.

Let’s look at some simple examples:

In spring of 2009, Hines Ward was entering the last year of his 2005, 5-year contract with the Pittsburgh Steelers.  Ward was scheduled to make $5.8M dollars as base salary and have a salary cap amount of $8.133M due to previous amortized signing bonuses ($5M/5 years from 2005 and $4M/4 years from 2006) and a surprise performance bonus ($333k related to the 2008 Super Bowl).

The Steelers renegotiated Hines Wards deal as follows:

2009:     Base Salary = $2.75M, Signing Bonus = $3.05M
2010:     Base Salary = $4M
2011:     Base Salary = $3M, Roster Bonus = $1M
2012:     Base Salary = $4M
2013:     Base Salary = $4M

The key to deducing what Hines Ward’s new salary cap values are is to realize we still need to carry the previously amortized amounts from his last contract in 2009.

It is the 2009 salary cap value that is tricky.  His previous signing bonuses in 2005 and 2006 each amortized to $1M/season, so that adds $2M onto Ward’s 2009 salary cap charge.  His NEW signing bonus of $3.05M, which gets equally divided from years 2009 to 2013, will add $610k.  His new base salary is $2.75M.  And we need an adjustment to carry the $333k Ward was paid as a surprise performance bonus in 2008.

So Hines Ward’s new 2009 salary cap charge is:  $2.75M (BS) + $1.0M (SB ’05) + $1.0M (SB ‘06) + $610k (SB ‘09) + 333k (Performance Bonus) = $5.693M.

Once we get past 2009, the money paid Hines Ward as signing bonuses in 2005 and 2006 will now be “off the books” and his salary cap charge becomes just his base salary plus the amortized signing bonus of 2009 ($610k per year).  So Ward’s 2010 cap charge is simply $4M + $610k = $4.61M.

Remember, you cannot “refinance” how to amortize a signing bonus.  You can’t continue to split it into smaller and smaller pieces over longer time frames.  Even when you renegotiate a contract how a signing bonus was previously amortized remains on the salary cap books as originally planned.

One last note; Hines Ward neither received a pay raise nor pay cut with the above renegotiation.  His 2009 take-home pay remained identical at $5.8M.  Only the structure of the money changed (turning base salary into a signing bonus).

The fact Ward’s take-home pay didn’t change leads us to another common use of renegotiation to try and make salary cap room.  An example of this occurred with Ike Taylor in 2008.

Ike Taylor signed a long term, 5-year deal with the Steelers in 2006 after his rookie contract.  Heading into the 2008 off-season, Ike Taylor was on the salary cap books as follows for the remaining three years of his contract (consider this a snap shot in time):

2008:  $4.09M Base Salary, $300k Roster Bonus, $1.35M Signing Bonus Allocation = $5.74M CAP
2009:  $3.5M Base Salary, $250k Roster Bonus, $1.35M Signing Bonus Allocation = $5.1M CAP
2010:  $3.5M Base Salary, $250k Roster Bonus, $1.35M Signing Bonus Allocation = $5.1M CAP

In spring of 2008, the Steelers organization needed salary cap room for other uses, therefore they renegotiated Ike Taylor’s contract by converting his 2008 base salary of $4.09M into a base salary of $1.09M and a new signing bonus of $3M.  This $3M signing bonus was allowed to then be amortized over the remaining three years of the contract.  No other changes to the deal were made.

Let’s look at the effect this renegotiation had on Ike Taylor’s projected salary cap charges:

2009:  $1.09M Base Salary, $300k Roster Bonus, $2.35M Signing Bonus Allocation = $3.74M CAP
2010:  $3.5M Base Salary, $250k Roster Bonus, $2.35M Signing Bonus Allocation = $6.1M CAP
2011:  $3.5M Base Salary, $250k Roster Bonus, $2.35M Signing Bonus Allocation = $6.1M CAP

This is a very simple example of how a team can push forward some salary cap dollars into future years.  There are risks associated to the team when doing this however because Ike Taylor becomes much more difficult to release or trade at the tail end of a contract.  There is additional liability in potential “dead money” now in both 2010 and 2011.


The examples above, if you can follow the mathematics, explain about 99% of all current contracts in the NFL.   There are a few more “advanced topics” if you are interest I will explain with some questions and answers:

1.  I often hear about “guaranteed” money when a contract is signed.  What is this and does it affect the salary cap?

A:  In recent contracts it has become more common for teams to guarantee payment of either roster bonuses, base salaries or both after the first year of the contract.  If and when a player is released PRIOR to these guarantees, then yes this can affect the salary cap books.  Consider some of these guarantees as severance packages.  And since this is cash spent, all severance payments have to find their way to the salary cap books eventually.

2.  Can you explain performance bonuses in any more detail?

A:  Sure.  Like I stated above performance bonuses get labeled “Likely to be Earned” (LTBE for short) or “Unlikely to be Earned” (UTBE).  How and who decides this is a bit fuzzy, but the league office is involved and scrutinizes teams on their assumed choice.  For year-to-year salary cap analysis, LTBE bonuses are simply treated as additional base salary and are applied to the current salary cap.  What gets interesting is when a LTBE bonus isn’t met.  Because the team carried that LTBE value on their salary cap books for the previous year, the team gets a salary cap “credit” the following year.  This credit is applied (get this) as an increase in the team’s allowable salary cap!

Effectively, what teams can do is take extra salary cap room from one season and bank it for use in future years.  New England and Philadelphia are famous in salary cap circles for doing this.

The easiest example I can give on how to do this would be if a team is interested in promoting a backup player into a starting role and signs them to a new, expensive, long-term contract.  Since many backup players participate in special teams, a team could create a large performance bonus based on special teams participation (either total snaps or % of snaps).  Since this former backup player reached these special teams milestone the previous season(s), it can be considered LTBE.  But if that team fully knows that player will NOT participate in special teams after his promotion to a starter, that performance bonus will never get paid (and all the parties know this).

Thus in year one of that players new contract, this huge LTBE bonus (and it can be any fictitious amount) is carried on the teams salary cap books but when it is fact the bonus was never paid (after the season), this LTBE bonus becomes a credit to the next year’s salary cap.

In the case of UTBE bonuses, there are no tricks like this.

3.  Are Signing Bonuses always amortized equally over the contract?

A:  As far as I can tell yes, but there is no rule I see that says it’s a requirement.  I believe a signing bonus can be amortized to “front-load” the value, but I have never seen an example of that done by any team.  I know for sure you cannot “back-load” a signing bonus.  Also note, the maximum number of years a signing bonus can be amortized is five years, even if the contract is longer than that.

4.  Does June 1st mean anything?

A:  Not really.  In the old days, June 1st was a demarcation line that changed the way teams could spread out dead money over the following two seasons.  But that date has effectively been removed with exemptions.

5.  Is there a method on how/when teams have to be in compliance with the salary cap?

A:  Yes.  The NFL financial year starts on March 1st (this is officially the day a new season starts for NFL teams).  Between March 1st and the start of the regular season, teams only count their highest projected 51 players against the salary cap (this is often called the Rule of 51).  This obviously allows teams to have the 80-90 roster players during OTA’s and training camp without worrying about all their salaries.  A few days before the actual season starts (the week after Labor Day), teams decide on their 53-man rosters.  At this point, all 53 players now count on the salary cap books.  Teams have to leave room for practice squad week-to-week salaries and also room for replacement players if anyone gets injured.  During the season, to be salary cap compliant all these minor changes to your 53-man roster have to be under the current salary cap for the league year.

6.  Do injured players count on the salary cap?

A:  Yes.  If a player is placed on Injured Reserve, his full salary becomes guaranteed and that salary remains on the salary cap accounting books.  If a player is released due to injury, often an “injury settlement” takes place.  Again, this is similar to a severance package and those payments must be accounted for on the salary cap books (almost always in the current year).

Wednesday, August 10, 2011

Correcting the QB Rating System

Trying to fix the QB Rating System

ESPN’s recent release of a new quarterback rating system started me thinking of my own design to improve the method of rating quarterbacks.

Unfortunately for the ESPN system, it is not just based on statistics, but rather film study and a subjective analysis of game tape.  I find that hard to agree with as a statistical method of grading quarterbacks.  I’d like to find something easier and based off relatively easy data to find in a box score.

The current quarterback (or passer) rating is a fairly simple mathematical formula and only based on the following four statistics:

1.  Completion Percentage
2.  Yards per Attempt
3.  Touchdown Percentage
4.  Interception Percentage

These four statistics are multiplied by constants to yield a linear scale between approximately 1.0 (bad) to 2.0 (exceptionally good).  For example, a completion percentage of 50% would give you 1.0 point for that category, while a 70% completion percentage would give you 2.0 points.

The current passer rating system just adds up the points you gain in each category and multiplies the total using another constant (in this case 16.6667) and that is your passer rating.  The system further caps how much you can earn in each category (a very arbitrary 2.375 points) which yields the very awkward maximum rating of 158.3.

The flaws with this system are fairly apparent.  First, it only accounts for the four categories listed.  No rushing yards, no sacks, no big plays, no fumbles lost, no care in the world how good the offense is in other ways.  Second it gives each of these categories EQUAL WEIGHT towards your total rating.  The reality of NFL football does not agree with that statement.  Historically, Yards per Attempt is a much more important statistic towards winning and losing games than Completion Percentage.

So how should we tweak the system?

First, by picking more relevant categories and weighting them properly in relation to each other and second, to eliminate the arbitrary maximum value.

After some thought and brainstorming ideas, I have decided to choose the following statistics be involved in a quarterback rating system:

1.  Completion Percentage (Comp%)
I still believe completion percentage and accuracy is an important statistic, but a change in its importance and calculation is needed.  When the current rating system was designed 50-55% completion percentage was typical.  Now it is 60-65%.  That’s a big flaw with the current system and needs to be fixed.

2.  Total Yards per Pass Play (YPP)
I am trying to incorporate yards per attempt to including scrambling yards as well as pass yards since a mobile quarterback should get credit for positive plays using his legs.  What I do not want to include is quarterback sneaks (which is a rush attack method) or sack yardage (I don’t want negative sack yardage to skew how aggressive a quarterback is downfield).  What I have decided is to do is analyze all positive yards on “pass play calls”.  If a quarterback gains them with his arm or leg, I don’t care.  This is a very important statistic in historic success and will be weighted accordingly.

3.  Offensive Points per Possession (PPP)
The goal of every offense is to score and it is the quarterback’s job to make sure that happens.  I struggle to understand why a quarterback should be penalized or rewarded based on how the touchdown is actually scored (pass vs. run) when almost every drive is a combination of successes both ways.  This statistic is representative of offensive team success since I strongly believe a quarterback is vital to their success, even in conservative or run-oriented offenses.  This also rewards “situational” success like 3rd down conversions and red zone success.

4.  Turnovers per Pass Play (TO%)
This is actually a simple fix to the INT% statistic used in the old formula.  Fumbles lost by a quarterback should be just as costly as interceptions (in fact, likely more since some interceptions act as “punts”).

5.  (20+ Yard Pass Plays minus Sacks) per Pass Play (Risk/Reward %)
I have created a minor 5th category (this will be weighted approximately half as much as the others) to take into account the risk/reward of quarterback play.  I have no problem with quarterbacks who take a lot of sacks but do so at the reward of making big plays downfield.  Nor do I want to rewards a quick-triggered quarterback who avoids sacks with constant throw-aways or checkdowns at the expense of ever going downfield.  I thought by analyzing these two totals, thus creating  a +/- or ratio it would best indicate this risk/reward behavior.

The next step is to create formulas that allow for much of what we are used to with the current quarterback rating system to be reflective in the new numbers.  An average quarterback should have a rating of around 75.0 and a good/great quarterback season should be 100.0.  I could also create the formulas to make a new “maximum” grade, which I think should be 200.0.  This allows for some truly stellar performances to show through a little better than the old "158.3" way.

So let’s try this example of an “average” quarterback and their resulting baseline score in each category:

A.            Completion % = 60%                                       1.00
B.            YPP = 6.0                                                         1.20
C.            PPP = 1.80                                                       0.80
D.            TO% = 3.5%                                                    0.80
E.            R/R % = +2%                                                    0.66

This total baseline score (4.4666) is multiplied by the same constant the old formula used (16.667) for a new Quarterback Rating of 77.78.  I think that’s a rating fans would correlate to an “average” player.  So our first math “check” seems to work out.

Let’s look at what the exceptional scores would be during a season.  These are the approximate averages of the top-5 in each category:

A.            Completion % = 66%                           1.24 (Brees, P. Manning, Rivers, Brady, Rogers)
B.            YPP = 7.50                                          1.80 (Rivers, Rogers, Roethlisberger, Brady, Vick)
C.            PPP = 2.40                                          1.40 (Brady, Rivers, Manning, Schaub, Vick)
D.            TO% = 1.6%                                                    1.64 (Brady, Cassell, Freeman, Roethlsiberger, Vick)
E.            R/R % = 5%                                         1.02 (E. Manning, Brady, River, Vick, Schaub)

This baseline total, for a quarterback that would rank around 3rd in all major statistical categories, would be 7.1 and yield a new QB rating of 118.3.  Again, I think that is appropriate.  As you can see from the list above, Tom Brady actually did accomplish this feat.  He also led an offense (New England) that scored considerably more points than its nearest competitor.

Tom Brady’s new quarterback rating is an astonishing 129.5 but when you consider what he and the Patriots did during the regular season, it should be that high:

1.  Brady completed 66% of his passes (4th in the league).
2.  Brady averaged around 7.4 yards per pass play, good for 4th in the league.
3.  The Patriots scored 458 points on offense (no returns/defensive TD’s) and averaged 2.90 points per possession.  This was light years ahead of the league and ranks New England in the top-10 most prolific offenses ever.
4.  Brady set an NFL record for fewest turnovers, committing only 5 in roughly 527 drop backs.
5.  Brady had 53 pass plays of 20 yards or greater vs. only 25 sacks.  This +28 was second in the league behind only Eli Manning (who was +41).

When I use my new quarterback rating formula for the rest of the top quarterbacks in the league, seven players reach the 100.0 milestone (Brady, Rivers, Vick, Rogers, Roethlisberger, Schaub and P. Manning).  Again, I think this “checks out”.

Our last “check” is to resolve game-day passer ratings and what constitutes a “perfect rating”.  As stated before we can cap each category to yield a maximum score and thus create the necessary parameters to yield a quarterback rating of 200.0 (which I will consider “perfect”).

In order to accomplish a game-day perfect rating, the following has to happen:

1.  A quarterback has a minimum 75% completion percentage.
2.  A quarterback gains a minimum 12.0 yard per pass play.
3.  The quarterback-led offense scores a minimum 3.5 points per possession.
4.  The quarterback can not commit a turnover (either interception or lost fumble).
5.  The quarterback has to have a +10% risk/reward ratio (ex. have +3 big plays vs. sacks over a 30 pass play day).

If all these conditions exist, the quarterback will attain a perfect 200.0 rating for the game.

In conclusion, the new ESPN formula frustrated me so much and left me so disheartened, I just decided to fix the old formula myself.  As I did research for this article, I think the old formula has merit and a certain level of comfort with the fans.  We know what certain scores mean.  But the old formula was flawed and out-of-date and did not weight categories correctly with their impact on winning games.

I hope my new system is more realistic and plan on testing it during the season.

As always, thanks again for reading and I look forward to your comments.

Appendix A:

Here are the actual formulas I have created for each category:

A.            (Completion % - 35%) * .04                                           max Score = 1.65
B.             (Yards per Pass Play - 4.0) * 0.5                                    max Score = 4.00
C.             Points per Possession - 1.0                                            max Score = 2.50
D.            2.2 - (TO/PP * 35)                                                              max Score = 2.20
E.             ((20+ yard pass plays - Sacks)/PP + .035) * 12             max Score = 1.65

Completion % = Pass Completions/Pass Attempts
Yards = Passing Yards + Scrambling Yards
PP (Pass Plays) = Pass Attempts + Sacks + Scrambles
Points Per Possession (PPP) = Points Scored (TD’s, XP’s and FG’s) divided by Possessions.  Kneel down drives are not included.
TO = Interceptions + Fumbles Lost
20+ Yard Pass Plays = Pass Completions for 20+ yards
Sacks = Official Sacks Against