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Draft, Free Agency, and Salary Cap

Discussion in 'Miami Dolphins Forum' started by Davenport, Mar 11, 2010.

  1. Davenport

    Davenport New Member

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    It's been a long hiatus since my last post, and for that I apologize. I will try to make a concerted effort to be more active during my favorite part of the NFL year-- the offseason!

    Now, the offseason is generally pretty interesting in itself; as typically it is the first glimpse into the minds of the management personnel of NFL franchises and usually gives a pretty good indication of the teams' future plans. However, this year is particularly interesting due to the fact that for the first time since 1993, the league will be operating without a salary cap. Understandably there have been mixed feelings from the fans, most wondering if their team will be one of the franchises that will take advantage of the absence of a ceiling, or one of those that will choose to terminate expensive contracts and exploit the fact that there is no salary floor either. As we've seen with the start of free agency, there has been a little bit of both-- but I wouldn't be too concerned about the NFL turning into baseball anytime soon.

    I, for one, think the absence of the salary cap for one season is great for the competitive balance of the league. It gives those teams that made poor financial decisions over the past few years (the Raiders and Redskins are good examples) an opportunity to terminate inflated contracts that otherwise would have been little more than dead weight due to cap penalties that would have been incurred with their release. If I were taking over a struggling franchise, this is the year that I would have wanted to do it. Bruce Allen and Mike Shanahan will have the opportunity to build the Redskins the way they want, a process that otherwise would have taken years of compromise at various positions as they waited for contracts to expire. It's also the reason there wasn't a whole lot of effort on the side of the owners to get a new CBA in place. Many of these teams were happy to see the salary cap vanish for a year, so they could rectify some of their mistakes in an effort to get back on track when the salary cap is implemented again.

    There also is a growing concern among fans about the possibility of a lockout in 2011, which let me go on the record and say right now is bull****. There will not be a lockout in 2011. It will be close, and I don't anticipate a new CBA to be in place until after the upcoming season, but you can be damn sure the revenue sharing issues will be resolved in time. The losses from both sides would be far greater in a year without football than the revenue differences they are disputing over. TV contracts would be voided, players who are already in enormous debt and are depending on their salaries will be forced to liquidate assets or file bankruptcy, and the $7 billion of annual league-wide revenue that the NFL loves to brag about would be essentially reduced to 0. It would take almost a decade to recover financially from a year without football-- and ultimately would result in a lower salary cap in the new CBA anyway (which is why the strike makes no sense for the players). And yes, despite what the late Gene Upshaw thought, I do believe the salary cap will return, although perhaps in a more lenient capacity.

    [​IMG]

    Which leads to a slightly more interesting and always evolving discussion, which is the draft versus free agency. Typically the fans are always pushing for the big names in free agency, while teams are always in favor of building through the draft. There is no right or wrong answer, and every successful team is usually built with a mixture of both.

    However, there are enormous benefits to building through the draft that go beyond what some fans may realize. With the exception of the first 5 picks, hitting on your draft picks can do wonders for a franchise financially. Even though teams will more often than not be forced to deal with the typical struggles a rookie will endure as he progresses; if he can develop into a starting role quickly, you have just given yourself an advantageous situation that many teams are not fortunate enough to be in. For example, Patrick Willis is widely regarded as the best young Mike linebacker in the league, and he will now be entering into the 4th year of his 5-year $16.65 million contract. Contrast that to the 5-year $43 million contract Karlos Dansby recently signed, and although ability wise they are comparable players with Willis likely getting the small edge, Dansby is currently making over $5 million more annually than Willis.

    [​IMG]

    There are other similar examples throughout the league. Chris Johnson, who is now regarded as the most explosive running back in the league, will be entering the 3rd year of a 5-year $12 million contract. DeSean Jackson will be entering the 3rd year of a 4-year $3.01 million contract. The list goes on.

    So what does this mean? Well, even though all of the above players are surely in for a big pay day like the one Dansby received, the respective teams of these players are reaping the benefits right now without much of an investment. What this does, is allows teams to have star caliber players on their roster without the financial burden that usually accompanies that talent-- which ultimately frees up salary space to be spent elsewhere. For instance, signing other players and front loading their contract with money so that by the time players like Chris Johnson are due for a new contract, they'll have the space to sign them, while also being able to keep the other players as well.

    For this same reason, teams are often reluctant to go on huge spending sprees and offer these big contracts to high profile free agents. Even though it looks good and keeps the fans happy, by signing high-priced free agents it inhibits your ability to 1) sign other free agents to fill similar needs, and 2) re-sign players on your roster when their rookie contracts expire. Of course, the quickest way for a team to fail is to miss on too many of their draft picks, which forces them to compensate by overspending on free agents and usually results in a franchise regressing (see Redskins, Raiders).

    Which leads me to one more quick note about the salary cap and free agency before I wrap it up. If for some reason they extend the current CBA or agree to a new CBA without a salary cap, I wouldn't expect too many teams to start spending like the Yankees. Almost every team in the league has an annual revenue between $215 - $240 million, with a few exceptions including the Patriots, Redskins, and Cowboys (which are all over $300 million). The average operating income for an NFL team was between $12 - $25 million-- almost all of which is reserved for facility upgrades to compensate for depreciation. So, even if there is no cap, it doesn't make much sense for these teams to operate in the red by signing a few more free agents when their future revenue isn't going to increase much with a few more wins. The Redskins are the exception with an operating income of over $90 million even in their current state, although we've already witnessed Daniel Snyder spend his franchise into the toilet (at least temporarily), and I don't see the absence of a salary cap changing the way teams operate-- at least not drastically. A team can spend all the money it wants to, but the draft is still where the core of the good teams are usually built.

    Of course, free agency isn't always a bad thing. Balancing your roster through the draft and free agency and knowing which years to pay certain players is an art that every current and aspiring general manager is working towards mastering.

    So, even though this turned out to be a little more lengthy than I originally intended, I hope at the very least it was a somewhat informative. The rest of the offseason should be very interesting, as the 2010 draft class figures to be the most talented in recent memory-- which I hope to address abundantly with you all in the coming weeks.

    Feel free to convey your thoughts.
     
  2. TNphinfan

    TNphinfan Always soo close... Club Member

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    I enjoyed reading your post here, and the whole thing does make sense. We get a sense of a self-imposed cap on every team. This being on the amount of money the owners are able to free up, as well as their income. I also agree the draft is the best way of gaining good talent, especially for a great price! The Chris Johnson, and De'sean Jackson example were great to illustrate the view. :up:
     
  3. Murmannator

    Murmannator New Member

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    no way there will be a lock out, players have the owners by the b@lls. If they dont play, no money will be made.
     
  4. GridIronKing34

    GridIronKing34 Silently Judging You

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    Great post. Thanks for sharing.
     
  5. CrunchTime

    CrunchTime Administrator Retired Administrator

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    Great post brother.We hope you stick around to share more of your opinions.:up:
     
  6. Rdrunn004

    Rdrunn004 Active Member

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    I have to respectfully disagree with the "players have the owners by the b@lls. if they don't play, no money will be made." comment. When push comes to shove there are plenty of players coming out of college and plenty of current players in the low salary bracket that will continue to play.

    There are so many athletes out there in today's world that the talent level will probably not take very long to recultivate. Besides you give the young college players the choice to go work a 9 to 5 at $30k - $40K or play in the NFL and make more money (even though it is not at the salary level it is today) and I don't see them choosing the 9 to 5 at all.

    Competition is what the NFL feeds on and regardless who the players are and what their salaries are there will always be competition and fan willing to support their teams. Money will be made.
     
  7. finyank13

    finyank13 Reality Check

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    Watch the Dolphins win the Super Bowl with scabs....
     
  8. phineas64

    phineas64 Season Ticket Holder

    And not only that, but the owners have other income. They are all successful businessmen, and will not starve in a lockout. The players, for the most part, aren't business owners or millionaires, and need the income. It's the owners with most of the leverage. They both need each other though in this case, and I think a deal will get done. The players want to play and get paid, the owners don't want their prize hobby destroyed.
     
  9. PhinishLine

    PhinishLine Season Ticket Holder Club Member

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    Definitely a good read to go along with my morning cup of coffee!
     
  10. Da 'Fins

    Da 'Fins Season Ticket Holder Staff Member Club Member

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    Good post and very good points.

    The only regret I have is that with our needs, we don't have more picks than we do this year (which is a deep draft).
     
  11. Onehondo

    Onehondo Senior Member Club Member

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    It being a deep draft with good prospects available, maybe the Dolphins will have a real chance to trade down and accumulate more picks if they choose to. There may not be a player at 12 that we think is worth that 12th pick but there could be players available there that another team has an eye on and just can't do without.

    Great read by the way!
     
  12. SeanP

    SeanP Season Ticket Holder Club Member

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    Thanks for the insight, as usual, great post :)
     
  13. Shamboubou

    Shamboubou Well-Known Member

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    Ok I first want to say that I really enjoyed your post. I think you made some great points but sometimes I get confused about the Draft vs. Free Agency debate. I personally look at the first 3 rounds to be players that have to be starters in at most 2 or 3 years to get your return on them. Unfortunatly for the Fins IMO we would have been better off getting some big name FA's than drafting Jason Allen whom we have been paying 1st round salary to for not really much production other than special teams. The draft to me is like a high risk stock...it might take off and you just made a ton, but a lot of times it doesn't pay off in the long run. Its just hard for me to pass on young talent in free agency for a gamble in the draft a lot of time. I will strait up say that I'm not a numbers guy when it comes to contracts and the salary cap and everything, which may be why I dont understand. Just seems to me that taking a proven WR like Bolden or Marshall would be better than taking a risk in the draft. My example is that with the pick we spent on Patrick Turner who didn't play last year but very little, we could have had Bolden who is proven.
     

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