Procrastination Nation

Things that Robert is thinking about that keep him from accomplishing anything.

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Tuesday, September 02, 2003
Cap Moves
I am still trying to understand what it is the National Football League Players Association does for players. Each year, teams sign their big stars to "huge" contracts with lots of upfront signing bonuses (that are pro-rated for the length of the contract) and agree to relatively less huge annual salaries. Then, within a year, faced with actually having to pay the money and the league's salary cap, teams look to the players for cap relief by redistributing salary, typically by pushing money into the future. The only money guaranteed in the deal is the signing bonus.

Case in point: the Tennessee Titans at the February cut-down point waived Neil O'Donnell and his $X million salary. (I can't find offhand the original prices, but it was over $1m.) However, the player and the team both wanted each other, so O'Donnell passed on offers from Minnesota and New Orleans to stay with the Ttans for about $755k. Now, after a pre-season in which the #3 QB, Billy Volek, proved he can be the #2 (for $605k), the Titans cut O'Donnell, and they can use a rookie QB, Jason Gesser, for the league minimum, $225k. $605+$225 is less than $755+605 by about $500k, which they can use for roster moves during the season or to put into a new contract for oft-injured and unproductive DL Jevon Kearse. That's on top of what they saved to get O'Donnell down to $755k.

Such adjustments help the team because it can use that "new" money (or pool it with money given back by other players) to sign new players to help the team or to finance new "huge" contracts to other stars. This can only happen so many times because as time goes on a player's skill level declines relative to the increase in salary price. As a result, teams waive the players. Based on the timing of those waivers, the team takes less of a cap hit than if the player stayed with the team, freeing up more money in the future to perpetuate the cycle.

Of course, they use this strategy on all contracts. I say "huge" not just because of the irony that players never actually see all the money they signed for. They're "huge" in the sense of relative value, the discrepancy between a player's future skill level, their future salary, and the value of a replacement player. In the future, there will be an undrafted free agent, maybe a couple years into the league, who will play for the league minimum and play his position and probably on special teams, too. He likely won't be as good as the player released, but he will be cheaper. The ratio of marginal cost to marginal benefit will be closer to 1, possibly even below 1 if the player turns out better than expected.

In theory, players agree to these givebacks because if they refuse, they'll get cut sooner; the giveback postpones their eventual waiver, and players prefer the certainty of a job to the uncertainty of the free agent market. Also, if enough players refused the givebacks and took waivers, they would flood the market and lower the price, presumably below the value of the renegotiated rate.

Are these not the practices the NFLPA should be working to avoid? It's bad enough that marginal players and aging players end up subsidizing the new contracts for first round rookies and superstars entering the prime of their careers. Apparently players suck it up and avoid much class warfare. If the union functioned properly though, they would protect the earnings of all their players and stop feeding the egos of the elite players and their agents, even to the point that the players would strike for changes to the operation of the waiver/cut-down and cap process. (Although we've seen how successful the 80s strikes were: they produced this ridiculous system.)

What is really disgusting is that Gene Upshaw, Hall of Fame OL of the Oakland Raiders and president of the NFLPA, is the highest paid union leader in the country. The labor rights of the man's union members are treated only marginally better than a Wal-Mart employee.

For Titans fans, all I can say is, look for Eddie George on the waiver wire come 2004.

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