[Warning: long sciency type post. You have been warned.]
There has been a bit of debate over the offseason about how much cap trouble we are in, if any.
On one side, there are the pessimists: we're already over the 2015 cap, they say, even before we resign a bunch of players. We need to be careful about who we give money to, because it's about to become very, very scarce.
On the other side, the optimists: there's also something you can do with the cap, they say. Just restructure a couple of contracts, it'll be fine. And don't worry too much about the future, we need to win now. Boone wants money? Pay the man, he undeniably deserves it. Crabtree and Iupati too? Pay them all.
The difficulty in the argument (it seems to me) is that it's difficult to put your finger on how much salary you can push back before cap hell arrives. So, I set out tonight to try to put some science to it, without any clue really on how it would turn out.
First, my thought process:
Teams can, in effect, "borrow" salary cap against earlier or later years by structuring the contract appropriately. For example, Joe Staley's first big contract (which I think was $44m/9years – not sure if that was the original contract or if it was extended) in 2009 had huge roster bonuses in 2009 and 2010, resulting in cap figures of $13.5m and $6.8m when we had cap to burn. This allowed us to keep the cap hit to only a few million for the remainder of the contract.
However, I argue that the true cost of a $44m/9year is about $5m per year, irrespective of how it was allocated for salary cap purposes. Why does this distinction help? Well, by looking at how much a team is really spending you can see how sustainable that is. If the true cost of the team is $5m more than the cap, this money has to be recouped in another year (either earlier or later). That's manageable, but if you have the same cost the following year then you have to push $10m into the next period; another year it's $15m. At some point, you can't push it forward anymore: You have hit cap hell.
For teams at the end of their window, they might not care. Take the Broncos: Chances are they will be terrible the moment Manning retires (say after 2015) until they find another competent QB. So why not borrow as much 2016 and 2017 cap space and shove it into 2014 and 2015?
On the other hand, we (in theory) have a QB who should be at his peak over the next 5-6 years. Our plan should be compete through that entire period. A degree of borrowing from future cap space is fine (say, in line with the annual increase in cap space), but as we are not intending to repay our "debt" until we are no longer competitive we can't afford to over borrow.
So how are we doing? (Hat-tip to ninercaphell and sportrac for the underlying figures that the following analysis is based upon).
[If possible, I'd ask you to pause here and think: how much cap space would you think is a reasonable number to "borrow" from a future year.]
Our top 53 paid players at the moment have a combined salary cap hit of about $127m, about $6m less than the salary cap. This feels reassuringly comfortable: we aren't even pushing that hard against the cap this year.
However, this is misleading. The true cost of the team this year (by looking at average cost per year over the contract) is $154.2m: in other words we are pushing over $21m into future years, or overspending the cap by 16%. This debt will get called in, sooner or later. This level of spending is not sustainable at all. If we extend/restructure players so that we can give big contracts to Boone, Iupati, Smith and Crabtree, all we are doing is borrowing cap from 2016.
This post isn't meant to show that it's impossible to manage the cap, just that money will become scarce in the next couple of years and that we shouldn't be throwing it around today just because the crunch hasn't hit.