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question about a cap

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Old
09-15-2004, 02:15 PM
  #1
hockeytown9321
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question about a cap

The argument I seem to get from people in favor of a cap is that it lets the small payroll\market teams hang onto the players they draft, while the current system doesn't. I've already discussed at length why I beleive a cap would punish a team that drafts well, but I have more question:

How do you get around signing bounses? Signing bonuses are not salary. It seems to me that the large market teams would have even more of an advantage becuase they could pay huge signing bonuses. For example, Niklas Lidstrom signed a one year deal in April for $10 million. What if he signed a $2 million deal under a cap, but with a $8 million signing bonus? How is the playing field leveled? Lets say both the Rangers and Flames had the same cap room, and Iginla was a free agent. They both offer him a $4 million salary, but New York offers a bonus of $5 million. Can Calgary match that? I highly doubt it.

Bottom line, the large revenue teams will still be able to "set the market", and the poor small revenue teams can't match what those teams can offer. I don't see how anything changes.

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09-15-2004, 02:21 PM
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Quote:
Originally Posted by hockeytown9321
The argument I seem to get from people in favor of a cap is that it lets the small payroll\market teams hang onto the players they draft, while the current system doesn't. I've already discussed at length why I beleive a cap would punish a team that drafts well, but I have more question:

How do you get around signing bounses? Signing bonuses are not salary. It seems to me that the large market teams would have even more of an advantage becuase they could pay huge signing bonuses. For example, Niklas Lidstrom signed a one year deal in April for $10 million. What if he signed a $2 million deal under a cap, but with a $8 million signing bonus? How is the playing field leveled? Lets say both the Rangers and Flames had the same cap room, and Iginla was a free agent. They both offer him a $4 million salary, but New York offers a bonus of $5 million. Can Calgary match that? I highly doubt it.

Bottom line, the large revenue teams will still be able to "set the market", and the poor small revenue teams can't match what those teams can offer. I don't see how anything changes.
Bonuses count against the salary cap. They just get prorated.

So if the Lidstrom signed a 3 year deal for $24 million, but got paid like this:

Bonus - $12 million
Year 1 - $4 million
Year 2 - $4 million
Year 3 - $4 million


He would still count as $8 million against the cap all 4 years.

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09-15-2004, 02:26 PM
  #3
hockeytown9321
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OK, my point is that money ispaid all at once and upfront. I don't think many small payroll tems can do that. If you're being offered the same salary would you take a $5 million bonus from Detroit or a $2 million bonus from Edmonton?

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09-15-2004, 02:28 PM
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Quote:
Originally Posted by hockeytown9321
OK, my point is that money ispaid all at once and upfront. I don't think many small payroll tems can do that. If you're being offered the same salary would you take a $5 million bonus from Detroit or a $2 million bonus from Edmonton?
and hence the reason why bonus' are a MAJOR persuasive device in the NFL.

100% correct, teams can offer a bonus to entice players. It happens in the NFL.

difference is, in the NFL you can also cut a player and lessen the cap impact if he doesnt hold up his end of the bargain. the NHLPA wants nothign to do with that, which may put half of its highest paid players out of a job.

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09-15-2004, 02:30 PM
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Quote:
Originally Posted by hockeytown9321
OK, my point is that money ispaid all at once and upfront. I don't think many small payroll tems can do that. If you're being offered the same salary would you take a $5 million bonus from Detroit or a $2 million bonus from Edmonton?
True

If a player is offered

Rangers
Bonus - $10 million
Year 1 - $1 million
Year 2 - $1 million
Year 3 - $1 million
Year 4 - $1 million
Year 5 - $1 million

or

Flames
Year 1 - $2 million
Year 2 - $2.5 million
Year 3 - $3 million
Year 4 - $3.5 million
Year 5 - $4 million

It's $15 million any way you slice it ... but better to take the Rangers offer.

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09-15-2004, 02:32 PM
  #6
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Quote:
Originally Posted by X8oD
and hence the reason why bonus' are a MAJOR persuasive device in the NFL.

100% correct, teams can offer a bonus to entice players. It happens in the NFL.

difference is, in the NFL you can also cut a player and lessen the cap impact if he doesnt hold up his end of the bargain. the NHLPA wants nothign to do with that, which may put half of its highest paid players out of a job.
I'm all for non-gauranteed contracts.

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09-15-2004, 02:33 PM
  #7
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Quote:
Originally Posted by John Flyers Fan
True

If a player is offered

Rangers
Bonus - $10 million
Year 1 - $1 million
Year 2 - $1 million
Year 3 - $1 million
Year 4 - $1 million
Year 5 - $1 million

or

Flames
Year 1 - $2 million
Year 2 - $2.5 million
Year 3 - $3 million
Year 4 - $3.5 million
Year 5 - $4 million

It's $15 million any way you slice it ... but better to take the Rangers offer.

And thus you have the same problems you have now.

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09-15-2004, 02:41 PM
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Quote:
Originally Posted by hockeytown9321
I'm all for non-gauranteed contracts.
they dont have to make em non guarenteed.

make em 2-way, there for instead of being able to go on the free market, you get your pay slashed and you are sent to the AHL.

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09-15-2004, 04:22 PM
  #9
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NHLPA would never accept 2 way contracts to receive greater use. They would not want the teams to have the option to just send any player down to the minors. They probably hate it as it is when younger players like Spezza can get sent down.

Pro-rated bonuses encourage lengthier contracts such as the 6 and 7 year deals you see in the NFL and NBA. The counter to that is the accelerator clause where if you cut a player or trade him, you have cap penalties where the remaining pro-rated portion of a bonus is charged against the cap in the current year all in one shot. So, a rebuilding team could cut their high priced players, take the cap hit right away and then have a massive cap space the next year to rebuild. To maintain some competitive balance, you would have to have an NBA system where bonuses are limited so all teams are able to pay the same bonuses.

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Old
09-15-2004, 05:59 PM
  #10
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Quote:
Originally Posted by hockeytown9321
The argument I seem to get from people in favor of a cap is that it lets the small payroll\market teams hang onto the players they draft, while the current system doesn't.
I think there is a subtle difference that is worth distinguishing for us fans.

There is a concept of a connection between revenues and expenses. This can be done in many ways. This is a financial/power battle hard for us fans to relate to.

There is one of many ways of implementing this. One of those is through the concept of a uniform team payroll cap, or a system that strives to that goal. This I think is a secondary issue more worthy of fan discussion, and somewhat unrelated to the first.

I personally abhor the idea of 30 equal teams or any system that strives for it. I think its a ridiculous concept. I think a cyclical competitiveness is the true fairness. Allowing great and rebuilding teams, rather than all mediocre teams.

I think they can have cost certainty without a uniform team payroll cap.

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09-16-2004, 04:25 PM
  #11
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Quote:
Originally Posted by thinkwild
I think there is a subtle difference that is worth distinguishing for us fans.

There is a concept of a connection between revenues and expenses. This can be done in many ways. This is a financial/power battle hard for us fans to relate to.

There is one of many ways of implementing this. One of those is through the concept of a uniform team payroll cap, or a system that strives to that goal. This I think is a secondary issue more worthy of fan discussion, and somewhat unrelated to the first.

I personally abhor the idea of 30 equal teams or any system that strives for it. I think its a ridiculous concept. I think a cyclical competitiveness is the true fairness. Allowing great and rebuilding teams, rather than all mediocre teams.

I think they can have cost certainty without a uniform team payroll cap.
a uniform payroll threshold/cap is one thing, as has been shown time and time again, money doesn't mean a thing if your team doesn't have the chemistry on ice to compete successfully, getting a uniform payroll system is one of the first stepping stones to allow all teams to have access to all players, not just the mediocre/lowend talent, IMO if all teams had access to the full spectrum of talent in the league, then you'd see more teams making money and becoming more financially sound, it doesn't matter whether a team's from florida or nunavut, if a team is being priced out of the premiere talent it's not going to go anywhere and will continue losing money year after year

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09-16-2004, 05:03 PM
  #12
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I wouldn't mind seeing the bonuses thrown out the window in favor of a performance based contract in the first place. Make all the contracts the standard minimum salary for the league per year, then tailor each contract in ways that every player can contribute to their team and get compensation for that.

Scoring are not the only stats, and while stats can be very subjective, there are a number of ways that you can manage performance based contracts.

Make the players earn their salaries, it makes the most sense. It'd also create a better balance for players on teams, because you might be able to make more on a team like Atlanta where you would be the #2 LW with PP time than you would be able to make on Detroit as the #3 LW with no PP time. Just an example.

Then the only caps you have to worry about are the individual caps for the performance qualifiers. Let the owners pay for their success, because they yield a profit from it.

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09-16-2004, 06:44 PM
  #13
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Quote:
Originally Posted by GoCoyotes
I wouldn't mind seeing the bonuses thrown out the window in favor of a performance based contract in the first place.
I'd like to see that... 'bonus' implies reward for performance that is 'special' - i.e. over and above what is expected.

My 'basic' system would have:

(1) a cap of fixed cost salary... The individual team and the individual player agent negotiate the fixed cost portion of salary... Like they do now, except under a cap system...

(2) a variable cost salary... Each CBA, the NHL and the NHLPA negotiate what percentage of revenue will be allocated to the players when certain team and performance milestones are reached... For example, for a 100 point team, the players get equal share of x% of revenue. For a team that makes the playoffs, the players get equal share of y% of revenue... For a team that wins the Stanley Cup, the players get equal share of z% of revenue... And this is regardless of individual performance... and this is the same percentage across the league...

If an individual player reaches personal milestones, his variable compensation also increases. For example, a 35-40 goal scorer during the season receives an additional a% of revenue generated for the year... a 100-point scorer during the season receives an additional b% of revenue generated for the year...

And personal milestones wouldn't only include individual stats - but roles as well... For example, team captains for the season receive c% of revenue generated...

A lower fixed compensation (which the player is guaranteed)... and a high variable compensation (which is directly dependent on personal and team performance)...

Assume under my system, Todd Bertuzzi has a fixed salary of $5 million... He'll get $5 million regardless of what he does or doesn't do on the ice... However, if he scores 50 goals, 100 points, 10 regular season game winners, the Canucks reach the Stanley Cup final, and Bert wins the playoff MVP reward, while being an assistant captain - he gets $10 million... Next season, he floats, scores 40 points, the Canucks suck, come last in the league - Bert gets $5.3 million... $5 million for his base salary, and $300,000 for being an assistant captain...

IMO, the beauty of this type of system is that the fixed portion of salaries are guaranteed (for both the owners and the players), yet it doesn't 'cap' what the player can earn... The more success and money the team makes, the more money the player makes... The bigger role the individual player has for the success of the team, the more money the player makes...

It rewards performance... and it ensures that if Matt Cooke has an anomoly and scores 40 goals next year - 10 game winners, he gets compensated fairly for his contribution (say $3.5 million instead of $1.2 million)... while NOT disrupting his fixed 'salary'... If Cooke shows that he is a consistent 40 goal scorer, THEN his fixed base salary is adjusted accordingly when his contract is next up for renewal... If this 40 goal season was just a 'one off thing', then his compensation for the following year is back to $1.2 million - assuming other personal and team milestones were not reached)...

This is cost certainty without limiting what the players can earn... when the players deserve to earn it...

An additional benefit is that UFAs (and players in general) will want to go to (or stay with) teams that generate lots of hockey-related revenue and have success... The good teams get a much better chance to get and keep the best players - and IMO, that's how it should be... I'd also have a 'drafted player' individual milestone percentage of revenue... If a drafted player plays with the team that drafted him, he gets d% of revenue... If that player leaves as a free agent, or is traded, he no longer - throughout his career - receives this %... For good teams that draft and grow their own good players, this will help these teams keep their drafted players...

Under this system, players will likely not want to play for poor teams... For the good player on the poor team, sure the base salary and individual performance compensation is nice... However, the base salary, individual performance, and team performance compensation is a lot nicer...

This type of system incorporates a cap, but it DOES NOT limit what the players earn... In fact, it would, for good teams that generate a significant amount of revenue, pay the players significantly more than a guaranteed contract would - IF players perform and ESPECIALLY IF players perform beyond expectations...

IMO, this is an absolute fair system for both sides...

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09-16-2004, 07:30 PM
  #14
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Quote:
Originally Posted by John Flyers Fan
Bonuses count against the salary cap. They just get prorated.

So if the Lidstrom signed a 3 year deal for $24 million, but got paid like this:

Bonus - $12 million
Year 1 - $4 million
Year 2 - $4 million
Year 3 - $4 million


He would still count as $8 million against the cap all 4 years.
hat would be true if it is in the new agreement.If not address then it is not counted as salary . Rich teams can get around any cap by the somple personal services greement to the owner or the company . You canot stop personal serice agrements because they are outside hockeys preview. That is just one way to get around the cap.Ever hear of creative accounting?Well you can use that method also to defeat a cap . Example lease agreement with the player.

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09-16-2004, 08:13 PM
  #15
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Quote:
Originally Posted by hockeytown9321
And thus you have the same problems you have now.
Not true.

If that was the case, then the NY Giants would have the same advantage over the Green Bay Packers. There's a reason why that's not the case... because that 'Rangers' deal is bad cap management.

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09-16-2004, 08:15 PM
  #16
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Quote:
Originally Posted by capman29
hat would be true if it is in the new agreement.If not address then it is not counted as salary . Rich teams can get around any cap by the somple personal services greement to the owner or the company . You canot stop personal serice agrements because they are outside hockeys preview. That is just one way to get around the cap.Ever hear of creative accounting?Well you can use that method also to defeat a cap . Example lease agreement with the player.
If there are so many methods to defeat a cap then why haven't NFL teams figured them out yet?

Here's an idea: Maybe because these things are covered in the CBA?

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09-16-2004, 09:11 PM
  #17
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Quote:
Originally Posted by I in the Eye
I'd like to see that... 'bonus' implies reward for performance that is 'special' - i.e. over and above what is expected.

My 'basic' system would have:

(1) a cap of fixed cost salary... The individual team and the individual player agent negotiate the fixed cost portion of salary... Like they do now, except under a cap system...

(2) a variable cost salary... Each CBA, the NHL and the NHLPA negotiate what percentage of revenue will be allocated to the players when certain team and performance milestones are reached... For example, for a 100 point team, the players get equal share of x% of revenue. For a team that makes the playoffs, the players get equal share of y% of revenue... For a team that wins the Stanley Cup, the players get equal share of z% of revenue... And this is regardless of individual performance... and this is the same percentage across the league...

If an individual player reaches personal milestones, his variable compensation also increases. For example, a 35-40 goal scorer during the season receives an additional a% of revenue generated for the year... a 100-point scorer during the season receives an additional b% of revenue generated for the year...

And personal milestones wouldn't only include individual stats - but roles as well... For example, team captains for the season receive c% of revenue generated...

A lower fixed compensation (which the player is guaranteed)... and a high variable compensation (which is directly dependent on personal and team performance)...

Assume under my system, Todd Bertuzzi has a fixed salary of $5 million... He'll get $5 million regardless of what he does or doesn't do on the ice... However, if he scores 50 goals, 100 points, 10 regular season game winners, the Canucks reach the Stanley Cup final, and Bert wins the playoff MVP reward, while being an assistant captain - he gets $10 million... Next season, he floats, scores 40 points, the Canucks suck, come last in the league - Bert gets $5.3 million... $5 million for his base salary, and $300,000 for being an assistant captain...

IMO, the beauty of this type of system is that the fixed portion of salaries are guaranteed (for both the owners and the players), yet it doesn't 'cap' what the player can earn... The more success and money the team makes, the more money the player makes... The bigger role the individual player has for the success of the team, the more money the player makes...

It rewards performance... and it ensures that if Matt Cooke has an anomoly and scores 40 goals next year - 10 game winners, he gets compensated fairly for his contribution (say $3.5 million instead of $1.2 million)... while NOT disrupting his fixed 'salary'... If Cooke shows that he is a consistent 40 goal scorer, THEN his fixed base salary is adjusted accordingly when his contract is next up for renewal... If this 40 goal season was just a 'one off thing', then his compensation for the following year is back to $1.2 million - assuming other personal and team milestones were not reached)...

This is cost certainty without limiting what the players can earn... when the players deserve to earn it...

An additional benefit is that UFAs (and players in general) will want to go to (or stay with) teams that generate lots of hockey-related revenue and have success... The good teams get a much better chance to get and keep the best players - and IMO, that's how it should be... I'd also have a 'drafted player' individual milestone percentage of revenue... If a drafted player plays with the team that drafted him, he gets d% of revenue... If that player leaves as a free agent, or is traded, he no longer - throughout his career - receives this %... For good teams that draft and grow their own good players, this will help these teams keep their drafted players...

Under this system, players will likely not want to play for poor teams... For the good player on the poor team, sure the base salary and individual performance compensation is nice... However, the base salary, individual performance, and team performance compensation is a lot nicer...

This type of system incorporates a cap, but it DOES NOT limit what the players earn... In fact, it would, for good teams that generate a significant amount of revenue, pay the players significantly more than a guaranteed contract would - IF players perform and ESPECIALLY IF players perform beyond expectations...

IMO, this is an absolute fair system for both sides...

I think this system is brilliant...but I am no accountant-business type guy. Anyone see any potential flaws ?

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09-16-2004, 09:25 PM
  #18
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Well 2 things maybe to consider are :
-performance based pay system, discourages teamwork and selfless acts of teamwork
-the assumption is the major problem hurting owners is players not earning their contracts. I dont think this is a considerable part of the problem. Perhaps not living up to the inflated expectations of what they thought he was worth when they decided he was worth it,



Quote:
Originally Posted by capman29
Well you can use that method also to defeat a cap . Example lease agreement with the player.
Now thats an interesting one, never thought of that before. Lower monthly payments but no compensation when you dump it. Why dont they do it now, or are they?

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09-17-2004, 03:10 PM
  #19
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Quote:
Originally Posted by thinkwild
Well 2 things maybe to consider are :
-performance based pay system, discourages teamwork and selfless acts of teamwork
-the assumption is the major problem hurting owners is players not earning their contracts. I dont think this is a considerable part of the problem. Perhaps not living up to the inflated expectations of what they thought he was worth when they decided he was worth it
this is where I in the Eye's framework comes into play, if you make the team %'s of more value than the individual %'s then you'd have teams working together as a team for the betterment of everyone

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09-17-2004, 03:25 PM
  #20
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Originally Posted by Stich
Not true.

If that was the case, then the NY Giants would have the same advantage over the Green Bay Packers. There's a reason why that's not the case... because that 'Rangers' deal is bad cap management.
Your argument is faulty because the Giants and Packers both have the same amount of money. If the Giants offered Ahman Green a $10 million signing bonus, GB has the resources to match it. If the Rangers offer Iginla a $7 million bonus, the Flames don't have the resources to match it.

And in the more proof that you can't build a dynasty under a cap file, the only team to win consecutive SuperBowls in over a decade was fined almost $1 million by the NFL today for cicumventing the cap in the years they won. Also shows you caps can and will be circumveted.

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09-17-2004, 06:13 PM
  #21
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Quote:
Originally Posted by hockeytown9321
The argument I seem to get from people in favor of a cap is that it lets the small payroll\market teams hang onto the players they draft, while the current system doesn't. I've already discussed at length why I beleive a cap would punish a team that drafts well, but I have more question:

How do you get around signing bounses? Signing bonuses are not salary. It seems to me that the large market teams would have even more of an advantage becuase they could pay huge signing bonuses. For example, Niklas Lidstrom signed a one year deal in April for $10 million. What if he signed a $2 million deal under a cap, but with a $8 million signing bonus? How is the playing field leveled? Lets say both the Rangers and Flames had the same cap room, and Iginla was a free agent. They both offer him a $4 million salary, but New York offers a bonus of $5 million. Can Calgary match that? I highly doubt it.

Bottom line, the large revenue teams will still be able to "set the market", and the poor small revenue teams can't match what those teams can offer. I don't see how anything changes.

Does NY have $9m in cap space in the 1st year?

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09-17-2004, 06:19 PM
  #22
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Quote:
Originally Posted by garry1221
getting a uniform payroll system is one of the first stepping stones to allow all teams to have access to all players, not just the mediocre/lowend talent,
Access to all the UFA's? I dont think this is what they need access to. Maybe more draft picks.

Pittsburgh, Washington were just needed the ability to acquire more UFA's but they were too expensive?

All teams now have access to the draft picks they need to develop their team. If they have become 31 yrs old, expensive and losing the players they need access to are prospects not more UFA's. Well they are free to try, many do, but it hasnt worked as well as growing your own yet.

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09-17-2004, 06:57 PM
  #23
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Originally Posted by me2
Does NY have $9m in cap space in the 1st year?
the wouldn't need it. Like was said earlier, in the NFL bonuses get prorated over the length of the contract, but are paid up front in full.

So over a 5 year deal, the $9 million bonus only counts as $1.8 million against the cap each year.

My point is not so much the cap space issue on this, its that large revenue teams wil be able to offer much larger bonues than small revenue teams.

Cap space is a problem because if you draft a good team, you will invariably lose some of those good players you drafted because you won't be able to fit them all under the cap.

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