Former NFL Executive Breaks Down How Teams Are Beating The Salary Cap | Pat McAfee Reacts
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- čas přidán 22. 06. 2024
- We FINALLY get some reasoning on how it seems like some of these teams are beating the salary cap.
This is a conversation from The Pat McAfee Show LIVE from Noon-3PM EST Mon-Fri.
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This is the first time I’ve actually been able to listen to and understand someone explain the inner mechanics and loopholes to the NFL cap. No other media does/can do this like you guys dropping knowledge bombs left and right while also being incredibly entertaining. Love the show and have since the start!!!
Yea maskes sense he’s a professor of sports law at Villanova. It’s his job to explain complex concepts hahaa
It's not that complicated
@@TheScotttt iTs NoT tHaT cOmPlIcAtEd. Don’t sit here and act like you knew all this before watching this video. If you did you wouldn’t be here watching it. 99% of the average population probably didn’t know this until this guy explained it.
I've known this for years. If you play Madden dynasty mode that's how you sign players. Madden is basically real life. As douchey as this comment is it's the truth.
Love this!!
Great breakdown. Salary cap management is basically just accounting and there’s a bunch of tricks and loopholes you can do
And it’s so the teams in the biggest cities can have better players.
Yeah that’s what he just said lol
Exactly and taking a gamble on these players and hope they don't bust.
Turns out the Rams aren't cheating. They just have a bigger cash flow, better at accounting, value proven over unproven & are good at it. lol Let's GO
@@FEARNoMore still gotta draft good mid-late round picks to keep cost down on the team. That’s what these teams and pundits don’t understand. The rams have drafted great in the late rounds: noteboom, Allen, Gaines, fuller, Scott, Henderson, Kupp, Akers, Joseph-day, I’m sure there’s others that I’m missing.
As someone with an MBA in accounting, I learned almost everything boils down to timing. It's always a question of now VS later
Great point. Are you still available? I could use a potentially expert accountant who's willing to look the other way as long as the numbers on his payroll check make sense.
@@rukus9585 lmao! cook the books baby
Enron would agree.
@@rukus9585 So what big Fintech company you work for???
For the comments: he isn’t saying look the other way he’s saying accounting is naturally this way. In your first year of accounting you learn LIFO vs FIFO and Average
LIFO - Last in first out often used if expenses are decreasing (because then cost of goods sold is lower)
FIFO - first in first out often used if expenses are increasing (cost of goods sold lower)
Average - self explanatory take the average of all inventory used regularly as it’s easier (in my experience)
These three inventory accounting ideals are used to make your books look better or worse in many ways. Accounting is and always will be about finding the best way to look profitable. It’s not looking the other way to say “If we use straight line depreciation instead of sim of digits depreciation this looks much better.” It’s about perspective and adjustment to meet customer needs.
Madden franchise mode needs to add these features
99% of people wouldn't even know how to design contracts like this
bro madden has had franchise model 2 decades they still havent figured out the fact that nfl cap goes up 9-13 mil EVERY YEAR. and they expwct us to play 2026 season when we shpuld have an extra 40-50 mil in cap
@@tufoinproductions Not that hard...
cooncidentally madden does have this. its called signing bonus. prettty obvious
and ppl think the pats are so good not only they fuckin cheat but they got more momey than every1 loke bruh imahine bein stupid enough to think brady is goat or even near it
Watching Pat McAffee get the first question right and the second wrong was hilarious😂
I remember doing this with my Madden franchise in the mid 2000’s😂😂
When a player would hold out for a new contract I would just up the bonus and stretch out the years so the cap hit would be lower… so the capologist probably played Madden in the mid 2000 s 😂😂😂
I did the same thing lol if I knew I was gonna keep the player. Put as much in bonus as possible.
😂😂
I wish Madden still showed the yearly impact as you adjust the numbers before making an offer. It was much easier to renegotiate contracts to lower your salary cap for a given year back then.
love AJ cracking up at how much pat was feeling himself over the real time calculus exercise ;D
Extremely informative. Confirms what I thought how the NFL is closer to MLB than it is to the NBA or NHL
Except the NFL has a salary floor. Meaning teams have to spend a minimum to make their teams competitive. In the MLB, the owners have no incentive to win because they could pay their whole team $5 and rake in all of the profits. This is why teams do salary dumps (like the Nats Reds and A's) and teams like the Pirates trades anyone who resembles a Major Leaguer.
@@KTF0 minimum doesn't count as salary but as cash spent so you can easily transfer some money from future year salaries on players contracts to fill this minimum
@@KTF0 bro ive seen many nfl teams tank stop lying
@@elcuau1330 bro what lmfao
NFL has a hard cap. Meaning you have to cut/redo contracts if you're over the cap by a specific date. Also, it has a hard floor meaning small market teams must use i think 88% of the cap, so you don't have Oakland A type NFL teams only spending 1/4 of the cap.
I get the feeling that Jimmy Garappolo's season-ending ACL injury in 2018 wound up being a good thing for the 49ers -- it created an impromptu "tanking" year that cleared out a fair chunk of his overall guaranteed salary, and got them a high draft pick that made their already-formidable defensive line even better. So they were able to come back the next year with a bruising run game and scary defense that allowed Jimmy G. to game-manage his way to an NFC championship.
Howie Roseman has been doing this for awhile. He's really good with this stuff. Not the super big numbers but we've been paying a lot of signing bonuses in the form of restructuring contracts so we can get under the cap.
Howie stinks he should be fired
Howie “signing bonus” Roseman been doing this since 2016 lol (eagles fan)
Every team does this it’s not rocket science
Lol sooo good he signed Alshon Jeffery to major money and had to pay for it in dead money. Cry shegirls cry
The best cap breakdown I have ever heard. Great to finally have a small understanding of this. Damn those Stanford grads are smart!
Teams that manipulate the cap space still pay down the road a few years after the player is gone but because the salary cap is projected to go way up due to the big TV deals it does minimal damage down the road.
That's what I was thinking. Cap grows every year, so in reality, it doesn't really hurt them. All this does is benefit large market teams, where small market teams will always lose out on big market players.
Exactly they are basically hedging their money for the future. It helps when Stan Kroenke is your owner and has money burning a hole in his pocket
It would hurt the poorer teams like the raiders who can barely afford to guarantee certain contracts. But it means very little to teams like the rams or broncos.
@@keatonstemler5092 the market has nothing to do with it. It could be a small market to with a crazy rich owner. No one considers Carolina a big market team but they have one of the richest owners.
What’s the point of the cap if you can just put it off?
This probably the smartest segment on this show ever
im really enjoying it and ill watch it again to pay full atention
"We can do anything in the world, if all we care about is this year." That is the most accurate summary of the NFL salary cap I've ever heard. Do you go all-in for just one great year or do you plan for the future that have the potential to have many good years?
Actually, what he is said was big market teams with plenty of cash can do both.
Only small market teams, who typically don't have a lot of cash, have to make a today vs tomorrow trade-off.
Rams
Depends on the team
The last question is wrong. Many teams plan for the future indefinitely without getting there not even close!
As a Packer fan go all in. I don’t care how many years we went to the playoffs. We have 3 Superbowl appearances in 50 years with 2 HOF QBs. They should’ve done this after Rodgers SB
Andrew needs to be on at least once a month, would be real interesting to hear his take on what happens in the leguage and what implications it might have in the future. How "this" could only happened "in this market" and how a small/big market team would do it differently.
Legit, one of the most informative interviews ever!
I love this show. Informative, entertaining, Top notch guests, kids cussing!! Kudos guys, thanks!
F Boston Conner killed me the other day 🤣🤣🤣
This might be one of the best explanations of this I’ve ever heard. Simple, contrite, yet completely thorough at the same time.
Also, I can’t wait to hear Tom Pellisero try and debunk this one 😂😂
He's already fuming I'm sure lol
Concise, not contrite. Contrite means sorry
It's really insane how the NHL is the only league that has a cap that's real vs every other league
What their cap? And how much does their best player average?
technically there still loopholes with the nhl salary cap aka the Tampa Bay lightning ltir fiasco
@@josegurrola9021 81 mil with a min of 60 mil. Crosby makes 9 million a year. McDavid is the highest paid at 16 million.
@@CatWith-AHat mcdavid is $12.5 million aav, the max contract allowed right now is a little more than $16 million
They closed up a loophole though where they were giving guys 13-15 year contract and there last 5 years would be like 1 million to cheat the cap
This is a wonderful explanation. Thank you!
Brilliant as always Pat. Thanks for sharing this insight.
I’m a Saints fan. Can confirm. The Salary cap is imaginary
I think the Taysom hill contract was the most proof that I’ve ever seen.
@@bobbypinkston9374 that contract wasn't what it seemed like. He's not getting some of that money. Most of it was incentives if he got certain numbers as a QB and non-guaranteed money. His cap hit is only 5 million this year. 12 in 2023, and 12 in 2024 and 12 in 2025. None of his 2025 base salary is guaranteed (10 m)., and his 2024 base salary is similar ............
"Additionally, it’s worth noting that $1.5 million of his $10 million base salary becomes fully guaranteed in March 2024 - the Saints can cut or trade him prior to that date (which isn’t clear right now, but is typically the third or fourth day of the new league fiscal year) and save all $10 million against the cap. That non-guaranteed salary could also be restructured into another signing bonus to save more current-year cap space."
@@bobbypinkston9374 Mikey Loomis is just a wizard.
lmao you guys always seem to be comically over the cap but then find a way to bring it down
@@clickbait3753 Rest of the league: We're over the cap. We have to spend less money.
Saints: We're over the cap. Let's spend more in reality and imaginary, AND let's extend a few contracts. That works, right?
hell. yes. Incredible interview and explanation!
Spread the cap hit over years. Watch the cap increase year over year (I know that it went down recently, but it was a covid year). Predict how much future cap you can tie up today and still not sink your future ship.
It's like borrowing against a wildly appreciating asset.
Great guest, very informative and insightful
I'm confident that the rules (which exist because of owner approval) are working exactly as intended.
2:20 Pat's reaction to his correct answer gives me life
We kinda already knew this. But its a great breakdown. Patriots did this for over a decade for Tom Brady.
so now, the nfl hands out 200 mil to eveey year, and only 1 mil goes to tom. and they have 199 to give every one else. where as if he got 0 bonus 0 upfront. hed rake up 50 mil and theres only 150 mil to pay the other 52 players
No they didn't. Patriots never had any massive big paid players, and when they did, they moved on from them. Then Brady never really took a massive salary.
@@remy090 he took small salarys and made more than manning? Ya hes unselfish🤣🤣🤣
@@remy090 typical of pats fans🤣🤣🤣
@@gabrielfelix1759 endorsements is a thing. Also it helps to have the highest paid model as your wife
This is an excellent interview.
Loved this information
This was incredibly helpful. I was driving myself crazy trying to understand how the Rams are doing these deals
Solid segment
The signing bonus is a simple prepaid asset that is expensed over the life of the asset. It’s accrual accounting, not cash. The reason the signing bonus is expenses pro rata as Andrew mentioned is that the expense of the player is matched with the revenues the player earns for the club. It’s not some broken system, it’s working as intended and by accounting standards. It wouldn’t make sense to eat the cap all in the first year when the player is going to play for a few more years.
Yea but what about those voidable years. Say they prorate it over 5 years with the last two as voidable. Yea hose last two don’t count against the cap in those years. Correct? Am I missing something
you lost me at accrual accounting. accountant in public accounting, here. (we don't have very many high income clients that use accrual)
@@ryanp6999 Bruh you should know Accrual accounting we learned it in college. Accrual is an accounting method where revenue or expenses are recorded when a transaction occurs versus when payment is received or made.
Wait how are you lost at accrual counting lmao was GAAP not a thought in any of your professor's heads?
@@aaronkuehn3229 you can prorate a signing bonus over 5 years max. Lets say the bonus is 10m i.e. 2m per year pro rated.
In your case the player is gone after 3 years. In year 4 there's 4m dead money which counts against the cap
Great Lesson!
Good info.
Thank u guys for breaking this cap down
Great football business mind.
Great professor too!
This is an amazing explanation.
Ty in the background here is freakin brilliant
This was fascinating.
My Commanders have a set of books just for the cap
They have like 10 sets of books for just that...🤣🤣🤣🤣
Wish they had this guy on when everyone was just rolling the idea "SaInTs ArE iN cap HeLl"
It's not rocket science at all. All just how you construct your contracts and if you have ownership willing to pay.
This show just keeps getting better
Hire a great accountant is almost as important as hire a great HC or QB in the NFL.
This is gold
Wow. This is the best explanation of the NFL salary cap I've ever seen.
This was quality.
Bruh!!!!🤦🏾♂️👍🏾💯.. I needed this. So it's up to the owner
As someone with a finance degree, it seems like managing the cap is all about capital budgeting, which is Pretty much mathematically calculating the “cheapest” way to break down a cash flow (in this case a contract) over multiple years. With the concept of the time value of money, the net present value of cash flows is smaller when they are farther in the future, and is greater when they are closest to the present. So, In terms of the Net present value, pushing off these contract cash flows to later dates frees up more space in the present, allowing you to make more moves.
You are one of the few in this entire comment section that actually understands the value-of-money part of this. Today's money is worth more than the same number in the future (assuming the cap goes up, similar to inflation in the market). Big money owners can pay large sums this year, keep their current salary cap hits lower, AND when the money is accounted for in future years, it's worth less (less of the % against the cap). So they do in fact take on more accounting in future years which should give them less money to spend on players, but as long as they continue to spend today and account in the future, that due-date only marginally goes up for the future. Small owners either must frontload contracts to entice players, or guarantee the money. Big owners can frontload the money to the player (better than guaranteed money), AND choose when to account for it.
@@josho3682 not necessarily just big owners tho. The Saints by far aren’t in a big market and the Bensons are no where near Kronkie or Jones level rich. But Loomis and the entire front office have a very strong understanding of NPV. It actually seems like the former
GM here doesn’t, no wonder the Packers never seem to get over the hump all the way
I’m glad Pat is banging this drum. It’s something I’ve been wondering about, too. Even with this excellent explanation, I still wonder how the voidable years really factors in.
Although it's very simplistic compared to real life, anyone that has really dug into contract management in Madden already knows the high signing bonus low salary trick.
Just playing Madden... Learned this long ago
This is the best someone has explained the salary cap
This is just great content
Dang, I never knew Pat was this good at math!
True enlightenment! As a finance guy, I admire it. As a fan of a smallish market team, grrr.
One thing Andrew did not mention is the generally increasing cap--if cutting a guy today means $40 M in dead money, that's pretty harsh (like 20% of the cap--one FIFTH of your payroll!), but if you keep him as an emergency backup for a year and a day, the dead money hit would be spread out over two years and (roughly speaking) $20M in 2024 and $10M in 2025, when the cap has risen by about $10M annually, those hits are 9% one year and 4% the next--relative peanuts! Makes it worth the risk for going so deep cash over cap.
Good vid
Saints been doing this for years! And every damn year they swear we in cap hell. And every year we do Wateva we want! It just doesn’t get talked about unless it’s reported we owe money!
Yeah, also why I disagree with his complaint about "small market teams" being left behind by it. By all accounts, the Saints are one of the smallest markets. And yet, we've been doing this probably more aggressively than anyone else.
@@andybrinson3406 Yup
@@andybrinson3406 the guy putting out he cash has alot and wants to win
And how many Super Bowls have the saints won in the last 10 years? And no the saints don’t suck. They’ve had deadly teams but just couldn’t win the big one.
@@manuelastoria679 best record in the NFL over the last 5 years. Worst no-call in history and an all-time miracle play kept us out2 of those years. If the only way to measure success is rings, then there are 28 teams who have been building wing in that time frame.
8:21 . I truly wonder what team if ANY do this gamble. It would be an exciting season.
Mcafee reminds me of myself in 5th grade answering math questions. Getting all excited when the teacher asks something I can figure out!
One of the colts pre draft videos covers this a bit! Andrew B is world class!
Biggest fan Pat McAfee from all Brisbane Australia 🇦🇺
Would love to know about the tax differences. Also I am completely for cash over cap cap because the cap is what make the NFL better than Saban beating up on Akron
@6:35 😂
You learn something from this show everyday
its not just the signing bonus proration. its restructuring base salaries and roster bonuses into later years, creating void years to save cap room in the present in exchange future cap hit, etc...
basically just kicking the can down the road perpetually.
"Good deeaallllll" ... 🤣🤣🤣 lol wtf
The 49ers clearly don’t know about this loophole
This man makes something so convoluted and, typically, BORING very interesting and easy to understand. Super smart guy!
This was some really interesting stiff on this show today Pat
This is a great breakdown and now I better understand the process. And on the surface it sounds like it's not fair due to the fact not every owner can do this, but in a sport like baseball the small markets have found ways to compete with a smaller budget. So I'm sure NFL franchises will have to make similar adjustments because there is no incentive to get rid of it. In the CBA, the players won't oppose it because they're still getting paid while not compromising the salary cap, and it allows some teams to build superteams that are very popular and generate ratings and revenue that the NFL and the Owners like. It's like a perfect crime.
It's really just spending future salary cap increases now. $208m this year. $225m next year. $250m in 2024. $275m in 2025 (I'm just guessing at 23-25).
Point is the increased paydays you are handing out are being absorbed by the the yearly salary cap increases. Teams just assume a certain amount of increase and utilize it the best way they see fit. Exception was last year because of covid. That hurt some teams who were $10s of millions over. (Eagles, saints come to mind)
first person to ever explain it so i could understand thats cool.
Interesting I knew there was a loophole (at least somewhat) I just didn't know what it was until now.
Have him more often!!
Quality content.
You think about it going over the cap is basically just an interest-free loan, no deadline, which is really no problem for owners when you're absolutely assured of the revenue sharing from these billion dollar TV contracts.
Owners certainly can restrict real money spending from general managers, and I wish more media outlets reported things from a real money perspective.
If you really think about it from a long-term perspective, you could punt on the salary cap indefinitely without any real consequence. At least not any hard financial consequences, just administrative complexities.
And they keep pushing for an increase for the cap.
@Richard Charles You're right, it's not actually a loan. But its still a useful way to think about it. You 'borrow' future cap space against zero percent interest in a situation with 'cap inflation', which is that a dollar you need to count for the cap in the future will be worth less compared to one you need to count today. Basically governments today: pay no or little interest while inflation decreases your debt burden in the future.
It was like watching a reverse rainman
Then someone please tell me what the hell is going on down here in ATL bc we getting shitted on
Ballard and scouts pretty much explained this in “With the next pick” fellas
Adding the extra years is something the NHL had to do away with years ago
Suter/Parise deal 😭😭😭
@@jfkusa123 Hossa, Luongo etc
the nhl has the strictest cap rules of the big 4
Maybe that's part of why they are 4th in popularity barely ahead of soccer?
@@FEARNoMore Its too fast and surprisingly too violent for Americans.
So my Packers are literally screwed, along with all other small mkt teams
Not for the Packers now
Yea, boo hoo with all of those championship games...
In 2023 or maybe 2024 maybe. But if Rodgers stays, they can push it out even more with more restructuring. What might happen is there could be a year where the Packers have some crazy dead money hit like 40-50% of their total cap space. As an example, the Bears are close to 25% of their salary cap in dead money this year but have cleared a lot of those aging/overpaid contracts off the books.
Packers been in the playoffs 14 times in the past 2 decades & twice this decade plus a SB chip? lol Poor babies. hahaha
@@FEARNoMore Well you finally got your SB win and 17 people showed to the parade. ST. Louis probably had 18.. 🤣
Pat ... on the math !!!
Anyone just hearing Andrew Brandt for the first time, he does the Ross Tucker football podcast and business of sports podcasts...gold everytime he's on the air
Mickey Loomis & Ireland are wizards 😂😂⚜️⚜️⚜️⚜️⚜️
My brain hurts
I always figured it was basically "low salary, high bonus" type of thing, especially when looking at the actual numbers of teams' salaries. Like a player would get $2mil salary and $24mil in bonuses. Only problem is I think the bonuses are not guaranteed and you need to have some mega trust in the ownership to sign something like that. Which is why the DeShaun Watson deal is so insane with all the guaranteed money (even if he doesn't play a single snap!)
Bonuses can be a guaranteed, I think that's the only thing that needed to be paid in full. Only reason I remember was because of Todd Gurley
Pat's on that math today hahahahaha
The cap hit for the Bills on Allen, Diggs and Miller jumps a combined $37 million next year.
that's no secret, it's been going on for years!
Pat was on one today.
So basically, just pay it all up front in bonuses with cash, instead of a yearly salary lol. Got it!
Amazing content guys, your cornering apart of the NFL media market, no one else tells the truth
There is still a limit to the amount of void years you can add to each deal. That means the cap is still real, but teams can go a long time without feeling the repercussions.
Same with signing bonus. Maximum it can be applied is 4 year I think.
Chicago is a big market team, the giants are a big market team…the rams hit on our picks and trade 1st-2nd rounders for pro bowlers
I didn't know if they cut a player all the prorated amount immediately comes due on the salary cap. Holy crap the Browns are in huge trouble
GOOD FKN JOB PAT
Sheeeeeesh gimme dat cash boi!!!
How would you do this in madden tho?
Still, the Cash given out counts against the cap at some point. Teams trying to win now will push massive cap numbers into the future.