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Salary Cap Leagues: Guide to the Offseason


By Brian Hawkes, @bdhawkes

If you’re reading this article, chances are you are an avid fantasy football player. That being said, there is a very real possibility you haven’t been part of a Salary Cap league yet. For those who haven’t taken the leap, I recommend you read this piece on “Why a Salary Cap should be part of your Dynasty League”.

Salary Cap leagues offer an entirely new dynamic to the traditional dynasty format as they create roster turnover, and reward owners who show not only an ability to judge player talent, but also use cap management skills to maximize their buying power. This article will provide an inside look to the thought process a salary cap owner goes through each offseason, and also shed some light on ways you can separate yourself from the competition as a savvy General Manager.

 

#1 Know Your League Rules
Rules-of-the-LeagueThis may sound ludicrous, but the most important factor to success in a salary cap league is cap management; it ranks well above your ability to evaluate player talent. Salary cap leagues, unlike traditional dynasty leagues, have forced roster turnover as player contracts expire. If you do not effectively manage your cap, you may overcommit salary to the wrong position or player, which ultimately prevents you from having an opportunity to sign elite free agents when they are available. The secret to cap management is roster flexibility, and the way you create flexibility is by knowing your league rules.

A cap league will typically offer some form of maximum contract length, and also outline the extent that player contracts are guaranteed. For example, let’s assume we are in a cap league with fully guaranteed contracts and a max length of 4 years. If you are faced with a decision to sign a player, you can likely keep his annual cap number down by spreading his contract out over a longer term of 4 years. The trade off, of course, is if the player does not meet expectations at anytime during the 4 years you signed him – you have no cap relief and have to pay his salary for the full duration of his contract.

Some leagues will add flexibility through a cut penalty based on the remaining years of the player contract. For example, here are the rules from one of my leagues:

If a player is cut from an active roster while under contract, the owner will be charged a penalty against the salary cap for early termination. The penalty will be 30% of the player’s annual salary times the number of contract years the player was signed. (Example: Player signed to a $1 M/ 4 year contract. Early Termination is 30% of $1 M = $300 K x 4 years = $1.2 M.) Meaning if you cut a player in year 4, you pay penalties for all four years:

Year 4 = 120% of their salary
Year 3 = 90% of their salary
Year 2 = 60% of their salary
Year 1 = 30% of their salary

With rules like these, you do have the option of gaining some cap relief as each year of the contract passes.

Still with me?

Let’s apply this to a situation, assuming our league uses the rules outlined above, to see how it affects your decision making as a GM.

Situation:

  • Your team is ready to contend
  • You have $30 cap space ($60 cap)
  • You have only one team need, running back
  • You have Odell Beckham Jr. due for a big raise in two years

List of top available RB free agents and the total contract bid for each player:

  • DeMarco Murray, $40
  • Adrian Peterson, $44
  • Le’Veon Bell, $72

With $30 available, you have a decision to make on each of these players; You have the flexibility to spread out each contract up to 4 years to reduce the annual number.

  • Demarco Murray Options: $10 x 4 years, or $13.3 x 3 years, or $20 x 2 years
  • Adrian Peterson Options: $11 x 4 years, or $14.7 x 3 years, or $22 x 2 years
  • Le’Veon Bell Options: $18 x 4 years, or $24 x 3 years

In a traditional dynasty league, this would be a no brainer as the younger, more productive Le’Veon Bell would be the obvious choice. However, that is not the best option due to the length of contract we’d have to put him on to keep his annual salary down. Remember, we need to resign Odell Beckham Jr. in two years. That leaves us with the choice between Demarco Murray and Adrian Peterson. As a team that is ready to contend, we need to choose the player that is best suited to contribute right now. The answer is Peterson.

We elect to put him on a $22 contract for 2 years. If he does not play well at any point during this contract, he’s cuttable at 60% against the cap this year and 30% next year. This is a safe contract, for an immediate impact player, and the deal comes completely off the books just in time to pay OBJ, who will bring prime money.

The lesson: Understanding the volatility of the running back position, rarely should you put a running back on a four year deal. This is particularly true if/when you face decisions to resign young wide receivers due to the longevity of the position. Knowing league rules allows you to create roster flexibility. It’s completely acceptable to cut a player. In fact, you should plan to cut players if your league rules provide cap relief for a cut.

 
#2 Know Upcoming Free Agents/ Rookies and League Cap Space
nba-salary-capAnnual cap number is just a number. It doesn’t matter if it’s part of a plan. In the example above, at $22 Adrian Peterson would be the highest paid running back in the league. But, in the greater scheme of things, he serves as the perfect bridge player to help the team contend all while serving as a contract placeholder for OBJ.

Understanding what players will be available each off-season (supply) and what league owners will have the cap space to bid (demand) helps determine the contract value for players. It also serves as a key for when you should cut or sign players.

Let’s apply this to see how it affects your decision making as a GM:

Situation:

  • Your team is ready to contend
  • You signed Adrian Peterson to a $22 x 2 year deal
  • You have $8 cap space ($60 cap)
  • You have no immediate needs, other than depth
  • You have Odell Beckham Jr. due for a big raise in the next two years

2017 Free Agency/ Rookie Outlook: Excellent

  • Rookie Class projects to be one of the best in years
  • Free Agent Class is incredibly deep — top upcoming free agents:
  • Antonio Brown
  • Allen Robinson
  • DeAndre Hopkins
  • AJ Green
  • Julio Jones
  • Dez Bryant
  • Alshon Jeffery
  • Randall Cobb
  • Jamaal Charles
  • Jeremy Hill
  • Devonta Freeman
  • Eddie Lacy
  • Mark Ingram
  • Gio Bernard

2017 League Cap Space Outlook: Average

  • Team cap space ranges from $10 – $30 ($60 cap)
  • Teams approaching $30 in space have several top free agents due for a new deal

Understanding the deep influx of talent coming in the 2017 draft, and the depth of top shelf free agents, it is likely that 2017 will bring some great value buys due to flooding of the market. In fact, it may be worth considering a huge risk…cutting Odell Beckham Jr. after the season to include him in this class of available players.

Put yourself in a competitive owners shoes…Sure, you love OBJ and will bid on him in free agency, but how steep are you bidding when there is a list of available players that includes seven of the top WRs in the game (many of whom the original owner will want to retain). Having a unique crop of players like this class provides an opportunity to lock up one of your cornerstone players at a discount.

The best course of action for next off-season is to cut Adrian Peterson (30+ years old) and gain back $15.4 in cap relief. Then cut Odell Beckham Jr. to enter him into this deep pool of players.

 
The lesson: Spreadsheets, spreadsheets, spreadsheets! Every good cap manager should have a list of upcoming free agents, and available cap space, that projects forward at least four years (max contract length in this league). This is simply a way to monitor supply and demand. When supply gets flooded, we are likely to see value; inversely, when supply is limited, player values are inflated. Forecasting ahead allows you to plan when it’s wise to buy or cut your players.

 

#3 Know NFL Contracts
nflPlaying the role of salary cap league GM is not an easy task. You not only have to be an effective talent evaluator, but you must also be cap savvy. As we’ve outlined above, it’s incredibly important that you maximize cap space when it counts to set your team up for the long haul.

Of course, as we’ve all experienced in fantasy sports, there are situations where you will just plain miss on a player. In a cap league, the biggest miss you can make is to sign a short term player to a long term, max deal. One way to hedge against this risk is to use NFL GM data to influence your cap league GM decisions – you have to know NFL contracts! If a team isn’t committed to a player, why should you be?

Let’s apply this to see how it affects your decision making as a GM:

Situation:

  • You have $8 cap space ($60 cap)
  • You’re considering adding a young running back for roster depth

List of potential free agent targets:

  • Thomas Rawls
  • Latavius Murray
  • Isaiah Crowell

All of these players are the assumed starters for their current team, and all are under the age of 25. On the surface, it may seem like these are ideal candidates to lock up for the long term due to their starter status and age. However, we should review each of these players’ NFL contracts before we assume their current situation is an indication of what the future holds.

  • Crowell and Murray are both NFL free agents following the 2016 season
  • Rawls is a free agent following the 2017 season
  • As late round/ undrafted players, none of these players is due significant money if they were demoted or cut from their current team

And, let’s not forget the 2017 rookie class is littered with talent at the running back position. Put yourself in the shoes of an NFL GM – you have little invested in these players who are currently on roster and have an opportunity to add a potential difference maker in next year’s draft….what do you do?

In your current situation, none of these players are good candidates for a long term contract. If you could lock one of them up under the cap on a one year deal, that would be ideal.

The lesson: You should not commit long-term money to a player unless their NFL contract shows their team is also committed. Understanding NFL contracts is a critical piece to making wise cap management decisions in a salary cap league.

 

RECAP: Many of the factors that influence your decision making as a dynasty owner are consistent with a salary cap league owner; player evaluation and roster depth are essential to success. As this article highlighted, however, a salary cap opens the door to a number of strategies that simply are not available in traditional dynasty leagues. If you haven’t been part of a salary cap league yet, I highly recommend you try. It’s not as daunting as it sounds, and it can also provide the framework for a quicker rebuild or title contention for your dynasty team.