Crazy Gorilla Math: The Salary Cap, Troy Polamalu, Lawrence Timmons and How it All Ties Together

PITTSBURGH - FILE: Willis McGahee #23 of the Baltimore Ravens tries to escape the tackle of Lawrence Timmons #94 of the Pittsburgh Steelers on October 3, 2010 at Heinz Field in Pittsburgh, Pennsylvania. According to reports on July 29, 2011 McGahee and the Denver Broncos have reached an agreement on a $7.5 million deal for three years. (Photo by Gregory Shamus/Getty Images)

When i think of the salary cap, i always think of the line from the movie Rounders where Mike McDermott (Damon) asks Worm (Norton) how much he owes Grama the shylock. Worm responds: "I don't know by his crazy f*cking gorilla math...like fifteen?" I love rounders with nicknames like Teddy KGB (Malkovich) and Joey Knish (Turturro) you just can't go wrong. Looks like A-Rod may have watched this movie a few too many times and is playing it out in real life:)

But let's get to the point. Now that the dust has settled on free agency, many are wondering about the Pittsburgh Steelers' cap situation in 2012, mainly because of the restructured contracts of Big Ben, Brett Keisel and James Harrison, and the team's (presumed) interest at re-signing or extending Troy Polamalu and Lawrence Timmons. With the new deals signed by LaMarr Woodley and Ike Taylor, there's quite a bit of money tied up in 2012.

To begin though, let's look at the top 15 salaries cap hits for the 2011 season:

4

Player
Contract Expires
Base Salary
Cap Hit
Ben Roethlisberger 2015 $6,000,000 $11,320,000
Troy Polamalu 2011 $6,400,000 $8,595,000
LaMarr Woodley 2016 $1,100,000 $7,700,000
Casey Hampton 2012 $3,910,000 $7,077,000
Aaron Smith 2011 $4,500,000 $6,100,000
James Harrison 2014 $1,250,000 $5,875,000
Maurkice Pouncey 2014 $405,000 $5,429,000
Hines Ward 2013 $3,000,000 $4,610,000
James Farrior 2012 $2,825,000 $3,825,000
Ike Taylor 2014 $1,250,000 $3,813,000
Heath Miller 2014 $1,000,000 $3,796,500
Ryan Clark 2013 $2,500,000 $3,250,000
Larry Foote 2012 $2,400,000 $3,000,000
Lawrence Timmons 2011 $650,000 $2,798,000
Willie Colon 2015 $1,500,000 $2,700,000

 

These numbers are presumed to be accurate but again there is no way to know for sure unless someone here can get their hands on copies of these contracts. With that said, there are a few things that jump out at me. First, Woodley is a $7.7mm hit and I believe this is how we can get to that number. The cash received this year was $18.1mm and as you see $1.1mm was base salary. This leaves me to believe that the signing bonus was $13mm over 5 years ($2.6mm/yr.) and a roster bonus of $4mm. The math works perfectly as $1.1 + 2.6 +4  =  $7.7mm cap hit.

This also means there is only $5.5mm more in guarantees beyond this year ($22.5mm - $17mm). Now, if the $27mm for the first two years is also correct then he would make $8.9mm ($27-$18.1mm) next year and with the prorated signing bonus his cap hit should be $11.5mm.

Ike's hit this year is $3.8mm+ so it appears his signing bonus is only prorated over 3 years. If management was thinking short-term this year's hit could have been much lower. Jets signing of Santonio for $50mm/5years only hit their cap for $2.5mm this year.

Now between Troy & Timmons, there is roughly $8.6mm and $2.8mm or just under $11.4mm coming off the books. Even if both of their new contracts were to hit the cap for a total of $15mm, this is only a $3.6mm increase from this year's hit. If management was overly worried about this, they would have probably guaranteed more $ to Woodley but have lower cap for next year.

Steelers probably could have gotten away with just restructuring Ben (Ben's cap number only went down ~ $3.8mm>> reduced from $15.4 to $11.32mm) and structuring Woodley's contract much lower than this year's $7.7mm hit. Instead they not only restructured Ben but Keisel and Harrison too. Why? This is not a cash-flow issue because you are getting the same cap reduction and spending roughly the same amount of signing bonus $. The reason behind this is to spread risk, if you gave all the signing bonus to Ben and he had a career ending injury this year, you would have all his guaranteed $ remaining and all prorated signing bonus hit next year. This is just too risky to put all your eggs in one basket.

Going onto the big picture, even if we went into depression, the new CBA dictates that the salary cap cannot be lower than $120.375 next year. The salary cap number was a negotiated number for this year, however, next year it will be based on actual revenue. We know the cap will rise based on the fact that direct TV will pay $300mm more next year and the Jets/Giants naming rights are worth $18mm. Ticket sales have not been rising quickly in the last few years because of the economy but also because of HD & red zone. For many the home viewing experience is preferred.

With that said, local revenue should increase as Dallas & NY gain luxury box and concession revenue as the economy, while challenged, is still better than 2009. Here is a reasonable projection of next year's salary cap, this number could be over/under by $4mm but that really depends upon consumer spending. If people are really scared about their jobs they will not buy as many $280 jerseys and ticket sales and local revenue would suffer too.

Revenue Stream
Revenue (billions)
Player %
Cap $ by Stream
Broadcast TV (ESPN, FOX, CBS, NBC) $3.064 55 % $1.685
Tickets $1.850 45 % $0.833
DirectTV, NFL Network, XM-Sirius, Madden $1.917 45 % $0.863
Licensed Merchandise $1.056 45 % $0.475
Local (luxury boxes, hot dogs, programs) $2.450 40 % $0.980
TOTALS
$10.337
46.78%
$4.836

 

Salary Cap and Benefits per Team ($4.836b / 32)

 $151.111

Salary Cap = roughly 84.5% of total player dollars

$127.689

 

So we are looking at a salary cap of roughly $127.7mm next year (and there will be $1.5mm you can borrow from a future year too) Again, this is a guesstimate but i reviewed packers public financials and other sources to make a pretty informed decision. From the scuttlebutt, league had $9.3b in total revenue last year, add $300mm for direct TV and you are at $9.6b for this year already. The additional $737mm is about average if you look at how revenue has trended ($7.6b in 2008 to $9.3b in 2010).

With even this small an increase in the cap it appears Troy and Timmons should be very manageable. 2013 could be a different story but looks good for next year. 2014 is the year 4 new network TV contracts will drive up the salary cap at least $35mm and possibly $50mm.

Clearly, there were no desperation moves to get under the cap and multiple restructurings were just prudent risk management. There may be new rules in the CBA which prevented us from lowering Ben's base salary more than $5mm so that could be another explanation. But as of yesterday according to Bouchette we are $3mm under the cap so these moves were to add flexibility to sign a FA not just to get under the cap.

Sleep easy, as always, management has the situation firmly under their control:)

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