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Colon on IR, can we afford Flozell or Starks with our cap situation ?

Here are a few facts, it is what it is:

  • We have 3 players on IR with an estimated cap hit of $5.087mm (Lefty $2mm, Colon $2.7mm & Batch $386+k).  When a player is injured in football "activity" whether you cut them or put them on IR that amount still counts against the Salary Cap. Otherwise, every team in the league would come up with "fake or minor" injuries so they could put their under-performers on IR and clear cap space.
  • For those speculating, cutting Aaron Smith does bupkis for cap space, he is a veteran with 4 or more accrued seasons, if you cut such a player after being on the Roster for the first game his whole compensation for 2011 is automatically guaranteed and he is due termination pay if you release him. You don’t have to pay him until after the regular season is over (helps with cash-flow) but 100% of his $4.5mm in base salary remains on the cap. Plus you still have $1.6mm in pro-rated signing bonus hitting this year making his cap hit for 2011 = $6.1mm. Had you cut him prior to the first game, $1.6mm would have counted against the cap anyway, this is also known as dead $. When you are struggling for cap space like we were from day one of the new CBA, dead $ is a no-no and it is avoided at all cost, right now I believe we only have 3 players with dead $, Starks $2mm, Sweed & ARE but that total is only $683k. We have almost twice as much cap space tied up in IR than in dead $.
  • How much cap space do we currently have available? I have no idea but I doubt it is $5mm, maybe more like $2-3mm, if that? After signing Troy, the cap and contract information seemed to come to a screeching halt. If anyone gets some new information on Troy's contract or our cap situation, post it here and it will definitely add to the discussion.
  •  Flozell was set to make $5mm this year and we wanted to keep him but for less than that amount. He said, "thanks but no thanks" and went on his merry way. Now we really need him so how do we pay him $5mm if we only have $2mm cap space? Well, here is one way, sign him to a four year deal with a $4mm signing bonus and a $1mm base salary (his minimum veteran salary would be $910k so this works fine). This means his cap hit for 2011 would be $2mm and he would have $1mm per year hit our cap for 2012 to 2014. There are other ways to work the deal (guaranteed and/or deferred compensation) to improve cash-flow if he is amenable. Obviously this is not an ideal situation because if we cut him prior to June 1st 2012 his remaining signing bonus of $3mm would hit the 2012 cap. But you could also release him after June 1st 2012 and only $1mm would hit the 2012 cap while the remaining $2mm would go against the 2013 cap.
  • After signing Timmons, Mr. Rooney & the FO were concerned about cash-flow and at first were going to hold off signing Troy until after the season. For whatever reason Mr. Rooney had a change of heart, maybe cash-flow improved or maybe he decided interest rates were so low that borrowing more was not a big deal. Who knows what he is thinking? But cash-flow has to be considered when making a call, if Flozell insists on a $3mm signing bonus to come back then you have to have the cash in the bank. $3mm is not much on it's own but you must put this in perspective. During the regular season player salaries are paid,so Steelers are paying roughly $10mm bi-weekly on top of coaches/staff who are paid year round. Also keep in mind that fully guaranteed & deferred contract amounts need to be reserved against (present value of 50% of first $2mm, 75% above $2mm). So I have no doubt cash-flow is tight at this point, did you notice Troy's signing bonus was only in the $10.5mm range? Because Troy has the big shampoo $ I am guessing they guaranteed and/or deferred more monies than many others would take. But, that is pure supposition. 
  • This is the quandary, do you go "all-in" thinking that this is the year and so much is already invested. A.k.a "sunk cost" conundrum which can lead to throwing good money after bad. Is the window still open or are we already witnessing the twilight years of this defense? Are we "In for a penny in for a pound" or does that even make sense at this point with our Cap situation? Unfortunately, in the NFL there is scant time to "sleep on the choices." At best, maybe there is a one or two week window, who knows? I mean if Ravens didn't sign McKinnie would we be calling him now or does it take too long to get a newcomer up to speed. I truly have no idea, all I know for sure is I wouldn't want to have to make the call.
  • Starks may be a great re-sign, we are sitting with $2mm of his dead $ on our books. If we re-signed him I do not believe there is any reason we couldn’t tie that money into a new contract which would be more cap friendly. In other words, re-sign him but give him a $1mm signing bonus and roll the dead$ and the signing bonus into a new deal over 2-3 years. While I am writing, I never thought about this situation before but have not seen anything in either CBA to outlaw doing it. It’s like bringing back a contract from the dead, put that bitch on life support:)
  • There is always a way around the cap depending upon your level of desperation. If you have the cash-flow and you are willing to get your hands dirty you can always make it work. Obviously, you don’t want to borrow from future cap years if you can avoid that (similar to robbing Peter to pay Paul). Borrowing from future cap years, especially 2012 & 2013 is mortgaging your future. We don't have enough information to know how much the cap will rise (if any) between now and then. 2014 is much easier to figure out as we know ESPN has already re-upped to pay $1.9b a year from the current $1.1b. 

 Adam Schefter is getting people all "riled" up tweeting this:  

Steelers projected to be about $25 million over 2012 salary cap; nothing new – have headed into off-season over the cap the past seven years.

Who cares how much you are over the 2011 cap with your 2012 projected payroll, we only care how much we will be over the 2012 cap number with our 2012 payroll. What’s the point in only half the information?  If you can’t give a Salary Cap for 2012 then the payroll information is useless too. I did an updated estimate for the 2012 cap number, there are many assumptions that may turn out to be incorrect but it’s better than nothing.

revenue stream

 

 

revenue (billions)

player %

cap $ by stream

League Media AR (TV, International, Direct TV)

$4.300

55%

$2.365

Ticket revenue

$1.850

45%

$0.833

NFL Ventures(Licensing, network, playoffs, VZ)

$1.700

45%

$0.765

Local AR (Skyboxes, food, naming rights)

$2.450

40%

$0.980

total

$10.300

47.99%

$4.943

2012 salaries-benefits per team ($4.943b/32)

$154.453

2012 projected salary cap  (84.5% of player’s dollars)

$130.513

 

I now think the cap for 2012 will be between $128mm and $131mm which would put us over the 2012 cap by somewhere between $14-17mm.  We will have to cut players and/or re-negotiate contracts to free cap space just like this year. This will likely be our situation until 2014 when new network TV contracts will kick into place and the cap will rise $40-50mm for 2014. There is an end-game here, we won't be in Salary Cap purgatory forever:) 

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