Thursday, March 09, 2006

More Benefits of the New CBA

So it looks like my rant about the lack of a new CBA is moot now, as the owners and players have finally freakin’ agreed to terms that will extend the CBA six years. Well, in reality it’s four years, since we’ll likely be facing the same situation in 2010.

Now that there’s no looming threat of an uncapped year, the spending can begin. Teams will have an additional $8 mil or so to work with, which could be the difference maker for many. And while the teams nearest the cap will benefit the most (since they have some flexibility now as opposed to none under the old CBA), four teams now emerge as serious buyers in the free agency market. Minnesota, Green Bay, Cleveland, and Arizona will all have over $30 million in cap room to work with.

Of course, the fine details of the CBA haven’t all been divulged yet, but for now I’m just satisfied a deal is done. And just in case you’re wondering, while the cap is $102 million this year, it makes another $7 million hike to $109 mil next year. This most directly affects the smart front offices, since they can plan this off-season around the additional $7 million available next off-season. Dumb front offices, however, will probably blow all of their cap space this year, banking on the increase next year. But we all know that strategy never works.

Many veterans can now feel safer with the new CBA is in place, since many that were slated for the chopping block will now remain with their teams. However, keeping these veterans isn’t always the smartest move. Cutting a player triggers a cap charge for the current season, meaning the net cap savings is the player’s base salary minus the prorated portion of his bonus for the remaining contract years. As such, cutting a player later in his contract provides more net cap savings, since base salaries rise with each passing year, and there is less of a bonus to subtract. Now, try to follow me here.

Teams need to show foresight at this point in the game. There’s a fresh CBA with expected salary cap increases in the coming years. We already know of the $7 million hike next year, and many teams may run amok in the free agency market. However, teams can poise themselves for an even bigger spending spree if they cut players loose now that would be potential cap casualties next year.

Take Player A for instance. The net cap savings for cutting Player A this year is $1 million, a nominal amount for a player the caliber of Player A. But, while Player A is still largely effective, he’s on the wrong side of 30. Surely if he sticks around for 2006, he’ll be cut prior to the beginning of the 2007 league year. Even though cutting him will only provide menial cap savings this year, the savings down the road could make it all worth it.

While they save $1 million in 2006, the cap charge triggered by Player A’s release will be completely erased on the commencement of the 2007 league year. If, however, Player A is retained for 2006 and cut prior to 2007, the team will only save his base salary minus the prorated portion of his bonus, surely a far reach from the savings they’d realize if they cut him loose in 2006.

Let me be clear: in no way am I suggesting teams throw 2006 in order to better position themselves for 2007. But for some teams, this maneuver makes the most sense. Take my beloved Jets for example. They will only see $1.1 million in cap savings by cutting Kevin Mawae. But his base salary is through the roof. Once 2007 rolls around, they’ll have no remnants of Mawae affecting their cap, whereas keeping him would mean fewer saving in the long run. They’re not going to be a winning team this year, so might as well cut a 35-year-old who’s costing you a fortune. Save for the future.