2006 Bills' Salary Cap Analysis & Outlook

Yet another demoralizing season here in Bills' country. I guess going with J.P. Losman wasn't such a good idea on a team loaded with veterans wanting to win now. I suspect the season would have been more rewarding if the QB job was an open competition. Be that as it may, it's time to look forward. New front office & coaching staff makes change inevitable.

The Bills' salary cap situation is not among the best in the league, but that doesn't mean it will be a hindrance to the efforts of improving the team. The hindrance will be the lack of a CBA extension.

Final 2005 Accounting

As of 1/2/06, the official end of the Buffalo Bills' 2005 season, I had the Bills' $157,219 OVER an "adjusted salary cap" of $85,721,000 with "dead cap" of $5,710,967. All players accounted for and it includes nearly a full year of practice squad which comes to $634,500. Obviously, the Bills' did not finish 2005 "over the cap", thus I have errors in my 2005 cap page that I still need to resolve. However, any remaining 2005 cap space will be applied to NLTBE incentives earned by players during 2005 season.

2006 Cap Analysis

Please refer to the 2006 Bills' Cap Page . Well, as of 3/4/06, I have the $8,604,810 under an "adjusted salary cap" of $94,289,911 million with "dead cap" of $8,622,892. These numbers include the recent franchising of CB Nate Clements ($5.893 million), tendering of RFAs & EFAs, cap debit of $223,089, and the releases of OL Mike Williams (cap savings of slightly less than $4.2 million), DT Sam Adams ($3.5 million), S Lawyer Milloy ($2.5 million), TE Mark Campbell ($1 million). At this point, I have not received any other information of restructurings or other transactions that impact on the 2006 cap.

Remember that during the off-season (start of League Year March 3rd until final 53 man roster), teams follow the "top 51" rule. Essentially, the "top 51" rule takes the players with the top 51 cap charges and all other bonuses from all other players to calculate the teams total cap charge. Bills presently have more than 51 players on the offseason roster.

Tenders to RFAs & EFAs

The Bills have three players who qualify as RFAs: WR Sam Aiken (4th rd), LB Mario Haggan (7th rd), and LB Josh Stamer (none). I believe all 3 players should and will be given the minimum tender of $712,000. All 3 are solid contributors on special teams. Haggan and Stamer provide depth at LB which is suspect. The Bills have five players who qualify as EFAs: OT Jason Peters, WR Jonathan Smith, OL Lawrence Smith, RB Shaud Williams, and CB Jabari Greer. I would tender all but G Lawrence Smith. The tender amount is $385,000. Tendering these players would use $2.016 million of the available cap space after adjusting for top 51.

Cap Adjustment

The salary cap number released by the NFL and reported by the various media outlets is what's called an "unadjusted" salary cap. It's the salary cap derived from the provisions within the CBA using specified DGR's (designated gross revenues). However, each team is subject to what's called a "cap adjustment". The cap adjustment is derived from "Not-Likely-To-Be-Earned" (NLTBE) and "Likely-To-Be-Earned" (LTBE) incentives that many players have in their contracts. LTBE's count against the cap year in which they are expected to be earned while NLTBE's do not count against that cap year.

Example: If a player has a LTBE in 2004 and does not achieve it (basis for the Philly Loophole), then the team receives a credit for the amount of the LTBE in the following cap year. If a player has a NLTBE and achieves it, one of two things can happen. If the NLTBE incentive is earned, then it may be applied to that year using any remaining cap space or it will be a debit on the following cap year. When all the NLTBE and LTBE incentives are accounted for, each team has either a credit or debit that becomes their cap adjustment.

I do not have cap adjustment information prior to the 2002 season. The cap debits for 2002-2004 were approx. $2.2 million, $1,083,586, and $822,925 respectively. In 2005, the Bills' actually a small cap credit of $221,000. As stated before, any remaining 2005 cap space will be applied to 2005 NLTBE's earned. I cannot even begin to make an educated guess on what the Bills cap adjustment will be. Last year, I estimated a cap debit of $1.25 million, but they ended up with a cap credit of $221,000.

The Bills cap adjustement is a cap debit of $223,089. Information received 3/4/06

Salary Escalators

I originally believed that DE Chris Kelsay had a salary escalator. At this point, there has been no indication of that being the case. QB J. P. Losman had provisions for salary escalators based on playing time, but he apparently did not trigger it. Four players ended up with modest increases: OT Mike Gandy ($1.25 million to $1.8 million), G Bennie Anderson ($1.4 million to $1.5 million), FB Daimon Shelton ($950,000 to $1 million), and QB Kelly Holcomb ($875,000 to $1.125 million). Net impact was only $850,000 on the cap.

Salary escalators were one of the factors that caught me off guard (and all of the media) last year. I was well aware of Mike Williams' escalators, but not of Nate Clements, Coy Wire, and Justin Bannan. Those 3 alone ate up nearly $3 million of available cap space.

New Cap Rules for 2006

Without an extension to the CBA and the presence of an "uncapped" 2007, there are a few things that need to be explained. There is no longer a "June 1st" rule. A player who's released at any time during 2006 has ALL remaining proration accelerated onto the 2006 cap year. Also, NLTBE's earned in 2006 automatically become LTBE's and count on 2006. LTBE's not earned are automatically credited once the player can no longer achieve it. Teams will need to keep cap space available for such possibilities. There is also the "30% rule". This rule only allows for a 30% increase in a players' salary if that players contract extends into an uncapped year. This rule will make simple restructurings nearly impossible because teams will not be able to simply convert 2006 salary to signing bonus. They will also have to adjust salaries of subsequest years to comply with the 30% rule. Of course, if an extension is worked out, then much of this paragraph will be moot.

Where can the Bills create cap space?

The Bills can find as much cap space that they want to create. They can sign players to extensions that create cap space in the short term, restructure deals (be careful of the "30% rule"), release or trade players.

The question posed: "Where can the Bills find additional cap space?"

Eric Moulds

From the salary cap forum thread titled "Eric Moulds Cap Situation" I posted a few months ago:

After '05 season, Moulds will have 2 yrs remaining. He signed a 1 yr extension in Feb '05 that helped the Bills save a bit over $3.4 million on the '05 cap. His remaining 2 yrs look as follows:

2006

Salary: $6.089 million
Old proration: $2 million (from $12 million s.b. he rec'd in 2001)
New Proration: $1,666,667
Reporting bonus: $1 million (likely due at start of training camp)
Work out bonus: $100,000
Pro Bowl bonus: $200,000 (NLTBE but counts on 2006 cap if named to the Pro Bowl in Dec. 2006)

Cap hit: $10,855,667 (or $11,055,667)

2007

Salary: $7.25 million
New proration: $1,666,667

Cap hit: $8,916,667

Two scenarios exist for Moulds:

Scenario 1: Released or trade before reporting bonus due

I believe the reporting bonus is due at the start of training camp. However, I doubt the Bills will wait to decide on whether Moulds stays or goes. They would have to carry his large cap number all off-season. If the Bills do not work out a restructuring (i.e. paycut), then it's likely that he's gone before the 2006 League Yr begins in March '06.

Cap savings = 2006 cap hit - remaining proration

$5,522,333 = $10,855,667 - $5,333,334

Scenario 2: Released or traded after paying reporting bonus

It's possible the Bills hang on to Moulds. It depends on what happens during the rest of this season. If Evans/Parrish were to suffer a serious injury (knock on wood he doesn't ), that along with the fact that Josh Reed is UFA and Sam Aiken is RFA could force the Bills to retain him and in fact likely force a restructuring long before training camp. That being said, this scenario results:

Cap savings = 2006 cap hit - (remaining proration + reporting bonus)

$4,522,333 = $10,855,667 - ($5,333,334 + $1,000,000)

Scenario 3: Restructuring

I will not attempt to suggest how a restructuring may look using the numbers above. Rest assured, the aforementioned "30% rule" makes this a difficult proposition.

Clump's Outlook: I really believe the Bills FO recognizes Moulds' value to the team. That being said, if it's determined his "leadership" was detrimental to the team in '05, then he'll likely be let go, but I really hope something is worked out with his contract. Recent rhetoric aside, I think he ends up signing a 1 or 2 yr extension with a modest paycut. The result will save approx. $2 million on 2006 cap.

Mike Williams (DONE!)

2006

Salary: $4 million
Roster bonus: $3 million
Amortized bonus: $3,453,333
"Deion" debit: $360,431
(add all 4)
Cap hit: $10,813,764

2007

Salary: $5 million
Amortized bonus: $3,170,000
"Deion" credit: ($1,081,293)
(add 1st 2 and subtract credit)
Cap hit: $7,088,707

One scenario exists:

Release or trade before roster bonus due whatever date: I would assume Bills decide not to pay roster bonus and release him. The cap savings are:

Cap hit - remaining amortization = cap savings

$10,813,764 - ($3,453,333 + $3,170,000) = $4,190,431 in 2006

$7,372,040 on 2007

Clump's Outlook: While I thought it was possible he would work something out, the new leadership decided to part ways and save the cap space. I believe "Big Mike" will latch on with someone like Bill Parcells and become a very good OL.

The Bills could realize as much as $9.52 million in cap savings by releasing both.

Other Possibilities

I will highlight the situations of a number of veteran players (cap savings adjusted for "top 51"):

DT Sam Adams DONE!!

Adams had one year left on his contract. His cap number is $3.875 million with $2 million salary, $375,000 proration, and roster bonus of $1.5 million. Cap savings is $3.5 million. On a team desperate for run-stopping DTs and an average DT FA market, I'm surprised that he was let go.

LB London Fletcher

Fletcher has 1 yr remaining with $4 million salary, $800,000 proration, and $100,000 workout bonus for a cap number of $4.9 million. Bills could sign him to an extension and save $1.5-2.0 million on 2006. His release would save $3.79 million.

G Bennie Anderson

Anderson has 2 yrs remaining with salaries of $1.5 million (2006) and $1.65 million (2007). His proration each season is $500,000 for cap numbers of $1,906,160 (2006) and $2.15 million (2007). His release would save $683,840 on 2006 cap.

SS Lawyer Milloy DONE!!

Milloy had 1 yr remaining with a salary of $1 million, proration of $1.25 million, and roster bonus of $1.5 million for a cap number of $3.75 million. I'm not aware of the due date of the roster bonus, thus if the Bills decide to move in a new direction at SS (a distinct possibility with the switch to "cover-2"), then he would likely be released before the roster bonus is due. (His release save $2.265 million)

LB Jeff Posey

Posey has 1 yr remaining with a salary of $1.75 million and proration of $437,500 for a cap hit of $2,187,500. His release would save $1.44 million. He's been a workman-like "Sam" OLB but the switch to the "cover-2" may end his time here in Buffalo.

DB Troy Vincent

A well respected leader not only on the Bills but throughout the NFL because of his position as Union President of the NFLPA. I cannot imagine the Bills parting ways with Vincent this year. His release result in minimal cap savings of approx. $500,000.

DB Coy Wire

I think Coy's days are numbered. He's a capable special teams player but does not excel. He's a below average safety who's time is up because better options exist in FA and in the draft. His release will save $290,000.

TE Mark Campbell DONE!!

Campbell had 1 yr remaining with salary of $1 million and proration of $237,500. (His release saved $765,000).

CB Nate Clements

Clements was given the "non-exclusive" Franchise tag. That means he can negotiate with other teams and the franchise amount of $5.893 million is locked. If he had been given the "exclusive" tag, he would not be allowed to negotiate with other teams but the possibility exists that the franchise tender could increase come later in the League Year. This being said, Clements could be traded. That would save $5.893 million. He could also sign a long-term deal. I do not believe the Bills intend to negotaite a long-term deal until after the CBA is extended. This would allow the deal to be negotiated under the new provisions of the CBA. It would likely allow for longer proration of the signing bonus. Hopefully something can get done.

QB J.P. Losman

He will not be released, but there have been some unsubstantiated rumors of Mary Levy's interest in using him in a trade. Not likely to happen because the trade would result in acceleration of all remaining proration and actually cost an additional $2.079 million on 2006 cap. However, if the Bills' brass feels it's a good move to make, they could accomodate the acceleration.

Part II will highlight what my off-season would look like. I will address team needs with possible solutions and take a preliminary look at the draft.

Thanks

Bob Balistreri

(Robert Balistreri is a well recognized salary cap expert with Billszone.com)


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