July 24, 2014

Explaining the cap penalties on the Redskins and Cowboys

I was very confused when I learned yesterday that the NFL would be penalizing the Redskins and Cowboys for contracts they re-worked in the uncapped year. It seemed very strange because the NFL seemingly lets teams re-work deals all the time so that they can free up cap space. So what was so different about what the Redskins and Cowboys did that got them into trouble?

First of all, most teams normally use restructuring to free up cap space. The NFL seemingly knew that an uncapped year could be used by teams to circumvent future salary caps by dumping as much salary as possible into 2010 as the uncapped year. They warned teams against doing it a reported six different times with letters from the front office. Those letters apparently warned teams that they risked being punished under the rules of the new CBA if they engaged in activities that would lead to circumventing the re-established salary cap. The Redskins and Cowboys gambled, and if the NFL’s penalty holds up, they will be punished.

Still, what, exactly did they do that broke the rules?

The Redskins are the most egregious example. In 2010 the Redskins were slated to have a salary number of $141.6 million. This included large salaries and bonuses for Albert Haynesworth and Deangelo Hall. The Redskins had a $21 million option bonus for Haynesworth that they converted to a signing bonus. No problem there. Teams do this all the time. They convert it into a signing bonus and then they can spread the bonus out over the length of the deal. This routinely saves cap space for teams that owe superstar players large bonuses. The NFL has no problem with it.

The Redskins didn’t aim to spread the contract out, though. They aimed to dump it in 2010. The problem this time is that the NFL had this one uncapped year. The Redskins used a sneaky little provision in the contract called a “voidable” provision. This means that Haynesworth would take the $21 million signing bonus and then he could void his own contract at any time after 2010. Of course in order to void his deal, Haynesworth would have had to pay back his signing bonus or at least some arbitrator-determined unearned portion of it. As we all know, that was never ever going to happen. But that little provision allowed the Redskins to take every penny of Haynesworth’s signing bonus and apply it to 2010 as opposed to spreading it out over the length of the contract.

Taking all the salary in one season is fine in a normally capped season because you are taking the hit presumably under the cap to create future flexibility. The Redskins used this one-off season to create future flexibility because they have an owner with extremely deep pockets.

The Redskins did the same thing with Deangelo Hall and all of a sudden instead of taking $141.6 million in 2010, the Redskins took $170 million all at once. So all of a sudden when the new CBA got signed the Redskins and their fans were sitting flush and ready to go with $31+ million under the cap. The NFL deemed that to be abusive to the system, got the player’s association to sign off on it and the penalties were levied in the amounts of Haynesworth’s $21 million and Hall’s $15 million for a total of $36 million.

ProFootballTalk is making noise about how this equates to collusion of NFL teams against the player’s association and I don’t have much standing to disagree, necessarily. At the same time, it is in the best interest of the league to have some form of level playing field financially. If the NFL wanted to have some kind of “amnesty” rule like the NBA then it would have been fair because every team could have done it.

Say what you want about Roger Goodell and the NFL, but this is one of the nice things if your team is in a small market. Rich guys like Daniel Snyder and Jerry Jones push the limits of the rules because they have the most money and they don’t get away with it. Some may argue that these two teams played within the rules, but we should all be able to agree it was outside the spirit of the rules. It is in the NFL’s best interest to keep people from constantly pressing the boundaries of the rules.

  • 5KMD

    Well if they sent six letters warning about this then I guess they can’t complain too much. Out of curiosity, are the Redskins and Cowboys complaining about this much?

  • 216in614

    I wonder if this came out earlier would it have changed the offer to the Rams knowing they had less cap space to surround the 2nd coming of Christ (err I mean RGIII) with talent.

  • Mark

    I’m in DC and the fans and sports talk radio (I know, I know) are complaining about it. It’s a “we followed the letter of law” type of complaint. I haven’t heard anything out of the Skins themselves. Some of the same chattering hens are wondering if they could back out of the RG3 deal but that doesn’t majestic much sense to me.

  • cmm13

    When reached for comment Daniel Snyder is quoted as saying “so how much do I have to spend to buy extra cap space now?!?”

  • Iverson081

    It’s not BREAKING THE RULES!!! Not one blog I’ve read says anything about breaking the rules! They all say that these two teams pushed the boundaries. As far as I’m concerned pushing the boundaries is legal and smart! If this was the Patriots that had done this then everybody is saying how Robert Craft and Bill Bellicheck out thought every other team and praising them as being geniuses!

  • mgbode

    except it’s been clear the NFL has sent multiple letters detailing that such transgressions would be not allowed and punished.  if you are going to be “legal and smart” then do something that isn’t so obvious at least.

  • Twoshoes

    Except there is evidence that every team has done the same thing. just the redskins and cowboys spent more money into the 2010 season than the rest of the teams. There will be lawyers involved now because the NFL broke laws in collussions, because there was no cap, and they told the teamsto act as if there is one.

  • Iverson081

    It was legal. It’s not the NFL that has a problem with it. It’s the owners that have the problem. The NFL signed off on the contracts according to the redskins gm Bruce Allen.

  • mgbode

    “the NFL” is controlled and appointed by “the owners”

    when the CBA is bargained, it is the “NFL” on one side and the “NFLPA” on the other.  therefore, whatever “the owners” have an issue with “the NFL” also has an issue with. 

  • mgbode

    “the NFL” is controlled and appointed by “the owners”

    when the CBA is bargained, it is the “NFL” on one side and the “NFLPA” on the other.  therefore, whatever “the owners” have an issue with “the NFL” also has an issue with. 

  • http://www.waitingfornextyear.com Craig Lyndall

    Legal and illegal is subject to a vote when it comes to owners playing in the league together. They are a self-governing body so don’t get too caught up on technicalities. The system is set up not to respond to technicalities but rather maintain the spirit of competition and fairness. 28 teams somehow managed to keep from violating any rules.

  • http://www.waitingfornextyear.com Craig Lyndall

    Legal and illegal is subject to a vote when it comes to owners playing in the league together. They are a self-governing body so don’t get too caught up on technicalities. The system is set up not to respond to technicalities but rather maintain the spirit of competition and fairness. 28 teams somehow managed to keep from violating any rules.

  • steve-o

    Those darn Redskins - they should have taken away three first round picks and a second instead.

  • porkchopexpress

    1st You should stop using the word legal.  This is a matter between privately owned business partners, and the rules that govern them. It isn’t a matter of law. 

    2nd The owners are the NFL.  The commisioner serves at the pleasure of the owners, any decision he makes reflects the will of at least a majority of the owners. 

    3rd  The owners acting through the commissioners office, made it known, apparently 6 times, that while they would not interfere during the uncapped year, attempts to circumvent future caps would be punished.  I think if the ‘Skins had just signed a bunch of guys to one year deals and went all in on a SuperBowl, and those players wouldn’t be with the team the next year, there probably wouldn’t be a problem.  Essentially what Washington and Dallas did was give themselves extra cap space over these next few years.  They were explicity told not to do this by the other owners they did it anyway, I don’t see how you can be upset about it.

  • porkchopexpress

    Actually only about 6 teams went over the cap, and the other 5 I believe just signed guys for that one year.  Oribiasi posted in some other thread a list of the teams who spent exhorbitant in 2010.  As I understand it, 26 teams stayed within the previous cap space, 4 teams exceeded for 1 year, 2 teams attempted to circumvent future caps during the uncapped year.

  • Iverson081

    Actually it wasn’t a rule! It’s an uncapped year. If the NFL didn’t want teams to do this then make it a rule. At the time this happened it wasn’t a rule. That’s the whole reason for the controversy. It’s wrong to wait two years and then a day before FA, call two teams up and say, oh yea by the way, we are taking most of the money you were going to spend and give it to all the other teams. That’s supposed to be fair play?

  • BenRM

    your answer is legal!

  • BenRM

    It’s comical how you completely skip the “6 letters telling the Skins/Boys not to do that” part. 

  • Iverson081

    Yea they got a warning. A warning is not a rule. A bicycle comes with a warning that doesn’t mean don’t ride the bike

  • smz

    This is a disappointing take from an otherwise stellar site. They got letters of warning? So what? Since when did that imply a rule existed that they were breaking? That’s what matters: There was no rule to break, it was an uncapped year. If this had happened to the Browns, this piece would have a decidedly different slant. It’s not the league’s job to enforce the spirit of a rule, it’s the league’s job to enforce the letter of a rule.

  • Max

    threadjacking alert!- Dolphins just traded Brandon Marshall to the Bears for a 2012 and 2013 third round pick. Culter and Marshall can now go sing some Peaches and Herb at Karaoke…”Reuinted and it feels so good….”

  • cmm13

    Was anyone else aware of the huge Redskin fanbase reading this site?

  • cmm13

    Don’t forget that these 6 particular warnings came from the other owners, not the NFL.

    It’s basically like 6 co-workers telling you to not do something that will get us all in trouble, then when you do it anyways those same 6 co-workers report you to the boss.

  • mgbode

    they came for the RGIII, they stayed for the financial discussions :)

  • smz

    I was born in Virginia, near DC, and thus inherited the Redskins, but moved to Solon as a wee lad, and thus am also a Cavs and Indians fan.

  • Iverson081

    Thank you SMZ. Someone that finally knows how to read! A lot of Eagle and Giant fans on this site

  • Vindictive_Pat

    Actually we’re all Browns fans here… guess that isn’t necessarily apparent from the name of the web site, but that’s okay.  We’re all debating with you because we think you’re flat out wrong.  You are viewing the NFL too much like the judicial arm of the government.  Yes, there are rules in the NFL rulebook, just like your office has employee policies.  There are also memos (ie the 6 letters) that aren’t “rules” but you’re going to face consequences if you decide not to heed the memo.  Same thing applies here.  I know you are having a hard time with this, but it’s all completely reasonable and was adhered to by the rest of the league.

  • Vindictive_Pat

    Actually we’re all Browns fans here… guess that isn’t necessarily apparent from the name of the web site, but that’s okay.  We’re all debating with you because we think you’re flat out wrong.  You are viewing the NFL too much like the judicial arm of the government.  Yes, there are rules in the NFL rulebook, just like your office has employee policies.  There are also memos (ie the 6 letters) that aren’t “rules” but you’re going to face consequences if you decide not to heed the memo.  Same thing applies here.  I know you are having a hard time with this, but it’s all completely reasonable and was adhered to by the rest of the league.

  • Vindictive_Pat

    FYI, the Redskins are my second favorite team as I live close to them in Richmond.  They’re also my wife’s favorite team.  But I think what they did is wrong and the majority of owners who didn’t like it have the right to punish them… majority rules in the NFL.

  • smz

    I just can’t see the logic in ‘yes, technically you broke no rules, but a lot of other people got upset about what you did, so we’re retroactively inventing a punishment because you stepped over some arbitrary line.’ I suppose it’s worth noting the ‘Skins finished last in the NFC East, so to argue they gained a competitive advantage is disingenuous (not that you are, goes to the larger ‘justification’ for this). This, to me, smacks of a cadre of owners throwing a petulant temper tantrum. I don’t care who the team is, you can’t make up the rules as you go along and expect other people to call it fair. 

  • 38416fds

     This. It was only two teams that tried to buy future leverage in the no cap year. The Redskins & Cowboys. The other were 4 went with one year deals but didn’t really abuse the system. The other 26 decided FA system is kind of crap gamble and passed. Reality is you build your team through the draft. You don’t gamble on FA until you’re a Superbowl contender. Best example of this is, surprise surprise, WASHINGTON. Trade away your drafts, sign FA to big money contracts, FAIL.

    Kind of feel sorry for RGIII.

  • Vindictive_Pat

    Wait… are you claiming that its the 30 owners who honored the agreement were disingenuous and not the 2 who broke the agreement, simply because nobody wrote it down?  The other owners weren’t as crafty as these 2 because they didn’t think of this?  Of course they did… they received 6 emails reminding them not to do that very thing (I’m not saying this is your argument, but I’ve heard it on the radio all day today).  I just don’t see your side of this.

  • smz

    Didn’t write it down? Dude, pardon the all caps, but IT WASN’T A RULE. Even given what a constantly changing, fungible approach the NFL takes to rules, there is a process for formally passing them. They didn’t do that, thus, there is no rule, thus, nobody could break it. Also, the Saints and Raiders did this as well, albeit to a much smaller extent. I’m baffled as to how that argument is lost on you. To be clear, I’m not alone in this reaction, nor does one need to be a Redskins fan to get it:

    http://espn.go.com/blog/nfceast/post/_/id/36923/cap-controversy-shows-nfl-at-its-worst

    http://deadspin.com/5892791/in-the-name-of-competitive-balance-the-nfl-plays-the-bully-and-the-tyrant

  • Vindictive_Pat

    So let’s say you work for a company and there is a memo sent out on email saying that you are not to contact clients yourself, you must use your client support team to contact them.  Would you not expect there to be consequences if you violate that notice?  There’s no rule in your employee handbook saying so, but there’s an email from an authoritative source requesting that you don’t contact clients on your own.  Could your boss not use this at your employee review to reduce your salary?  He absolutely could.  Excuse my caps but THIS ISN’T GOVERNMENT LAW.  The NFL is a self-governing body and they absolutely did send out a written notice on email.  6 times. It was not an official rule, but that is inconsequential.

  • Erick J

    ive seen this before it happened to the LA Lakers!!! Congrats NFL,your timing is so interesting,maybe you can punish teams that record practices more like 38 million oh only if its the skins and cowboys? Hey why didnt this happen last year or was the nfl just trying not to mess up the cowboys chances of winning a superbowl because they where one of the favorites and they would have had to cut superstars to even field a team? Or was it because the skins couldnt have gotten McNabb? Smellss like garbage to me but hey i thought the  nba and wwe was  real!!

  • BenRM

    I can’t understand why people are finding this so difficult to understand. 

  • mgbode

    and the Raiders and Saints were also punished (to a smaller extent since their transgressions were smaller)

    and for an above point, it did not give the Redskins a competitive advantage yet, it was setup to give them a competitive advantage now (by freeing up cap space they would not have had).

    the only thing I think is shady is the timing of the punishment.  unless they notified Dallas and Washington weeks ago and the media just learned of it now.

  • steve-o

    Instead of explaining this to us, you should be explaining it to the Redskins who seem to be content to spend as though this never happened.

  • Beshires1

    Thats something! the NFL shure took the bull by the horns when Fat Albert received the money then flat refused to play for the skins. That “sneaky little provision” in Fat Alberts contract was their insurance against Fat Boy doing what he did. Commish signed off on it.This is all horse$@#&! So now the NFL decided that Fat Albert should cost the skins $42,000,000. for screwing them in the first place.Guess they figured what tha hell if Albert got $21 million for doing nothing they can get the skins to fork over another $21million for making a bad decision.

  • Iverson081

    YYou like to use the co-workers and memo argument. what if the boss signed off on the contracts before you get the memo because that’s what actually happened! Doesn’t matter which team or teams this happened to. its just wrong !

  • Phludge

     The Redskins are the Ron Paul of the NFL. He has all the right answers, but no one is listening to him.

    “The spirit of the rules? What kind of BS is that! Either they were wrong or they were not! Uncapped means, just that. NO LIMITS!!! A letter warning teams not to do what they did, is a power play by Roger Doodell to lay a smack-down on the two most profitable teams in the NFL today. If the owners of a team have the money to spend, and the resources to fulfill that venture, “friggin’ let ‘em do it”.

    Personally, spending all that money last year, especially on Fat Albert Haynesworth, the has-been who should be the one fined. He took the money and ran!!! When he was to return the money. when do player get fined for such acts? Isn’t that “Stealing”. Anything over $600 is considered “Grand Larceny”.

    Goodell = Dictatorship