The good and the bad of the Saints salary cap approach
Social media jokes about how the New Orleans Saints are above the salary cap projection are a yearly recurrence. Every offseason, people look at sites like Over The Cap and Spotrac, think the Saints are in cap hell, and that it will be impossible for them to be compliant. Every offseason, the team management restructures […]
Social media jokes about how the New Orleans Saints are above the salary cap projection are a yearly recurrence.
Every offseason, people look at sites like Over The Cap and Spotrac, think the Saints are in cap hell, and that it will be impossible for them to be compliant. Every offseason, the team management restructures every possible contract to make it feasible, and other people go on social media to say the salary cap doesn't matter and that Saints general manager Mickey Loomis is a math genius.
As usual, the truth is in the middle.
Even though the Saints are projected to be $71.5 million over the cap for 2024 with 42 players under contract — and no other team is above $30 million —, they will certainly find a way to be compliant. But that doesn't mean the strategy is perfect. There are failures, and it's generally not good to be that extreme.
Even Loomis, by the way, agrees with that perception.
"Look, we've got to catch up. We've got to manage this back to the middle," Loomis said back in January. "That's been our plan all along, and obviously the COVID year and the reduced cap and the reduced leaguewide revenues and the smoothing out of all that has impacted that. But yes, we have to make up for some of that."
They haven't, however. The Saints are seventh in cash spending this year, mostly because they gave a big contract to quarterback Derek Carr, compounding a difficult financial situation for the next three years with a mediocre roster — they are 20th in DVOA after 13 weeks of football.
So let's discuss the good and the bad with the Saints salary cap approach.
How they do it
First of all, there is not any magic to what Mickey Loomis does salary cap wise. Any executive in the league knows how to do it and what it takes. The bigger questions are if they think it makes sense and if they are willing to do it.
Generally speaking, there are two types of money to structure an NFL contract. One part is money paid and that hits the cap immediately (base salary and roster bonuses, for example). And there's another part that is prorated through the life of the contract (or five years, if the deal is longer). That applies to signing bonuses and restructure bonuses.
So let's say a player agrees to a three-year, $30 million deal, and the team agrees to pay exactly $10 million per year. If everything is base salary, the cap hit each year will be $10 million.
But if the team wants, they can pay a minimum base salary in the first year (it depends on the experience of the player, but let's say here it's $1.2 million in this case), and the rest would be paid in the form of a signing bonus ($8.8 million). The $1.2 million base would hit the cap right away, but the $8.8 million bonus would be spread throughout three years.
So the team would pay $10 million, but the first-year cap hit would be $4.13 million. Over the next two years, though, the hit would be higher.
Several teams have expanded this logic with “void years” — the Denver Broncos, Philadelphia Eagles, and the Saints have done it for a long time, and basically every NFL team was forced to do so after the pandemic. The team adds fake years at the end of a contract, so the proration is longer, and the initial cap hit is lower. The problem with this approach, obviously, is that at some point the team will have a cap hit for a player that is not on the roster anymore (dead money), or the cap hit will be much higher than the real salary.
Using the same example above, the team could sign a player to a three-year, $30 million deal. The base salary in the first year is $1.2 million, and the signing bonus is $8.8 million. But the team adds two void years at the end of it, so the signing bonus hit is divided by five. The initial cap hit would be $2.96 million, but the team would be in line to have a $3.52 million dead money cap hit at the end of the contract.
The good
As NewOrleans.football writer Nick Underhill mentioned, a team can theoretically take this approach forever. They can keep "kicking the can down the road" and moving money around.
The salary cap has a trend to go up every year, unless a crazy event like a world pandemic happens, affecting the NFL's income.
The best part is that if the cap goes up, the inflation makes an old deal “cheaper”. Based on the 2022 salary cap number ($208.2 million), $10 million would be 4.8% of the cap. In 2023, with a $224.8 million salary cap, the same $10 million are 4.4% of the cap.
For a team contending for championships, taking this approach eventually is a no-brainer in the current version of the NFL to maximize its window.
The bad
First of all, the initial step demands an owner willing to spend a lot of money. The Saints have it, but it’s not applicable to all franchises in football.
Furthermore, the problem with this type of approach is that, eventually, the team loses flexibility to operate. The Saints were forced to let Marcus Williams and Trey Hendrickson walk in free agency, but that's not the bad part, because every team eventually loses players in free agency.
The worst is that the Saints have been forced to keep players they wouldn't otherwise because, at first, it's cheaper to keep them than to cut them.
Guard Andrus Peat might be a good example of that. He's in the last year of his deal, so next offseason he will be a free agent. But the Saints are projected to have $13.638 million in dead money with him, because all the prorated left accelerates once the contract voids.
But if the Saints find a way to extend Peat before the deal voids, it stays prorated.
So if Peat gets a new one-year, $10 million contract, his cap hit could be as low as $7.7 million. It would represent almost $6 million in 2024 savings to keep Peat instead of letting him go. However, it creates a snowball effect, because there's more money spread to the future.
As PFF cap analyst Brad Spielberger wrote, "a significant amount of dead money will inhibit a team's ability to effectively add talent."
Compounding aggressiveness
When Drew Brees retired, there was a general expectation that the Saints would take their foot off the gas a little bit, like the Green Bay Packers are doing after they traded Aaron Rodgers and like the Los Angeles Rams are doing as the 32nd team in cash spending this season. But the Saints took the opposite approach, keeping their aggressive style.
Not only they decided to maximize the salary cap mechanisms, but they also utilized future draft capital to move up several times. That’s how they gave up a top 10 draft pick to the Philadelphia Eagles this year — they used the 2023 first and a 2024 second to buy a 2022 first. From a process standpoint, it’s hard to understand the decision.
"I think there are a lot of variables," Loomis said in 2021. "It starts with maybe philosophy. More swings, more hits. That's one of the philosophies. The other one is quality over quantity, at times. There are a lot of variables with that, and I think it changes year to year. Obviously, the composition of your team makes a difference as well."
The Saints preferred the "quality over quantity" logic. However, it created more stress over the scouting process. Some high picks haven't worked out so well, like Payton Turner and Trevor Penning, and the low number of picks hasn't allowed the Saints to have as much talented cheap labor.
No reasonable and knowledgeable person thinks the Saints can't get under the salary cap. As always, they will find a way to be compliant. But that doesn't mean the salary cap isn't real, and the Saints are feeling the consequences of their roster-building approach.
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