Salary Cap Confidential: Cap Penalties
There are a lot of differences between a standard dynasty league and a salary cap league but the most glaring difference lies in player values.
In a traditional dynasty league, a player’s worth is decided using three factors: his production, age and the situation he’s in. With the exception of slight-to-moderate changes created by differences in the scoring system and starting lineup requirements, that player’s value is going to be the same across all dynasty leagues. Salary cap values are completely different.
In a cap league, two new factors – on top of those three from dynasty leagues – are introduced to change player values: his contract and salary. Thus, the same player’s worth can be drastically different between two salary cap leagues. In essence, that makes the dynasty rankings you find online – which are incredibly valuable to a dynasty owner – almost useless in salary cap. Because of this, every cap league is unique and far more challenging than any dynasty league.
It’s those two added factors which help create player values that make managing the salary cap and contract lengths perhaps the most important job a salary cap owner has. Understanding your league’s rules is the first step towards making sound decisions in this area so having a firm grasp on what percentage of a player’s salary is guaranteed is imperative to running a smooth salary cap franchise.
Revisiting the subject from earlier in the series, there are four types of salary cap leagues. The first three types are relatively self-explanatory, guaranteed salary leagues, partially guaranteed salary leagues, and unguaranteed salary leagues. The fourth type of salary cap league is one that incorporates some or all of the first three structures.
Let’s take a look at some of the most helpful techniques for managing the salary cap and contract allocation depending on how much of salaries are guaranteed.
Unguaranteed Salary Leagues
Although I played in a league that didn’t have any guarantees built into their salaries years ago, I believe they’ve gone nearly extinct because of the lack of challenge that they present. These types of cap leagues are without a doubt the easiest to navigate as an owner because they offer maximum flexibility to cut players and create salary cap space for other transactions.
Because there is no salary cap penalty for releasing a player, owners should always maximize the number of years offered in any contract. After all, if the player underperforms you can release him and get full cap relief, and if he overperforms, you’ll have him at a value for as long as possible.
Partially Guaranteed Salary Leagues
Most salary cap leagues I’ve been a part of have rules that guarantee a certain percentage of each player’s salary. Depending on what that percentage is, these types of leagues offer a good mix of consequences for poor decisions and flexibility to move on from an error.
There are two factors owners should always keep in mind when making roster decisions in partially guaranteed salary leagues: how great the penalty (in cap space) is for releasing a player and how and when that penalty is enforced. Both factors can drastically change the strategy employed by an owner when making bids in an auction, choosing whether to release a player, choosing the length of a contract for a player and pretty much every other major decision.
As a general rule, I’ve always used 40% as the benchmark for how strict a penalty is for releasing a player. I consider leagues that employ a penalty of 40% or less to be lenient, therefore I can be a little more aggressive in auctions or when giving out contracts. On the other hand, if the penalty is more than 40% – which typically means it’s 50% or more – a slightly more conservative tactic is my preferred approach to those decisions.
For example, if I won a 29-year old elite wide receiver in a free agent auction and have to decide his contract length post-auction, I might be on the fence choosing between a two or three-year contract. If the penalty is only 25% for cutting a player though, I’d be far more likely to make the longer commitment than if it was 50%, and it would be a slam dunk to offer the longer contract if I feel I won the player at a discount in the auction, giving him an already reduced salary.
This is also where knowing when and how penalties are enforced comes into play. There are really two standard ways that this is done. Again, one is a bit strict and the other a little more lenient.
The first is the more forgiving – and probably most common at least in my experience – of the two. For lack of a better term, I call it an extended penalty. This type of penalty is enforced by imposing a salary cap penalty equal to the player’s salary multiplied by the salary cap penalty percentage. That total is extended over each of the remaining years of the player’s contract.
The other type of salary cap penalty is calculated the same way, but instead of spreading the penalty over the length of the contract, it’s all paid when the player is released. To calculate these penalties, the player’s yearly salary is multiplied by the year’s remaining on his contract, then multiplied by the penalty percentage. That total is levied against that season’s salary cap immediately
Again, the extended penalty offers a lot more salary cap flexibility than the immediate penalty. So in extended penalty leagues, I tend once again to be a little more aggressive because I know that no matter when a player is dropped, the move will create at least some cap space. In an immediate penalty league, however, I get much more conservative because a single bad decision can put a franchise in salary cap purgatory.
Imagine giving that 29-year old wide receiver we just mentioned a four-year contract worth 18% of your salary cap. If that wideout suddenly becomes un-usable in year two of that contract due to injury or decline, he instantly becomes a drain on your salary cap. Worse yet, if you try to cut him and your penalty percentage is 50%, now instead of 18% of your cap space being used on a useless player, you’d have to use 27% of that season’s cap space. It’s unlikely you’d even have that extra 9% available to rid yourself of the mistake.
Fully Guaranteed Salary Leagues
Easily the most challenging of any salary cap league, running a franchise in a fully guaranteed salary league takes an incredible amount of patience and endurance to manage successfully. In all reality, these types of leagues completely eliminate releasing a player from the tools an owner has at his or her disposal because there is no cap relief for making such moves.
These leagues are rare because they are so difficult to manage which creates a high turnover rate due to owners making mistakes and abandoning teams. They also have a tendency of becoming eerily similar to a redraft league because owners become incredibly leery of giving more than a one year contract.
The only advice I have for a fully guaranteed salary league owner is to value draft picks more than in any other league due to the low rookie wage scale that typically exists in cap leagues. While this can be good advice across all the formats talked about here, it’s especially true here because it’s the only way to get cheap, long-term talent.
Multiple Salary Structure Leagues
The best leagues, in my opinion, are leagues that incorporate fully guaranteed contracts, partially guaranteed contracts and unguaranteed contracts. Each of the cap leagues I commission do this by requiring fully guaranteed contracts to any veteran signed more at least 5% of the salary cap or multiple years, partially guaranteed contracts to any veteran signed for less than 5% of the team’s salary cap and only one year, and unguaranteed contracts to all players selected in a rookie draft. This type of system creates flexibility when needed but also harsh penalties for multiple mistakes.
Leagues that incorporate multiple types of contracts require owners to put a priority on creating salary cap flexibility by rostering as many unguaranteed or partially guaranteed salaries as possible while only taking calculated risks when making fully guaranteed contract offers.
Conclusion
No matter what type of salary structure your league follows, it’s important to build your franchise’s roster construction strategy around the penalties associated with releasing players.
We’ll continue building on these strategies next week with Salary Cap Confidential: Managing the Salary Cap and Contracts.
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