Q. I don’t really have a full grasp on LTBE and NLTBE contractual bonuses. Could you please explain the difference?
ANSWER: The categories for incentives are specifically prescribed in the league’s CBA and can only be applied to the position that the player plays. Incentives are categorized as Likely To Be Earned (LTBE) or Not Likely To Be Earned (NLTBE) based on whether the player has reached that milestone in the prior season.
For example, if WR Kamar Aiken has an incentive that pays him an additional $500K if he reaches 75 catches in 2016, that incentive would be characterized as a LTBE incentive since Aiken had 75 catches in 2015. If the incentive threshold instead is 80 catches, then the incentive would be characterized as NLTBE, since he did not reach that threshold in 2015.
LTBE incentives fully count against the Cap in the year they could be earned, while NLTBE incentives do not. If the LTBE incentive is not actually earned, then the team receives a credit against the following year’s Cap in that amount, whereas an earned NLTBE incentive counts as a negative adjustment on the following year’s Cap.
So, in the Aiken example above, a $500K LTBE incentive would count against the 2016 Cap and if unearned, the Ravens would receive a $500K credit on the 2017 Cap. Conversely, if the incentive was NLTBE and Aiken reached the threshold, the Ravens would receive a negative adjustment of $500K against the 2017 Cap (since the incentive did not count in 2016, but was earned).
The Ravens rarely use LTBE incentives and have generally only used NLTBE incentives with (1) player coming off of injury or (2) when facing a tight Salary Cap. Both situations allow the team to lessen the player’s Salary Cap number in the present year, but also provide the player with the opportunity to receive more pay if he stays healthy and performs well.
Q. So, the new rules allow a team to roll over unused cap space from one year to the next, correct? Is there a limit to the amount that can be rolled over? If there’s unlimited rollover, doesn’t it always make sense to split a post-June 1 cap hit between two years, since it preserves your flexibility for the current year?
ANSWER: Yes, teams can roll over unused Cap space from one year to the next and there is no limit to the amount they can carry over. Using post-June 1 releases certainly have their utility and as you suggest any excess Cap space created by a post-June 1 release can be carried over to offset the portion of dead money that the release pushes into the following year. So, yes, that does act as a mitigating factor for using the post-June 1 release and can provide more Cap flexibility as an ongoing practice.
However, the major drawback to post-June 1 releases is that the Cap space created by the release isn’t realized until after June 1, so that Cap space isn’t available until then. For a team like the Ravens, that may not be an issue for signing outside FAs (since that’s not often their approach), but it could be a hindrance to re-signing some of their own pending FAs (i.e. PK Justin Tucker and/or OT/G Kelechi Osemele).
That said, a combination of pre- and post-June 1 releases is probably the most common approach. Most certainly, a reasonable amount of dead money carried over from year to year is not a bad thing, given that teams can somewhat minimize that by carrying over excess Cap space too.
Q. Also, what’s to stop a rebuilding team from spending at or near the cap floor for a year or two to build up a cushion, then getting to overspend for the next 3-5 years as they get competitive again?
ANSWER: That is pretty much the tact the Oakland Raiders have taken over the last couple of offseasons. They have spent little in the way of cash over those years. The only limitation on this approach is the CBA mandated minimum spending floor that requires teams to spend 89% of the Cap in cash over the 2013-16 season (same applies to the 2017-2020 timeframe). So, yes, a team could spend, say, 70% over the first 3 years of that period and then spend big in the 4th year to reach the 89% threshold.
Q. If the Ravens can’t get a new deal with Flacco which players do you expect to be cut? Who would most likely stay if the Ravens were able to get a deal done with Flacco?
We all know that certain guys are gone no matter what but there must be some who they want to keep but just won’t be able to if that deal with Joe doesn’t happen this year.
ANSWER: Obviously, I’m not privy to their plans, but if they don’t get something done with Flacco, they are going to have to find Cap space elsewhere. Right now, prior to any moves being made they project to be right at the Cap (assuming a projected Cap of $153M). So, it would all depend on what kinds of moves they would want to make and how much Cap space that’s going to require.
Granted, they could pretty much decide to sit free agency out totally and return with last year’s team largely intact and hope they fill holes through the draft.
But, even then, they’ll need to create at least enough to sign their draft picks and to carry into the season for injury replacements.
As such, there are guys that they appear to be expecting to hold onto – CB/S Lardarius Webb, LB Daryl Smith – who could become, by necessity, Cap casualties. Conceivably, that could include LB Terrell Suggs as a post-June 1 release to maximize his 2016 Cap savings.
Heck, not that I’m expecting it, but WR Steve Smith represents $3M in Cap savings, with only $1.167M in dead money remaining on the Cap. He would seem to be indispensable, but his release is one place where they can get the most Cap space, with the least dead money, from one release.
It could also mean having to decide whether to forgo the Franchise Tag with PK Justin Tucker and instead hoping to be able to sign him after he reaches the open market (since the 2016 Cap number on a long term deal would be several million dollars less than the approx. $4.5M Franchise Tag).
So, while it may be wise from a Cap perspective to wait a year to redo Flacco’s deal, it would also likely mean a very lean roster for 2016 (unless they are planning to make some deep cuts).
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