Tackling the Complex World of the NFL Salary Cap

For most fans, the National Football League (NFL) salary cap resembles rocket science.  Back-loaded contracts, cap floor…what does it mean in relation to the team they see during the season?  That’s simple – everything.

The NFL introduced a $34.6 million salary cap in 1994. In 2012, it’s $120.6 million. 

For the Baltimore Ravens, Vice President of Football Administration Pat Moriarty is the man charged with ensuring the team stays within that cap.  His job is less about Xs and Os, and more about dollars and cents.

Moriarty knows what it’s like to be on the other side of a negotiation.  A running back at Georgia Tech, where he majored in Industrial Management (subsequently earning a master’s degree in business administration from John Carroll University and graduating from the University of Baltimore School of Law), he signed with the Cleveland Browns in 1979 as an undrafted free agent.  Released in 1980, he spent the 1981 summer with the Miami Dolphins before being cut by the Michigan Panthers of the United States Football League (USFL). 

“I realized after being cut it was time to actually work for a living,” said Moriarty. “Since I had a business and finance degree, I took a job with a bank in Cleveland and was assigned the Browns’ account.”

 

The franchise was obviously impressed by Moriarty as they hired him as their Director of Business Operations in 1994. Since his first season coincided with the institution of the salary cap, he was responsible for deciphering the new system.   

“It was new to everybody and we had these new rules that were put into place,” Moriarty said. “But, like everything else, some of the rules were up to interpretation, so as you were negotiating contracts you were trying to apply these new rules.” 

Agents were also impacted by the new rules.  Tony Agnone is founder of Eastern Athletic Services, whose clients include Osi Umenyiora (Giants) and John Abraham (Falcons.)  After 16 years, his job now had a twist.

“You had to embrace the new system by learning the rules and knowing them backwards and forward,” said Agnone.  “The teams brought in ‘capologists’ – young, bright accountant/lawyer types – when they were developing the new system, so you had to learn a new language.”

Teams constantly evaluate their own talent. Moriarty is involved in assigning values to players, while monitoring what happens in the free agent market. 

“A large part of my job is literally going through deals, line by line, and then putting them into our system so we can calculate what the increases were with respect to various positions,” Moriarty said. “I’ll do valuation to see if the deal is really worth what is reported…I know what the cap is, but what is the cash.”

Moriarty is one of the original “capologists.” 

“There are few, if any, executives in the NFL who have negotiated as many player contracts as Pat,” said Ravens’ General Manager & Executive Vice President, Ozzie Newsome. “He is a significant factor in our winning, maintaining and managing our salary cap, and directing our football finances. He is highly respected among his peers in the NFL, by the agents he works with, and, certainly, by all of us at the Ravens. We see his impact every day.”

Moriarty feels the cap creates parity in the league. It forces clubs to put their resources to the players that are most productive. Through the draft, a team may get a productive player at a discount.  But if that player performs at a high level, teams are going to have to give him a better deal to keep him. 

“I tell Ozzie that you are a victim of your own success,” stated Moriarty. “The more successful you are in drafting good players, the more great players you will want to keep. But the system just doesn’t allow for it. Eventually, other teams will reap the benefits by taking your players.” 

When free agency starts, the Ravens tend to wait to see how things take shape.

Moriarty added, “I think it’s more of an art than a science and Ozzie has a tremendous knack for finding that right player for the right price - what he calls a ‘Raven deal.’ He normally accomplishes that by sitting back and letting that first wave of free agency hit the market.  Historically, after that first wave dries up a bit, the prices do drop.  As players begin to see their options become more limited, it allows the team to get a good player at a very good price.”

Moriarty cites the signing of Michael McCrary in 1997 as a prime example of waiting out that first wave and getting a good player. McCrary was coming off a great with Seattle, but didn’t get the deal he was looking for from the Seahawks. 

“By the time we began conversations, the market had dropped so we were able to get him for a very good price,” said Moriarty. “We subsequently ended up doing a larger free-agent type deal after his initial contract expired, so he eventually did get his money.  He became a great player for us and one of the main reasons, I believe, we made it to the Super Bowl”

The system does include items like compensatory picks to help clubs who lost more unrestricted free agents than they signed.  The formula determining those picks a team receives involves the salary of the lost players, playing time, etc.

Roman Oben played 12 seasons in the NFL.  Like Moriarty, he believes the salary cap allows for parity.

“Any team in the NFL could go 4-12 one season, then turn it around and make the playoffs the next year,” said Oben. “That can’t happen in other sports.”

He also feels it’s needed for teams to balance their finances.

“I think, with the new rules that require teams to spend a designated percentage of their salary cap, it helps make it more attractive for players to sign with teams like Kansas City or Cincinnati, as opposed to only focusing on larger markets,” explained Oben. “The salary cap gives low market teams a shot.”

Oben says players benefit as the leverage no longer falls solely to the team.  It’s as important for clubs to keep their starting quarterback as it is to hold onto solid players at other positions.  It maintains the overall quality of the team.

Opinions on the cap vary.

“My chief complaint is if you develop a player, you should be able to pay him what you want,” said Agnone. “Do teams really need to let a guy go that they took a chance on and is now a good player…just because they paid another.”

Teams and agents have ways to be creative with the cap.

Agents will seek guarantees in the latter years of a contract, try to front load deals or get base salaries guaranteed.  According to Agnone, these options protect the player as it wouldn’t make sense for a team to cut him since they’d take a hit on the cap. 

Every team wants to win a title.  Moriarty says that while there are creative ways to stay within the cap, making the cap work isn’t about finding loop holes in the system. There’s a bigger picture…how the Ravens’ manage their roster and salary cap in a way that maintains their competitiveness. 

Moriarty says he’s fortunate to be with “the best organization in the NFL.”  He’s been with Newsome for 18 years, and says it helps having a GM who has an appreciation for how the cap works to the betterment of the club.

In the end, the salary cap impacts the product fans see in the fall.