In the NFL, the term “cap wizard” is thrown around way too often, even being used to describe Carolina Panthers general manager Marty Hurney in the past. As time has gone on, Marty’s parties have left the Panthers “Hurn Burned” (tm, C, R) on many occasions. For example, having two top-tier running backs in DeAngelo Williams and Jonathan Stewart was great. Paying both like top-tier running backs was not. Some teams in the NFL consistently get great performances from players with relatively low cap hits. Teams like the New England Patriots, for example.
One of the ways Darth Belichick and the evil Empire have maintained their iron grip on the NFL is by bringing in players on cheap contracts with lofty incentives. Most of the time we see incentives as basic parts of any player’s contract. If you get 10 sacks, you get extra cash. If you throw for 30 touchdowns, here’s a bag of dough. While that is how it works for the players, the way it works for the teams relative to cap space is a bit more complex.
There are two main types of incentives: likely to be earned (LTBE) and not likely to be earned (NLTBE). Whether or not an incentive is likely to be earned depends entirely on how the player performed the previous season. If a player reached that threshold last year, then the incentive is LTBE. For example, if Christian McCaffrey had an incentive in his contract for getting 100 receptions this coming season, that would be LTBE since he did it last year. However, he did not reach 1,000 receiving yards, so an incentive for that in his contract for this year would be considered NLTBE. I know a lot of you are screaming “shut up, nerd” and “get to the point,” so here goes:
LTBE and NLTBE incentives hit the cap differently. An incentive deemed LTBE hits the cap this year. If the player reaches the threshold, then nothing changes since that money’s already been allocated. If the player doesn’t reach the threshold, then the team saves that much money on next year’s cap. These savings come because the team essentially “paid” a player for doing something before the season because it was LTBE. Since it was not earned, the team gets that money back. NLTBE incentives are the opposite. Since the player is not expected to reach the threshold, none of that money counts against this year’s cap. However, should that player hit or exceed the mark, the team would have to pay that player. Since the season would be over at that point, that cap hit gets moved to the following season. This can be a great way for teams without much cap space to sign great players at discount prices.
Take our Sith overlords in Foxborough for example. They were in desperate need of a starting caliber quarterback, but didn’t have the cap space to shell out $33M in guaranteed money to Teddy Bridgewater. Next year’s cap had enough space to pay someone a fair amount of money, so the Patriots did what they do best: they gamed the system. They signed former Panthers quarterback Cam Newton (cue Thanos: “and where did it lead you? Back to me...” gif). to a very low amount of guaranteed money, but with a ton of incentives worked in. Here’s the beauty of this signing: all of those incentives will be NLTBE. Cam Newton only played in two games last season, only threw for 572 yards, and did not find the endzone in any fashion. The Patriots could then offer Cam very low bars to hit and still label them as NLTBE. A hypothetical scenario could see an offer of an extra million dollars for playing four or more games, an extra $100,000 per touchdown exceeding 5 total touchdowns, and an extra two million dollars for exceeding 2,000 total yards. Those are bars that Cam could hit in a game and a half, if healthy, and in reality he is expected to earn those incentives. But because they are technically NLTBE based off last year’s stats, all of those incentives won’t hit the cap until next year, when the team has more flexibility.
This is an example of the type of low-risk, high-reward contract that has kept the Patriots at the top of the NFL for a dynasty that’s now old enough to buy lottery tickets. Other teams like the Panthers need to catch up, or just pray Darth Belichick eventually retires without a capable apprentice.