On the opening day of free agency, we were treated to the usual frenzied flurry of signings as many of the "top" free agents went off the board. At one point last night, for example, Sports Illustrated Peter King observed that 21 of the top 50 FAs had already inked new contracts. And, as is often the case, certain teams sign multiple players while others refrain from early participation. Yesterday, the Bears helped their running game by inking Martellus Bennet and Saints OT Jermon Bushrod; Indianapolis bolstered their defensive backfield by signing Greg Toler and Darius Butler (and added former Lions RT Gosder Cherilus); the Dolphins paid big money for WR Mike Wallace and linebackers Dannell Ellerbee and Phillip Wheeler. In addition, the Eagles and Chiefs were big day one players; each got multiple players to sign on the dotted line.
When teams sign players out of the free agency gate, they
tend to always overpay for their services. In his excellent "caveat emptor" post last month, O.C.C. offered up as one of his free agency lessons the stark reality that "You are going to overpay, regardless. To substantiate his argument, he cites Advanced NFL Stats' Brian Burke, whose point is worth repeating in its entirety:
The team that most grossly overestimates a free agent's value will very likely be the team that offers the most and wins the auction. The upshot is that free agents tend to be signed by the teams that erred the most in predicting their true worth. That's why free agent signings turn out so disappointing so often.
Burke's point is that free agency never offers good value. What I'd like to add is that this is particularly true during the opening period in which we currently find ourselves. Although the such signings annually garner headlines, they almost never fulfill their initial promise.
This is why the more well-run franchises opt out. Who did the Packers sign yesterday? The Patriots? The Steelers or 49ers? That's right, nobody. As is usually the case, the most stable franchises are nowhere to be seen during free agency's first week to ten days. Once the initial fire cools down, however, you'll see them offering reasonable contracts to solid veterans who were passed over in the initial wave. And, more importantly, you'll see them spending far less for roughly equivalent players.
This is a point made back in November by Grantland's Bill Barnwell, who pointed out that, in 2011, the Jaguars, by insisting that Bills free agent linebacker Paul Posluszny, who was one of three roughly equivalent young, starting MLBs on the market along with Stephen Tulloch (Titans) and Barrett Ruud (Buccaneers), just HAD to be their guy. With the fire of conviction, they shelled out for a six-year, $42 million deal to secure Posluszny's services at the beginning of the free agent period. But they essentially bid against themselves; neither Tulloch and Ruud were signed the first week. In fact, both were inked to low-market, one-year deals by patient teams, the Lions and Titans, respectively (Tulloch did end up signing a long-term contract with the Lions, and for far less money than Posluzny received).
As Barnwell points out in a more recent piece, such patience and financial sobriety are trebly important in the coming years, when we're likely to see a continued "flat cap." He begins with an overview of the yearly figures since the salary cap was instituted in 1994, which I find valuable enough to reiterate here:
|Year||Cap Figure (in millions)||Percentage Increase|
Note that the cap figure for a given year actually applies to the next season as we understand it. So, the "2012" cap figure is what teams are currently constrained by here, in 2013.
As can be clearly seen from this chart, the salary cap has increased at a fairly steady rate, with the exception of big increases in 1998, 2006 (when the way the cap was determined changed fairly drastically). Seeing this, NFL owners realized that, to maximize profits, they needed to curtail the rate of increase, so they reeled in the cap in the most recent collective bargaining agreement. So, not only did we see a marked decrease between 2009 and 2011, but the increase between 2011 and 2012 is the smallest since 1996-'97. To put it bluntly, the owners kicked the NFLPA's backside in the most recent negotiations, and we now have a "flat cap" for the forseeable future.
This doesn't impact every franchise this season, as there are still a lot of teams with money to burn; the Browns, Bengals, Eagles and Colts each have more than $40 million in cap space. However, once those and other similarly endowed teams get closer to the cap ceiling, free agent money will dry up (say, by 2015) and we'll be less likely to see the huge contracts we've seen the last two offseasons. What that means is that the big dollars deals we're seeing right now will soon be even more exorbitantly overpriced once the market corrects for the flat cap. A star defensive end might get 9 million a season now; in three years, the same player might well receive substantially less.
The upshot here is that, more than ever, its important to adhere to my foremost free agency commandment: "Thou Shalt Wait Until the Storm Passeth." As I wrote then, jumping into the early FA fray "is the epitome of short-view thinking." The teams that have the clearest sense of the NFL's changing free agent landscape will take the long view, and reap the benefits, not only in 2013, but, more crucially, in the flat cap years to follow. Of course, for coaches and GMs with a mandate to "win now," this is easier said than done. As Barnwell writes:
Identifying a market inefficiency is one thing. Acting on it, though, is another. It's easy for me to sit here and look at the market and say that it's going to be smarter than ever for teams to be patient and sit out free agency for a week, and that's because I don't need to make the playoffs next year to keep my job.
And this is why I'm actually glad that the Cowboys don't have a lot of (or, really, any) money to spend in free agency. Last year, you'll recall, they acted like a "win now" franchise, securing Brandon Carr's services by offering him a 5-year, $50 million deal. This year features a glut of able corners on the FA market (albeit none as gifted as Carr) - indeed so many that not all can be signed for beaucoup bucks; some are sure to sign low-money deals. Don't get me wrong, I love Brandon Carr. But if we compare him at the money Dallas paid to a lesser starting-caliber CB at, say $2.7 million per season, there's no question where the value lies.
Because they are cash-strapped, the only kind of shopping the Cowboys can afford is value shopping, which is what the best organizations do. Constrained by previous overspending, in other words, Dallas will be forced to behave like the most prudent organizations. In this instance, Jerry Jones may well have saved himself from himself. Given the leagues' future financial landscape, I can't see how that's a bad thing...