Salary cap formula winning teams rely on…

The secret salary cap formula successful NFL teams rely on
For NFL teams, it’s not just about staying under the salary cap, it’s also about keeping your salaries balanced.

By Bill Connelly

https://www.sbnation.com/2018/3/15/17114596/nfl-free-agency-2018-salary-cap-formula-winning-teams

The firehose has been turned on. It’s Free Agency Week in the NFL, and the reported signings have been spewing in faster than a website’s pre-writes can account for them.

As wild and active as the offseason free agency period can be, it obviously features fewer marquee shifts and home run swings as we see in sports like European soccer. There, the only financial restrictions certain clubs face are in their own respective imaginations. In the NFL, however, the salary cap means most free agent moves are more of the second- or third-tier variety.

The logic of a salary cap is pretty intuitive — it’s right there in the title. There is no Real Madrid, no 2000s-era New York Yankees, to woo every single available (or, in some cases, previously unavailable) player and absorb as many obscene salaries as possible. The NFL’s strict enforcement of its salary cap has rendered the league far more parity-heavy than even other American sports leagues.

The cap, combined with the small, 16-game sample, has created the ultimate in uniformity. Among the country’s four major leagues — NFL, MLB, NBA, and NHL — the NFL easily had the lowest correlation of year-to-year success.

Correlation between a team’s record in one year and the next*
NFL (2016 to 2017): 0.259
NHL (2015-16 to 2016-17): 0.331
MLB (2016 to 2017): 0.347
NBA (2015-16 to 2016-17): 0.849
* MLS manages to go even further than the NFL. The correlation between a team’s points in the 2016 season and its points in 2017 was both tiny and negative: minus-0.126.

Parity is the NFL’s best and worst trait (as it pertains to matters on the field, at least). Because your fortunes can so dramatically swing from season to season, every fan base this side of Cleveland begins a given season with renewed optimism and evidence for hope.

At the same time, outside of New England, building dynasties and long-term rivalries has never been more difficult. Even putting together two years of success is hard — of the top four teams in 2017’s DVOA rankings, three ranked 20th or worse in 2016, and of the top three in 2016, two fell to 13th or lower in 2017.

The margins are infinitesimal, and the cap has made the Good Player on a Rookie Contract intensely valuable. The more cheap players you have playing at a high level, the more expensive players you’ll be able to afford.

Still, there’s an art to cap management that goes beyond squeezing guys into a pre-defined space. The balance of cap space is and has been vital to success.
In his legendary 1997 tome Finding the Winning Edge, Bill Walsh wrote, “One aspect of the cap that is a major concern for all parties is the disproportionate amount of funds being committed to a smaller and smaller group of players.” He noted that in 1996, NFL teams spent 51 percent of their total cap allotment on their 10 most expensive players.

With the restructuring of rookie contracts, plus a few other changes through 20 years of collective bargaining, the ratio has barely changed. Using data from spotrac.com and using only players on the active roster (no injured reserve, no dead contracts), we find that in both 2016 and 2017, teams used an average of 48 percent of their cap on their 10 most expensive active players.

As it turns out, a lot of the best teams play a pretty dangerous game: the more you spend on your top 10 salaries, the better your team is going to be … right up until you’ve spent too much.
The goal is apparently to get as close as possible to 60 percent without going over. If you get that ratio right and keep the right players healthy — obviously the former is a little bit more in your control than the latter — you have passed the roster balance test.

The art of salary cap balance
Pct. of cap occupied by top 10 (2011-17) Teams Avg. wins Avg. scoring margin Std. error (scoring margin)
0-39% 13 4.8 -88.9 28.9
40-43% 30 6.4 -42.3 15.1
44-47% 51 8.0 +0.2 13.0
48-51% 46 8.3 +22.2 15.0
52-55% 50 8.9 +26.0 15.3
56-59% 26 9.2 +28.4 24.0
60+% 8 5.5 -89.5 22.9
In terms of the cap percentage occupied by your top 10, eight teams finished 2017 at between 50 and 59 percent; six of them ended up with a positive scoring margin: Minnesota (plus-130), Pittsburgh (plus-98), the Los Angeles Chargers (plus-83), Kansas City (plus-76), Atlanta (plus-38), and Detroit (plus-34). Three of those six (the Vikings, Chargers, and Lions) were particularly improved in 2017, raising their scoring margin by at least 46 points each.

As always, one should note that correlation is not causation. Simply attempting to approach a certain distribution is not what made certain teams good — success is at least a partial result of both staying healthy and, again, having good players on rookie contracts.

Still, looking at this balance can be instructive. When it comes to the percentage of salary your top 10 contracts occupy, the closer you can get to 60 percent without going over, the more likely you are to be good. But if you go over 60, you’re probably too top-heavy to thrive.

The exception to the rule: The 2017 Los Angeles Rams
In the sample of eight teams that went over 60 percent (they were at 63.1 percent), last year’s 11-5 Rams were one of just two that had a winning record* and were the only team with a scoring margin higher than plus-60 — at plus-149, they had the third-best margin of the year.

They bucked the trend basically by having a lot of big contributors on rookie contracts:

QB Jared Goff, the first pick of the 2016 draft, threw for 3,804 yards and 28 touchdowns.
RB Todd Gurley, the 10th pick of the 2015 draft, combined 1,305 rushing yards with 788 receiving yards as a first-team all-pro.
WR Cooper Kupp, a third-rounder in 2017, caught 62 passes for 869 yards.
WR Sammy Watkins, the 10th pick in the 2014 draft, caught 39 passes for 593 yards.
WR Pharoh Cooper, a fourth-rounder in 2016, averaged 27.1 yards per kick return and 12.5 yards per punt return and caught 11 passes.
TE Tyler Higbee, a fourth-rounder in 2016, caught 25 passes for 295 yards.
DT Aaron Donald, the 13th pick of the 2014 draft, had 11 sacks on his way to first-team All-Pro honors.
S Lamarcus Joyner, a second-rounder in 2014, had 44 tackles and three interceptions.
S John Johnson, a third-rounder in 2017, made 50 tackles.
Per Spotrac, these nine productive players combined to take up just 12 percent of the Rams’ cap space. That left plenty to spend on the likes of receivers Tavon Austin and Robert Woods (14 percent of cap), linebackers Mark Barron and Robert Quinn (14 percent), cornerback Trumaine Johnson (11 percent), defensive tackle Michael Brockers (7 percent), and left tackle Andrew Whitworth (six percent).

Having this many cheap players thrive was incredibly fortuitous. It’s also unsustainable, as eventually you have to re-sign some of these guys. Donald, for instance, will soon be far more expensive.

With the Rams placing the franchise tag on Joyner, we’ve already seen Quinn get traded and Watkins leave for Kansas City via free agency. Johnson is also a top free agent, Marcus Peters and Aqib Talib have been brought in as replacements, and there are even more big decisions on the horizon for the Rams, if not in 2018, then in 2019.

* The other, the 2015 Denver Broncos, went 12-4 and won the Super Bowl despite a scoring margin of only plus-59. Including the playoffs, they went 11-3 in games decided by one possession. They were a unicorn, an exception to almost every possible rule.

The annual exception: The New England Patriots
If we look at teams by win total, we see that those who spent a little more on those top 10 players, and keep them healthy, tended to get what they were hoping for from them.

Wins and cap management
Wins Teams (2011-17) Avg. scoring margin Pct. of cap occupied by top 10
13-15 16 166.3 52.5
12 17 118.8 50.5
11 21 83.9 50.3
10 22 69.0 51.8
9 24 22.7 49.1
8 28 -14.0 49.5
7 26 -24.3 47.9
6 20 -55.8 47.4
5 14 -84.4 45.7
4 17 -125.9 46.6
0-3 19 -160.2 47.5
Focusing on just scoring margin, there’s a similar story. But in each case, there’s a Foxborough-based exception. From 2011-17, 16 teams had a scoring margin of plus-150 or higher. Six of them were the Patriots (2011, 2012, 2014, 2015, 2016, and 2017).

Average percentage of cap occupied by top 10 salaries (6 New England teams): 45.7 percent
Average percentage of cap occupied by top 10 salaries (10 other teams with a top scoring margin): 52.1 percent
The 2011 Saints (13-3 with a plus-208 scoring margin), 2013 Broncos (13-3, plus-207), 2011 Packers (15-1, plus-207), 2012 Broncos (13-3, plus-192), and 2015 Panthers (15-1, plus-1912) averaged 14 wins and a scoring margin of plus-200. Their top 10 contracts were right in that mid-50s sweet spot: 55.3 percent.

The Patriots, meanwhile, kept right on diving into dumpsters and finding prime role players. Aside from Tom Brady and a smattering of others at times (Vince Wilfork, Nate Solder, Logan Mankins, Wes Welker), almost no one has taken up more than about five percent of the Pats’ cap. It works for them because Brady is Brady and Bill Belichick is Bill Belichick. But it doesn’t seem to work for most.

So what can we learn by looking at teams’ top-10 salaries for 2017 and 2018?
Heading into the free agent signing period, it was easy to see which teams would be making moves and which would be needing to cut some dead weight.

Note: The figures I’m using to signify how much of the cap is occupied is different than Spotrac’s for 2018, which don’t seem to be accounting for the entire cap at the moment.

2018 cap management
Year-Team Pct. of cap occupied by top 10 (2017) 2017 scoring margin ~Pct. of cap occupied by top 10 (early-2018) Diff
MIA 39.3 -112 70.7 31.3
NYG 46.5 -142 63.4 17.0
GB 47.1 -64 62.3 15.2
PIT 58.4 98 62.0 3.7
DAL 44.8 22 61.3 16.5
BAL 42.6 92 60.7 18.1
CAR 50.3 36 59.6 9.3
ARI 40.3 -66 59.2 18.9
ATL 54.8 38 59.1 4.3
SEA 51.2 34 58.6 7.4
PHI 45.4 162 57.9 12.5
LAC 54.2 83 57.7 3.5
OAK 55.4 -72 57.2 1.9
DET 52.9 34 57.1 4.2
DEN 54.6 -93 55.4 0.8
WAS 47.0 -46 54.5 7.5
JAX 49.1 149 54.4 5.3
KC 56.2 76 53.6 -2.6
NE 46.1 162 52.3 6.2
LAR 63.1 149 51.7 -11.4
CIN 52.8 -59 51.5 -1.3
MIN 53.4 130 48.5 -5.0
HOU 44.5 -98 45.1 0.6
NO 42.4 122 45.0 2.6
TB 49.8 -47 44.5 -5.2
CLE 31.9 -176 43.2 11.3
IND 41.6 -141 42.5 0.8
TEN 44.7 -22 41.3 -3.3
CHI 43.2 -56 40.4 -2.7
SF 31.6 -52 40.4 8.8
BUF 45.7 -57 38.1 -7.7
NYJ 44.8 -84 31.0 -13.9
Miami suddenly has a lot more salary to deal with at the moment. Since we’re looking at active players, Ryan Tannehill came back on the board in 2018 after missing most of 2017 with injury, and until he’s cut, Ndamukong Suh is occupying nearly 15 percent of the cap by himself.

This is where things stood on the brink of the signing period. We will revisit this periodically through the offseason to see whose rosters are beginning to balance out nicely, and whose are on the cusp of being a fiery mess