Keeping Track Of Spending
Posted by Sam
The Eagles were 18th in cash spending in 2009, according to an article published yesterday in USA Today.* That alone is not especially meaningful – spending rankings vary markedly from one year to the next, as evidenced by the Cowboys being 13th and the Redskins 27th on the same list. To really understand how your team is spending, you need a longer window.
However, last year Jason La Canfora published cash spending from 2004-2008 for each team. Combining the USA Today numbers for 2009 with those previous numbers, we have a nice six year ranking of team spending. The Eagles are 20th (click for full size).
Now, spending does not guarantee winning, as we all know. Of the top 5 teams, the Redskins, Cowboys and Texans have combined for 18 seasons in those three years, with just 5 playoff appearances in those 18 years and just 2 playoff wins.
The Eagles absolutely are one of the best teams at getting value out of the dollars they spend. As an example, look at a chart of wins per dollar spent from 2004-2009, a category in which the Eagles are 5th:
However, there is certainly a significant connection between spending and winning. The following table shows all of the teams that have appeared in the Super Bowl over that time period, and where they rank on the spending list.
Admittedly, a Super Bowl appearance may lead to increased player costs. But the Saints rank highly on this list despite not having incurred those costs yet, and the Eagles and Patriots are relatively low, despite being the teams in the 2004 Super Bowl. So I suspect that it works the other way around. Further, it is notable that with the exception of the Eagles and the Bears, th teams are all in the top half of the total spending list.^
All of this is why I find it difficult to say conclusively whether or not the Eagles are cheap. They spend wisely, but that doesn’t mean that they are spending enough. If the cap is binding – all teams are spending to the cap – then the efficiency is essential. But it hasn’t been since 2006 – the disparity between teams spending has grown. And in that environment, spending a little bit more to get a little bit more return makes sense. If because you are getting zero return (in terms of wins) on cash that you could be spending, but aren't. Even a slightly positive return on marginal dollars spend would increase your wins. Assuming that is your goal.
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As I have mentioned before, one of the next steps for the union is to threaten collusion charges against the NFL. The rumblings included in the USA Today article mentioned above are not subtle in the least:
"I find it interesting that in a sport that prides itself on competition amongst teams, you see almost a uniform decrease (in payrolls)," said [NFLPA Executive Director DeMaurice] Smith. "Virtually all of them are down."
Smith, wary of collusion, said the union will monitor two key indicators:
• Significant rollbacks. "That's something you wouldn't expect in a completely free market," Smith said.
• Spending by the 10 lower-revenue teams that received a collective $200 million in supplemental revenue sharing after a ruling by the special master overseeing the collective bargaining agreement. "That's 'found money,' " Smith says. "You have 10 of the lower-market teams with an extra $20 million they didn't budget for. How can you not spend it?"
Now, the offsetting factor is the fact that it isn’t clear who the money is supposed to be spent on – the changes in restricted free agency caused a temporary change to the market that I am certain will be used to explain, to a large extent, the roll-back in spending. Further, collusion is difficult to prove.
But the thing I haven’t seen yet is how teams spent cap dollars in 2009. The reason that matters is that the salary floor was in cap terms. If a team was above the floor by a good extent in 2009, it is hard to argue that the floor was a constraint – if you are $5 million above the floor, the argument would go you could have cut your payroll by $5 million in cash easily and chose not to. In 2008, only one team showed evidence of being floor constrained relative to the $100 million floor in place that season. But that was before the financial crisis. If teams reduced their cap spending as much as possible in 2009, that certainly supports the idea that the floor was a constraint. If not, well, it begins to support Smith’s claim above.
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* Note that this is not to be confused with the USA Today salary database. Those numbers are notoriously unreliable. For example, they often fail to differentiate between earned and unearned incentive clauses, and over the past few years, they have been uploaded at mid-season and therefore fail to capture many extensions that occur later in the year. If you run those numbers against the 2004-2008 numbers in the La Canfora article, they are substantially off.
^ As a side note, is anyone else stunned that the Cardinals ranked as high as they do? Their reputation certainly doesn’t equal the reality for that franchise.

