In how they approach their team’s finances, that is

The title of this piece has two interpretations. Yes, as the New York Giants plunge into their off-season process of team building, general manager Joe Schoen must confront the fact that the NFC East champion Philadelphia Eagles have considerably more talent on their roster than the Giants, and somehow that gap must be narrowed before the Giants can be considered a legitimate Super Bowl contender.

There’s a reason for that, though, that has nothing to do with Eagles’ GM Howie Roseman’s ability to identify and secure good players. To be sure, Roseman has done a very good job over the past decade of finding good players, especially on the offensive and defensive lines, as we discussed previously. But he’s made his share of mistakes, too - Carson Wentz, Nelson Agholor, J.J. Arcega-Whiteside, Jalen Reagor.

The other interpretation of the title refers to how Roseman manages to aggregate talent while following the financial rules of the NFL. It’s well documented that Roseman manipulates the salary cap to the maximum extent possible by deferring player costs to later years. There are several ways to do this, but the financial vehicle of choice in the NFL is the signing bonus - money completely paid to the player at the time he signs his Contract, but the cost of which is spread out over multiple years to reduce the player’s salary cap hit in the first year.

This device allows teams to spend more money in any given year than the salary cap number would indicate. In 2022, 75 percent of teams spent more cash than the cap amount. The Giants were not one of them, though they like other teams do use signing bonuses to defer costs and lower cap hits in the short term.

Into the void

Spreading out signing bonuses over the length of the contract for accounting purposes is very common. But it’s possible to defer the costs even further into the future by adding voidable, or simply “void”, years to a contract. A Void year is a year after the player’s contract ends in which the team is still paying the costs of the signing bonus even though the player is no longer on the team. Void Years are mostly a recent phenomenon, having come into vogue in 2021 when the salary cap decreased from the 2020 value due to the pandemic. They have remained popular since then, even though the cap has risen every year since.

Teams differ in their usage of void years, depending on their need given the players they have under contract, or philosophically because of their desire to maintain cap space. The two Super Bowl participants this year are at opposite ends of this spectrum, according to Over The Cap. The Super Bowl champion Kansas City Chiefs have no void years in any of their contracts. They use signing bonuses like every other team, and they restructure contracts when necessary to create cap space in the current year. But no void years at the present time.

The participation trophy Eagles, on the other hand, are champions of the void year competition. Let’s look at how the Eagles’ finances are structured. They currently have 18 player contracts with void years (numbers below in millions of dollars):

The first populated year for each player is the year in which he becomes a free agent if not re-signed, e.g., six of the Eagles’ 18 2023 free agents (Cox, Hargrave, Bradberry, Seumalo, White, Edwards) have one or more void years in their contracts. If they reach agreement on new contracts with the Eagles, each void year becomes part of the yearly cap hit for that player. If they do not reach agreement on a contract, then they become free agents and the total of all years’ void cap hits accelerates to the present year, i.e., is charged against the Eagles’ 2023 cap as “dead money” (reduced cap space). Those are the columns on the right side of the chart. Jason Fitzgerald of Over The Cap discusses the example of Tom Brady’s final contract with the Patriots to illustrate the void year - dead money concept.

Roseman’s use of void years is among the most aggressive in the NFL. He routinely “leverages” current costs far into the future against anticipated increases in the salary cap that will cover them when the time comes to pay. In 2023 he only has $11.9M in void year costs for those six free agents, but the amount grows to $36.8M by 2025. In the extreme case that he does not reach agreement with any of the six free agents above on new contracts, the Eagles would be on the hook for $36.4M in dead money in 2023, and if the same were to happen to Darius Slay, Jason Kelce, Brandon Graham, and Derek Barnett next year, a whopping $42.5M in dead money in 2024.

The Eagles had $3.5M in effective cap space (after the anticipated costs of signing their 2023 draft class) as of last week, so a mass exodus of their 2023 free agents would necessitate some combination of contract restructuring, trading away current for future draft picks, and cuts of other players without void years to offset dead money from the accelerated void year. That mass exodus began recently with the Eagles voiding the contracts of Bradberry, Edwards, Hargrave, and White:

That’s $18.8M of dead money added to the ledger of a team that started the day with not nearly enough cap space to absorb it. Changes are coming.

A-voiding the void (mostly)

By comparison, Joe Schoen has made good on his promise to get the Giants’ finances into better shape than he found them in when he arrived. He hasn’t been able to completely avoid void years, though. Here is the Giants’ void year and potential dead money situation at the moment:

None of the Giants’ potential 2023 free agents has any void years in their contracts. (Sterling Shepard is already a free agent carrying a $4.2M 2023 dead money hit. There is also $3.7M in dead money from the Kadarius Toney contract.) There are a few for 2024, however. Kenny Golladay is listed with an asterisk because although he is not a free agent until 2025 and has a modest $3.4M void year then, he is almost surely going to be released. This will accelerate that $3.4M plus his 2023 and 2024 costs into a total of $14.7M 2023 dead money, if he is cut before June 1. To understand that we can look at the details of Golladay’s contract:

Golladay was signed by Dave Gettleman to a four-year, $72M contract in 2021 with a $17M signing bonus that is prorated over the maximum five years allowed. $3.4M x 3 = $10.2M of that signing bonus has yet to be charged to the salary cap. Assuming he is cut, that $10.2M will accelerate into 2023, plus the $4.5M guaranteed portion of his 2023 $13.25M salary, for a total of $14.7M in dead money this year.

But that is better than the full $13.25M base salary + $3.4M prorated signing bonus + $4.5M roster bonus (You made the 53! Here’s $4.5M for you!) + $0.25M workout bonus (Thanks for showing up for scheduled off-season workouts! Here’s $0.25M for you!) = $21.4M he would cost if he remained a Giant, for a 2023 cap savings of $6.7M.

The Giants could wait until after June 1 to cut Golladay and get a 2023 cap savings of $13.5M instead ($6.8M of which can only be spent after June 1). But that would move the remaining $6.8M into 2024. Schoen might decide to do that if there are free agents he’d like to sign but can’t with the amount he saves from a pre-June 1 cut.

He could, e.g., postpone signing the highest 2023 draft picks until after June 1, leaving money available before then to sign a mid-level free agent or two. But the $6.8M less in cap space in 2024 would have to be weighed against the rest of the Giants’ 2024 cap situation. Leonard Williams, Adoree’ Jackson, Tyrod Taylor, and Graham Gano all have 2024 void years, totaling $11.3M, and Williams at least is bound to be extended beyond 2023 to reduce his $32.3M 2023 cap hit.

Save for tomorrow or spend today?

There is no clear answer to the question of whether deferred costs and void years are a better strategy than “living within your means” in a salary-capped NFL. We routinely defer costs in our daily lives when we buy a new car, take advantage of college loans to get a degree, or take out a mortgage to purchase a new home. In the short-term, adding void years can certainly be justified, especially for a team that senses that a Super Bowl is within its grasp if only it can add that one impact veteran player at a position of need. Howie Roseman goes one step further, envisioning the Eagles as perennial contenders and thus consistently making void years and possible dead money an important part of his financial planning.

Joe Schoen on the other hand learned at the feet of Buffalo Bills GM Brandon Beane. According to the Bills’ SB Nation site Buffalo Rumblings, “Beane has said in the past he doesn’t like using this approach, likening it to a credit card. You rob the future to pay for the present.”

But recently, Beane has changed his tune. That’s what Super Bowl aspirations and a franchise quarterback on a six-year, $43M per year average annual value contract will do. There are no void years in Josh Allen’s contract, but Beane has begun to add a modest amount of void year money to other contracts, $3.2-4.3M every year between 2023 and 2026.

This could be relevant to Joe Schoen’s 2023 strategy. Schoen is faced with trying to sign Daniel Jones and Saquon Barkley to new contracts this year, while contract extensions for Dexter Lawrence, Andrew Thomas, and Xavier McKinney loom in the future. Can void years help him keep all these players in blue while targeting a Super Bowl in the coming season, or the next, or the one after? A Super Bowl in the 2023 season seems ridiculous at first glance, but the Giants did finish in the final eight in 2022 after all, and the Cincinnati Bengals managed to almost win the Super Bowl the previous year after 2-14 and 4-11-1 seasons before that.

All eyes on Daniel Jones

Daniel Jones seems like the best candidate for a contract that contains void years to make it work. We’re hearing numbers like $35M+ per year for Jones, though his recent change in representation calls even that number into question. If Jones’ 2022 season was not a mirage, and he will take another step forward with better receivers and a better offensive line, that compensation is not unreasonable by current NFL standards. It would put him ninth in the NFL in average annual value at the moment, and probably a few spots lower than that once Lamar Jackson, Derek Carr, Justin Herbert, and Jalen Hurts sign new/extended contracts.

The Giants currently have $43.8M in 2023 effective cap space, third in the NFL behind only the Bears and Falcons. $35M+ annually would use up a lot of that cap space. (That’s why the Giants would prefer not to put the $32.4M non-exclusive franchise tag on Jones if they can avoid it.) But NFL contracts are rarely structured with constant costs over time. The chart above shows that while Schoen has reluctantly added void years for modest amounts of money, there is none so far beyond 2025.

Imagine as an illustration a three-year contract for Jones with a $20M signing bonus spread over four years and yearly salaries of $15M, $30M, and $45M, with Year 3 not guaranteed. That’s $110M total ($36.7M per year) but with a cap hit of only $20M in 2023, which eats up less than half the Giants’ cap space (much less once Golladay is released and Williams extended).

The out in Year 3 means that only 59 percent of the contract is guaranteed. Compare to the six highest QB contracts: 67 percent of Aaron Rodgers’, 51 percent of Russell Wilson’s, 45 percent of Kyler Murray’s, 100 percent of Deshaun Watson’s, 14 percent of Patrick Mahomes’, and 39 percent of Josh Allen’s contracts are fully guaranteed.

The void year would take $5M from the Giants’ cap space in 2026, a year in which they have no void money yet. (Maybe Joe Schoen planned it that way?) If Jones regresses and the Giants move on after year 2, they will have only paid him $20M (bonus) + $15M + $30M = $65M, i.e., similar to the 2023 franchise tag number for two years. There would, however, be $10M in dead money in 2025.

That would be a responsible use of the NFL’s void year rules. It would be fair to Jones, would give the Giants the chance to move on in two years if he does not perform with a better team around him, and would allow the Giants to negotiate a Barkley contract that uses a similar philosophy while leaving room to add a mid-tier veteran linebacker, and an offensive lineman, for example, in free agency.

Or consider a more aggressive commitment of four years, $170M total value ($42.5M per year, higher than what Dak Prescott got from Dallas), with Years 3 and 4 non-guaranteed and a $30M signing bonus spread over 6 years (i.e., including 2 void years of $5M apiece in 2027 and 2028). That would put Jones sixth in the NFL in average annual value, just behind Josh Allen, and about 10th once Jackson, Carr, Herbert, and Hurts sign new contracts.

With salaries of $20-30-40-50M in the four years, a contract like that would produce cap hits of $25-35-45-55M over the contract period. The out after Year 2, if exercised by the Giants, would reduce the total money paid out to $30M (bonus) + $20M + $30M = $80M (47%) or an average value of $40M per year, but with $20M in dead money due to the four void years being accelerated into 2025. A bigger pill to swallow, but still modest compared to what Howie Roseman has done and will almost certainly do for Jalen Hurts.

The non-guaranteed out years are the key to both contracts, much more so than the annual average values that people obsess about. Two guaranteed years is plenty of time to find out if Jones can be elite with better weapons and protection. If he plays like a top five QB by 2024, then the Giants will be happy to pay him the Mahomes-like higher Year 3 and 4 salaries under the likely higher salary cap amounts in those years. If he regresses, the Giants can move on with only limited damage from the four void years, not so different from what the Eagles did when Howie Roseman decided that Carson Wentz was not an elite QB. Either way, Jones would get the same $80M in cash by the end of Year 2.