Understanding the Value of Cap Space

By Max Mulitz

 

Using data from OverTheCap I ran a regression to look for a correlation between offensive and defensive spending as a percentage of the current salary cap and wins. I used data from the 2013-2015 NFL Seasons. Results below.

Coefficients: Estimate Std. Error t value Pr(>|t|)
(Intercept) -4.53424 3.16746 -1.432 0.15564
Offense 0.15781 0.04718 3.345 0.00119 **
Defense 0.13955 0.04458 3.13 0.00233 **

The way to read the chart is that for every extra 1% of Cap a team spends on Offense or Defense in a given year, they can expect to win ~0.15 extra games per season. It is interesting to note the coefficients for Offense and Defense are not significantly different from each other, so there’s no clear advantage for spending money on offense vs. defense.

This is a very preliminary look into valuing future Cap Space. Because NFL Teams are allowed to roll over unused salary from season to season, we can estimate the value of the rolled over space in terms of wins. For instance, if the Base Cap is 166 Million next year (as OverTheCap expects) rolling over 5 Million dollars from this season would be worth 5/166=3%*.15=.45 wins. So an extra 5 million dollars saved this year could be worth about .4-.5 wins the following year assuming the money is spent in the offseason at league average efficiency. It’s obviously not practical to try to pin down the exact value of $1 Million Dollars of Cap Space at any given moment as the actual value of money changes on availability of players, team needs, etc. but having some sort of baseline estimate of the value of cap space going forward is valuable as a rule-of-thumb starting point when deciding weather it is worthwhile to cut a high price veteran for cap space.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s