11/21/24
March 02, 2004
Manning re-signs with Colts: and gets a whopping $34.5 million signing bonus, according to reports. What's this about a salary cap in the NFL? With what the Redskins have been doing recently, and now this, the salary cap system seems to be under assault. How will these teams be able to stay competitive giving this much money out to just a couple players?
snarky $35m! that's almost $3.5m each time the Patriots sacked him this year! /snarky sorry, not a big peyton manning fan regardless. I try to look to the NFL as a model of where I'd eventually like to see baseball go, but admittedly, I don't know how the NFL cap works. Are signing bonuses taken out of the cap?
posted by jerseygirl at 12:08 PM on March 02, 2004
Signing bonuses are pro-rated over the life of the contract, up to seven years. That is, $35 mil / 7 years equals $5 mil that his cap hit will be annually, just on the signing bonus itself. Add to that his annual salary number, and that is his total cap hit. This year is just over $8 million for Manning. The issue is, were he to get hurt and have to retire (just for sake of arguement) this year, the Colts would have to take a $30 million cap hit next season, since they would have to move the remainder of his pro-rated bonus up. This would, of course, obliterate the team, and is worse-case scenario. It's complicated, but yes, the bonus is taken out of the cap.
posted by bcb2k2 at 12:14 PM on March 02, 2004
Also remember that contracts in the NFL are not guaranteed, but bonuses are. So three years in Peyton could be released, saving all that money but still having to pay the bonus as bcb2k2 mentioned. The NFL is unique in the sense that veteran players often end up playing for smaller sums late in their career because their old teams dump them before their contacts expire.
posted by vito90 at 12:21 PM on March 02, 2004
I don't find fault in this, but then again I'm a Skins fan and they've been working the cap like masters of late... Not that it has produced anything of course. For example, they're $11 million under the cap right now, saving room for Kearse or another big free agent. And it actually does not hurt a teams chances to field a successful team because contract negotiators are clever. Here is the way I believe Peyton's deal could break down. This is an un-educated guess, so take it for what it's worth. This should go a ways to explaining the cap and how it works, especially if some folks can correct me where I'm wrong... The article says we're talking about $99.2mm over seven years with $34.5mm in bonus money. First, bonus money (signing bonuses and guaranteed roster bonuses) is divided and counts against the cap for the same amount each year. In this case, it'll cost the Colts ~$5mm each year of the contract. Add that to the base salary for each year, which is back-loaded as is common these days.... Annual Salary Year 1: $4mm Year 2: $5mm Year 3: $6.7mm Year 4: $7mm Year 5: $10mm Year 6: $14mm Year 7: $18mm Players agree to back-loaded contracts because it allows for larger bonuses (see $34mm... The guaranteed roster bonuses act the same way, but all the team to defer some of that payment). The team gives them a ton of money today and low salaries at the front end of a contract to offset the big numbers. So, for the first four years of the contact, Peyton never costs more than $12 million against the cap. In year four he is $7mm in salary money and $5 million in bonus money. This is only one-seventh of the cap at the highest level in those years and that is not so bad in terms of trying to build around him with complementary pieces. Come the summer after that year the team can re-negotiate and do this all again or choose to cut Peyton. If they cut him --- and some of this is dependent on dates when changes are made --- all of the remaining bonus money is accelerated and counts against the cap for the coming year. So, with three years worth of bonus money remaining, the cap cost for the Colts after cutting Manning would be $15 million in year five. That would be "dead money" in the parlance of the NFL capologist (money paid against the cap for a player no longer on your roster). Note: I was writing this as others replied, but I'm not wasting it. Plus, I'd love to know where I'm wrong, if I am.
posted by 86 at 12:23 PM on March 02, 2004
That reads like shit. Sorry. Hopefully you can dig through it. Alas, I'm at work and didn't have a lot of time.
posted by 86 at 12:27 PM on March 02, 2004
Anyone who thinks their big-spending team has found a way around the cap is fooling themselves. The bill always comes due. The way Snyder is spending money, even if Washington becomes good under Joe Gibbs, they'll be dumping underpaid, overperforming young players to make room for the huge-salaried stiffs no one else wants.
posted by rcade at 12:42 PM on March 02, 2004
86 - Actually, in year three, according to the linked article, he is to receive a $9 million roster bonus, and a $10 million bonus in year 4, which is not part of the signing bonus. Therefore, his cap hit goes up significantly in those years, and subsequent years. This bonus was likely put in place to allow for wiggle room in renegotiations, but it's there regardless. Re-negotiating contracts year after year is the recipe for cap disaster. As a Jags fan, I should know this. This is what the Titans are going through now, and it's not fun.
posted by bcb2k2 at 12:47 PM on March 02, 2004
bcb2k2, I wondered about that, so I checked here... Note: If the roster or reporting bonuses were guaranteed they would be treated as signing bonus and the results would be different (i.e., they would be prorated over the term of the contracts). And all of the doubters may be right, but as a Skins fan I've been hearing about 'cap hell' for years and have yet to see it. We've had a hell of a different sort.
posted by 86 at 01:16 PM on March 02, 2004
I'm glad Peyton is getting this money. Now he can hire women who are willing to have his ass in their faces.
posted by wfrazerjr at 01:28 PM on March 02, 2004
86 - The roster bonus does get prorated, but only over the remaining years of the contract, not the total life of the contract from the beginning. When (if) Manning gets his $9 million roster in 2006, that money will get spread over the remaining four years of the contract.
posted by bcb2k2 at 01:44 PM on March 02, 2004
Ahhh, very well. Thanks. I'd adjust my findings, but I really should do some work this afternoon.
posted by 86 at 01:56 PM on March 02, 2004
Ahhh, very well. Thanks. I'd adjust my findings, but I really should do some work this afternoon.
posted by 86 at 01:56 PM on March 02, 2004
The Redskins have already paid for Snyder's free-spending ways -- Stephen Davis was dumped for cap reasons.
posted by rcade at 02:01 PM on March 02, 2004
Speaking of mismanaging the Cap Is it just me or are the Redskins seemingly the most impulsive team in football? Since when does a team give up a top five cornerback and a 2nd round pick, for arguably one of the top five running backs in the league when the upcoming draft has several quality runners? I guess the answer to that question is, right after the new ol' ball coach comes out of retirement, promptly demotes the 2nd year, star quarterback-in-the-making, to trade for an over-the-hill, oft-injured Mark Brunell--just to say he now has a veteran quarterback. Note to Joe Gibbs: There could be more good news--Vinny Testaverde is retiring and will soon be availabe to replace Brunell as the veteran, veteran quarterback. Here's an idea if you're in the Washington front office--keep Champ Bailey, trade down in the first round (they currently have the 5th pick), draft either RBs Kevin Jones or Steven Jackson and the second round pick is still yours. Don't get Brunell and start Patrick Ramsey, and the third round pick is still yours. As it stands, the Redskins now have two picks in the upcoming draft. That's a great way to rebuild a team that won five games last season
posted by pwilly at 02:11 PM on March 02, 2004
Pwilly, you are so wonderfully snarky. Can you do the same for my 49ers please? WFrazer, same to you. 86, your analysis is fine and understandable, don't sweat the minor discrepancies. My personal opinion is that I can't believe PManning got this deal, ain't no way he's worth it, and the Colts would have been better releasing him to test the market--then signing him at a much better price when he found the real temperature. At least they fixed that franchise player $18.4M number he would have gotten without this new contract.
posted by billsaysthis at 07:53 PM on March 02, 2004
I don't need to do anything to the 69ers, billy boy. If TO sticks around, he'll do it to them for me.
posted by wfrazerjr at 09:09 PM on March 02, 2004
I think this big deal foreshadows a move by the team to a place where they can get more revenues. The RCA Dome doesn't sell out and I don't believe has many luxury boxes compared to more recently built facilities.
posted by GoDizzGo at 03:45 AM on March 03, 2004
Don't get me wrong...I in no way fault the players for this salary escalation. If the owners didn't want to pay them this much to play a game, they wouldn't. However, to see these kinds of numbers coming from clubs in a league with what many regard as the best cap system in the land, how can a team realistically feel like it can win with just one or two players making such a large percentage of it's payroll every season?