Signing Bonus and the Uncapped Year

[Mark Morse]

Just a thought, but if these players were signed in the uncapped year, couldn't the Patriots push all of the Signing Bonus into the uncapped year and save potential salary cap space in future years?

 

[pats1]

Just a thought, but if these players were signed in the uncapped year, couldn't the Patriots push all of the Signing Bonus into the uncapped year and save potential salary cap space in future years?

You can't push existing signing bonus into future years. Signing bonuses are prorated over the life of the contract.

 

[pencilneckgeek]

The question is not whether the bonuses can be pushed into future years, but rather if the Pats can address all their expiring contracts in the uncapped year next year (if there is one), put up sizeable guaranteed dollars to keep their key free agents, and then be at a competitive advantage when the cap comes back and all their bonuses have already hit during the uncapped year, rather than being amortized over the length of the contract.

 

[lurker1965]

Just a thought, but if these players were signed in the uncapped year, couldn't the Patriots push all of the Signing Bonus into the uncapped year and save potential salary cap space in future years?

depends on what the new CBA says. It might take signing bonuses in the uncapped year and make them count against the future cap immediately for all we know.* That is, if there is a future cap.


*Probably not, but my crystal ball is broken.

 

[jmt57]

If a team tried to maneuver around the (lack of) salary cap in an uncapped year, they could pay a larger portion of the contract as a salary rather than a signing bonus in that uncapped year. For (an extreme) example, with a 4-year $16 million contract they could pay a $13 million salary in year one (uncapped), and then a $1 million salary in each of the next three years.

The risk with this scenario is that you are assuming the cba will still be worked out and there is no lockout. The team will have already altered its cash flow by paying more real dollars now, in the uncapped year, with comparitively larger annual salaries. Then if there is a lockout the team has no revenue. That combination of a year with higher than normal expenses, followed by a year with no income could be devastating for many clubs.

One other consideration is that if some teams use this strategy, it is possible that there may be rules put in to place in regards to the salary cap to counteract it once the new cba is worked out. I'm sure if one team signs players to contracts such as this in the uncapped year, the other owners are not going to simply sit back and let those players have minimal impact on the new salary cap.

 

[Synovia]

For (an extreme) example, with a 4-year $16 million contract they could pay a $13 million salary in year one (uncapped), and then a $1 million salary in each of the next three years.

Thats a real good way to have players hold out in year 3, saying they're "underpaid". Players like to conveniently forget that they got paid upfront.


(see the eagles for many examples...or Deion Branch)

 

[Miguel]

The question is not whether the bonuses can be pushed into future years, but rather if the Pats can address all their expiring contracts in the uncapped year next year (if there is one), put up sizeable guaranteed dollars to keep their key free agents, and then be at a competitive advantage when the cap comes back and all their bonuses have already hit during the uncapped year, rather than being amortized over the length of the contract.

The current CBA covers the 2010 season, even if it is uncapped, so the proration rules would apply.

 

[patsfan13]

The current CBA covers the 2010 season, even if it is uncapped, so the proration rules would apply.

What about the case Miguel, where a player signs a 5 yr contract for 25M, no bonus first year salary 15m, and the subsequent years at 2.5M, would this allow a team to avoid future cap implications?

 

[Ring 6]

The current CBA covers the 2010 season, even if it is uncapped, so the proration rules would apply.

Theoretically. But a new CBA for 2011 would bring new rules. In 2011 what the new CBA says about signing bonusses previously paid will apply, not what the one that expires has said, right?
It seems the idea the op had was make an abnormally high portion of long term deals count on the 2010 cap, based on the rules in place, in anticipation the cap charges would be small when a new cba is signed, IF there is a cap then. Someone said pay a large year 1 salary which I think better represents the concept.
Personally, I think the players are going to be very unhappily surprised by what happens in an uncapped year.
NFL owners seem too smart and unified to run themselves out of business in uncapped bidding wars (on the other hand the cap is there becuase they didnt think they could trust themselves). I cannot see huge signing bonusses being tossed around with a lockout looming.
I think in the end uncapped=uncertainty and uncertainty=owners unwilling to spend heavily.

 

[Miguel]

What about the case Miguel, where a player signs a 5 yr contract for 25M, no bonus first year salary 15m, and the subsequent years at 2.5M, would this allow a team to avoid future cap implications?

From the CBA:
Amounts Treated as Signing Bonuses. For purposes of determining Team Salary under the
foregoing, the term “signing bonus” shall include:
(1) Any amount specifically described in a Player Contract as a signing bonus;
....
(5) The difference between the Salary in the second contract year and the first contract year when Salary in the second contract year is less than half the Salary called for in the first year of such Contract;

 

[Miguel]

Theoretically.

Either the proration rules apply in 2010 or they do not. I say that they will based on my understanding of the CBA.

Signing Bonuses.
(i) Proration. The total amount of any signing bonus shall be prorated over the term of the Player Contract (on a straight-line basis, unless subject to acceleration or some other treatment as provided in this
Agreement), with a maximum proration of six years, in determining Team and Player Salary, except that:
(1) Maximum proration shall be five years (a) for contracts entered into during the period after the last regular season game of the 2005 League Year through the last regular season game of the 2006 League Year
and (b) for contracts entered into during the period after the last regular season game of the League Year preceding the Final Capped Year through the end of the Final Capped Year.

 

[patsfan13]

From the CBA:
Amounts Treated as Signing Bonuses. For purposes of determining Team Salary under the
foregoing, the term “signing bonus” shall include:
(5) The difference between the Salary in the second contract year and the first contract year when Salary in the second contract year is less than half the Salary called for in the first year of such Contract;

One could be very creavitive in using this clause to 'manage' the cap and retain core players who are getting new contracts next year, it seems we have a few of those. BB will have his economist hat on me thinks.

Bet the Brain Trust already has worked out a game plan for the uncapped year.


It great as a fan to know the FO is the best in the business.

 

[jmt57]

From the CBA:
Amounts Treated as Signing Bonuses. For purposes of determining Team Salary under the
foregoing, the term “signing bonus” shall include:
(1) Any amount specifically described in a Player Contract as a signing bonus;
....
(5) The difference between the Salary in the second contract year and the first contract year when Salary in the second contract year is less than half the Salary called for in the first year of such Contract;

So in other words in the example of the 5-year $25 million contract, if they wanted to go with patsfan13's idea of $15 million in the first year then year two (2011) would have to be at least $7.5 mil; then about $800k in each of the last three seasons, right?

 

[mgteich]

You all seem to be trying to use an uncapped year to lessen the effect on future caps so that more future cap money will be available to pay players. My guess is that few owners are interested in increasing player compensation over the next few years.

Many have said that the cash is the same. It is NOT. Paying players in 2010 and having it all hit the books in 2010 with no future cap effects increase the amount that can be paid to players in future years.

 

[alamo]

If a team tried to maneuver around the (lack of) salary cap in an uncapped year, they could pay a larger portion of the contract as a salary rather than a signing bonus in that uncapped year. For (an extreme) example, with a 4-year $16 million contract they could pay a $13 million salary in year one (uncapped), and then a $1 million salary in each of the next three years.

As Miguel has explained, there is already a rule against this which trats it as if it were a SB.

But all the team would need to do is make it a roster bonus rather than a signing bonus. The Vikings did this a few years ago where they put what would have normally been a SB for Antoine Winfield into their cap that year.

Such workarounds using roster bonuses, option bonuses, etc is also a source of the rookie compensation problem, where there is a rookie cap in place but at the top of the draft it is nothing but a slight nuisance to doing the deal the player is demanding.

I think the rookie problem means the next CBA addresses this sort of thing, and in the process teams who expected an uncapped year to be a loophole may end up being disappointed. (If there does end up being an uncapped year). But the way things are now few teams can take advantage anyaway, cap space is more plentiful than actual cash. And it's quite likely Kraft isn't in as good a cash position as he once was either.

 

[Miguel]

What about the case Miguel, where a player signs a 5 yr contract for 25M, no bonus first year salary 15m, and the subsequent years at 2.5M, would this allow a team to avoid future cap implications?

There is a 30% decrease rule in the CBA:
"No NFL Player Contract entered into in an Uncapped Year prior to the Final League Year may provide for an annual decrease in Salary, excluding any amount attributable to a signing bonus as defined in Section 7(b)(iv) above, of more than 30% of the Salary of the first League Year of the contract per year. "

I have asked around if this will apply in 2010 if 2010 is uncapped. I have yet to receive a definitive answer.

 

[Ring 6]

Either the proration rules apply in 2010 or they do not. I say that they will based on my understanding of the CBA.

Signing Bonuses.
(i) Proration. The total amount of any signing bonus shall be prorated over the term of the Player Contract (on a straight-line basis, unless subject to acceleration or some other treatment as provided in this
Agreement), with a maximum proration of six years, in determining Team and Player Salary, except that:
(1) Maximum proration shall be five years (a) for contracts entered into during the period after the last regular season game of the 2005 League Year through the last regular season game of the 2006 League Year
and (b) for contracts entered into during the period after the last regular season game of the League Year preceding the Final Capped Year through the end of the Final Capped Year.

I think you misunderstood me. Of course they apply in 2010. But in 2011 or whenever a new CBA is signed, the rules will change. In other words a contract signed in 2010 for 6 years will have those proration rules apply to 2010, but may or may not have them apply in the future contract years.
Unless you are saying the new CBA will have to honor the old CBAs terms for contract written under one extending to the other. I did not think that is true, but you would know better than I.

 

[Miguel]

I think you misunderstood me. Of course they apply in 2010. But in 2011 or whenever a new CBA is signed, the rules will change. In other words a contract signed in 2010 for 6 years will have those proration rules apply to 2010, but may or may not have them apply in the future contract years. Unless you are saying the new CBA will have to honor the old CBAs terms for contract written under one extending to the other. I did not think that is true

Why do you not think that it is true??