Why do contract salaries rise so steeply ?

[BlitzFritz]

I dont really understand the capology around NFL contracts.
I understand that when a team gives a player a signing bonus, its in ther interest to spread the cap hit out over more years, frequently beyond what is realistic.

But why do salaries go up so much in the later years, again beyond what is realistic?

Amandola is an example
The following are the contract figures for Danny Amendola, per a source.

It's a five-year pact with a total value of $27.7 million.

Signing bonus
$6 million

Base salaries
2013 -- $2 million (fully guaranteed)
2014 -- $3 million ($2 million guaranteed)
2015 -- $4 million
2016 -- $5 million
2017 -- $6 million

There are roster bonuses of $343,750 each year of the deal.

Salary cap charges
2013 -- $3,5 million
2014 -- $4.5 million
2015 -- $5.5 million
2016 -- $6.5 million
2017 -- $7.5 million

Thanks

--FRITZ

 

[PatsWickedPissah]

It's not beyond what's realistic. And by 2015/16 cap is expected to have growth again. TV contracts kick in.

So they can sign player with low cap hit now when cap is tight.
Player gets all signing bonus $ now.
Amortized over 5 yrs moderating cap hit.

If player cut, remaining bonus $ accelerates and is all counted against the cap at year of cut.

 

[BlitzFritz]

but some of these salaries in the out years look ridiculous (not Amendola's really). they scream restructure or cut.

so are you saying its just the player/agent getting a possibility of a later payout? if i were a player, i think i might prefer to have more realistic out year salaries that reduce the likelihood of getting cut....

in any case, what i am hearing is that there is no "financial engineering" benefit to either side, the way the number of years helps amortize signing bonuses, correct?

thanks for the education

It's not beyond what's realistic. And by 2015/16 cap is expected to have growth again. TV contracts kick in.

So they can sign player with low cap hit now when cap is tight.
Player gets all signing bonus $ now.
Amortized over 5 yrs moderating cap hit.

If player cut, remaining bonus $ accelerates and is all counted against the cap at year of cut.

 

[BradyFTW!]

In a nutshell, there are two reasons:

1) the cap goes up over time, so bigger hits further down the contract are more palatable, since they represent a smaller percentage of the cap for that year. That was more true in the past, when the cap was growing by about 8% per year. Since the lockout, things have been different.

2) It's also kind of an ego thing for the agents and players. The inflated base salaries on the back end of the contract enable them to brag about how they got a deal that's 'worth $XXX million". Meanwhile, the team knows that there's no way that they'll have to actually pay out that money, since they can just cut the guy. Players have wised up to this somewhat in recent years, and that's why guaranteed money pretty much always gets reported alongside total contract value nowadays. It's so important precisely because contracts that are backloaded with huge base salaries are basically phony, in a sense. The player rarely sees that money.

This is also why, when players agree to restructure, the benefit to them is usually that unguaranteed future money becomes guaranteed.

 

[PatsWickedPissah]

Well the team does benefit by amortizing the signing bonus, benefiting in a cap manner. The player of course gets the $ up front.

You are spot on in that the contracts make the player more susceptible to cut or restructure in the last year or 2, but it's like ****s, each player/agent wants the big #s.

 

[mgteich]

I actually expected the last three years of Amendola's contract to be a million higher than they are.

I dont really understand the capology around NFL contracts.
I understand that when a team gives a player a signing bonus, its in ther interest to spread the cap hit out over more years, frequently beyond what is realistic.

But why do salaries go up so much in the later years, again beyond what is realistic?

Amandola is an example
The following are the contract figures for Danny Amendola, per a source.

It's a five-year pact with a total value of $27.7 million.

Signing bonus
$6 million

Base salaries
2013 -- $2 million (fully guaranteed)
2014 -- $3 million ($2 million guaranteed)
2015 -- $4 million
2016 -- $5 million
2017 -- $6 million

There are roster bonuses of $343,750 each year of the deal.

Salary cap charges
2013 -- $3,5 million
2014 -- $4.5 million
2015 -- $5.5 million
2016 -- $6.5 million
2017 -- $7.5 million

Thanks

--FRITZ