Tom Brady Restructures Contract - shifts $24 million

[RobertWeathers]

Nope. Far from it.

I just agree with Bill Barnwell in that the interest payments on 24 million dollars is not in fact a significant sum for a billion dollar entity unless there is a problem elsewhere. This has been a fixed cost that has been known and, I imagine, budgeted for for at least two years. Suddenly the team is short on adequate liquidity to sign other assets? And if by freeing up that amount (roughly three million dollars, not twenty-four million if we assume Bob Kraft can obtain a loan) requires reducing the amount one can spend in the future on assets for that same business, it's a problem from my point of view.

I've made my point. I'll stop now.

Mosi- you are asking good questions. However I think you are over-complicating the situation.

Patriots as of Aug 2014

Gate Receipts : $95 M
Other Revenue: $333 M
Total Revenue : $428 M

Player Expenses : $156 M
Other Expenses: $125 M
Total Expenses: $281 M

Operating Income : $147.2 M

Are there cash flow problems based on potential expenses beyond 2014? Maybe.

Is the team cash-strapped? Hell no.

http://www.forbes.com/teams/new-england-patriots/

I highly doubt that potential interest payments on a loan had anything to do the motivation behind the restructuring and everything to do with freeing up on-hand cash so they can pay signing bonuses to players such as Revis, DMC and perhaps others and reducing risk based on #12 age.

 

[hwc]

But if the Pats are cutting corners on the cap because "liquidity" is an issue, that's actually a very big problem and I'm a little shocked and disappointed.

I think that is bit of a stretch. Successful NFL teams are EXTREMELY profitable with rapidly increasing revenues, fixed labor costs (as a percentage of revenues). The Patriots, according to Forbes, had revenues of $428 million in 2013, operating income (profit) of $147 million and an estimated value of $2.6 billion:

http://www.forbes.com/pictures/mlm45fgikm/2-new-england-patriots-6/

Not wanting to needlessly tie up $24 million in an escrow account would be a sensible business strategy regardless of cash flow.

In the years I have been following the Patriots, I have never seen the first shred of evidence that it is not an extremely well-run business under the Krafts. Robert and Jonathan Kraft seem like very intelligent, well-educated, capable, and serious businessmen. There just aren't signs of reckless or careless management that would undermine the profitability and cash flow of one of the top sports franchises in the United States.

 

[goheels22002]

Let's say that the 2013 extension had this parameters
Same 30m signing bonus
Same fully guaranteed salaries for 2013/2014
8 million salary in 2015;9 million in 2016;10 million in 2017. Those salaries were not guaranteed at all at the time of the extension but would become guaranteed for injury if Brady was on the Week 17 roster in 2014.

That is, the 2013 deal is from the beginning what it is now.

Are we still having a discussion of when to release a healthy Tom Brady?
Are we having a discussion of when to trade Brady?

Probably not. But we might be having conversations about why the Patriots traded Brady. The $24 million in escrow looks a lot like a no-trade clause in a MLB contract. Now that Mr. Kraft has his $24 million back in the checing account, the liability associated with the guaranteed money would shift to Brady's new team, right?

 

[goheels22002]

Mosi- you are asking good questions. However I think you are over-complicating the situation.

Patriots as of Aug 2014

Gate Receipts : $95 M
Other Revenue: $333 M
Total Revenue : $428 M

Player Expenses : $156 M
Other Expenses: $125 M
Total Expenses: $281 M

Operating Income : $147.2 M

Are there cash flow problems based on potential expenses beyond 2014? Maybe.

Is the team cash-strapped? Hell no.

http://www.forbes.com/teams/new-england-patriots/

I highly doubt that potential interest payments on a loan had anything to do the motivation behind the restructuring and everything to do with freeing up on-hand cash so they can pay signing bonuses to players such as Revis, DMC and perhaps others and reducing risk based on #12 age.

Do you think the NFLPA realizes that the players only get 36% of the revenue? What a ripoff!

 

[RobertWeathers]

Do you think the NFLPA realizes that the players only get 36% of the revenue? What a ripoff!

...and contribute to 56% of the cost. They know that for sure.

 

[PatsFanInVa]

1) Free up the $24m from the escrow service so the Pats have more flexibility to distribute the cash- signing bonuses. Including Brady's salary, the net increase of available cash attributed to TB is $16m. Benefit: Team
2) By removing the "skill" designation from TB's contract and only guarantee the "injury" portion, it reduces the total guaranteed amounts paid to Brady. Benefit: Team
3) By restructuring, Brady receives $3m more over the next 3 years. For Brady this is a no risk restructure as he would likely earn at least- if not more what he gave up if he was released and put on the open market. Benefit: Brady
4) If Brady leaves the team for non-injury reasons, the team's can cut him and not be accountable for paying him anything. Benefit: Team

The restructuring is a win-win and I do believe both sides intend on working with one another for the next 3 years. With that said, if Brady gets hurt- he still gets $24m. If he and the team part ways for reasons non-injury related, Brady has confidence that he will make the same- if not more on the open market.

Seems like both sides address risks.

1) The big team advantage: $ to spend on signings not escrow.

2) Brady addresses the risk that the Pats no longer consider him starter material before he thinks he is done. The team addresses the same risk. It is easier for him to walk, and the team would not need to keep him for dead-money reasons. I think it's erroneous to only say "benefit: team," if I read it correctly. It's more like, "If you're done with me, don't tie me up." "Okay, don't make it cost money to trade you." "Deal." (Edit - you cover this more in (4) than (2), but the reduced guaranteed money is the same thing.)

3) Brady gets a little more cash (and at his level, $1 M truly is a little more). Benefit to Brady, but it is relatively small potatoes.

4) I think this is what I covered in (2).

You guys correct me if I'm wrong, but it looks like it provides cap flexibility now, and to use an analogy, puts in place a "pre-nup" in the event of a divorce.

Brady's tweet addresses the latter quite well. We all hope that 2017 us feel like New Year's 2015 us, and that Brady feels like he does today about the team. But we've seen it go the other way for other players in the past.

Am I reading this wrong? It seems like everybody's making sure that if they're in that position, they can do it with less fuss.

That seems rational to me. Of course "fan" is short for "fanatic" and I hate the idea, at 1/1/15, of Brady ever leaving this team. He should play until he is 80, and play here. Etc. But removing my fan glasses, isn't this the deal's effect?

 

[RobertWeathers]

You guys correct me if I'm wrong, but it looks like it provides cap flexibility now, and to use an analogy, puts in place a "pre-nup" in the event of a divorce.

The cap numbers go up because of the pay increase.

Pre-nup is a good analogy.

Am I reading this wrong? It seems like everybody's making sure that if they're in that position, they can do it with less fuss.

That seems rational to me. Of course "fan" is short for "fanatic" and I hate the idea, at 1/1/15, of Brady ever leaving this team. He should play until he is 80, and play here. Etc. But removing my fan glasses, isn't this the deal's effect?

It makes things cleaner if the sides split if it goes bad. If all goes great, it stays great.

 

[PatsFanInVa]

Thanks Robertweathers. Makes perfect sense - even better sense if you add in that yes, we did just draft the heir-apparent. You have to look at it that way until/unless proven otherwise. So the pretty young thing is already in the house helping with the dishes and such. Okay the analogy is getting creepy. But you get the idea.

Healthy productive Brady for 3 years? None of it matters. But if it comes to it, at least we don't get a retire/unretire Favre circus in the deal.

 

[RobertWeathers]

Thanks Robertweathers. Makes perfect sense - even better sense if you add in that yes, we did just draft the heir-apparent. You have to look at it that way until/unless proven otherwise. So the pretty young thing is already in the house helping with the dishes and such. Okay the analogy is getting creepy. But you get the idea.

Healthy productive Brady for 3 years? None of it matters. But if it comes to it, at least we don't get a retire/unretire Favre circus in the deal.

Its good business for the Pats to do this- and Brady.

Look at Manning. If it comes out that he has a degenerative shoulder/neck/back thing, under the Pats/Brady scenario, he retires and gets $24m.

If his performance dips and the team is skeptical that he can come back to current levels or they want to take their lumps in Year 1 of the Grapes Era (remember, BB's philosophy is to get rid of an aging player a year sooner rather than a year later) , they walk away, have more cash. Along that same line, Brady goes to another team and lands a big payday- ala Favre.

If he puts up the standard-Brady season, he stays in Foxboro and makes $3m more than what we would have if they had not modified his current deal.

 

[grux]

I just hope the pats try to give Brady a great offensive line and defense. This will help extend his career and give him a shot at winning a few more rings. He is the ultimate team player who continues to be underpaid so there can be a great team around him.

 

[RobertWeathers]

I just hope the pats try to give Brady a great offensive line and defense. This will help extend his career and give him a shot at winning a few more rings. He is the ultimate team player who continues to be underpaid so there can be a great team around him.

From 2001-2006, he averaged 32 throws a game
From 2007 to 2010 he averaged 34 throws a game
From 2009 to 2014 hes averaged about 38 throws a game

Clearly the reason for his gradual increase in TPG is that the D is not as good and he is just too damn good not to take full advantage of.

People disagree with me but the way to extend TBs career is to reduce his # of throws per game. By reducing the number of throws, you are slowing down physical wear and tear from throwing and taking hits.

In my opinion if they want to extend his career, they need to do 3 things (stating the obvious).
1) Continue to load up the D and control games so the O doesn't have to play from behind.
2) Evolve the o-line enough that it can physically dominate opposing offenses.
3) Acquire game-breaking RB(s) that can make plays- see Dillon.

You saw Denver and SF do this in the late 90s with Elway and Young.

 

[Tom meets Kaepernick]

Nope. Far from it.

I just agree with Bill Barnwell in that the interest payments on 24 million dollars is not in fact a significant sum for a billion dollar entity unless there is a problem elsewhere. This has been a fixed cost that has been known and, I imagine, budgeted for for at least two years. Suddenly the team is short on adequate liquidity to sign other assets? And if by freeing up that amount (roughly three million dollars, not twenty-four million if we assume Bob Kraft can obtain a loan) requires reducing the amount one can spend in the future on assets for that same business, it's a problem from my point of view.

I've made my point. I'll stop now.

Don't entertain idiocy

 

[Miguel]

In 2013 Brady signed his extension. 100% of his 5th year salary is guaranteed for injury. In 2014 J.J. Watt signed an extension. 0% of his 5th year salary is guaranteed. Most glaring example of how Brady's deal even after the recent change is still better than most deals.

 

[Mark12]

From 2001-2006, he averaged 32 throws a game
From 2007 to 2010 he averaged 34 throws a game
From 2009 to 2014 hes averaged about 38 throws a game

Clearly the reason for his gradual increase in TPG is that the D is not as good and he is just too damn good not to take full advantage of.

People disagree with me but the way to extend TBs career is to reduce his # of throws per game. By reducing the number of throws, you are slowing down physical wear and tear from throwing and taking hits.

In my opinion if they want to extend his career, they need to do 3 things (stating the obvious).
1) Continue to load up the D and control games so the O doesn't have to play from behind.
2) Evolve the o-line enough that it can physically dominate opposing offenses.
3) Acquire game-breaking RB(s) that can make plays- see Dillon.

You saw Denver and SF do this in the late 90s with Elway and Young.

Dude reducing the number of throws per game would be insignificant. Just consider all the times he throws in practice, spring camps, training camp, etc.

If you take all those throws into account, throwing the ball 40 times less per season would be statistically insignificant. And in those 40 attempts, he would probably get hit 3-4 more times per season. Which, again, are almost insignificant.

 

[TruthSeeker]

I think it's unlikely that Tom Brady will be the starting QB for the New England Patriots beyond the 2017 season when he will be 40 years old.

Nolan Ryan didn't get pounded to the ground 15 times a game. In the all-pass-all-the-time National Football League, the QB has to be able to stand in and take a pounding after releasing the ball. Flinching ... throwing while falling back to avoid the hit just doesn't work. It's not the arm that goes. It's not the legs that go. It the folly of youth that allows a gunslinger QB to stand in the pocket and get jacked up that goes.

I do think it is increasingly likely that Brady makes it to the end of the current contract. He's certainly playing well enough to be penciled in as the starter in 2015.

So Tom Brady's problem that will be a significant factor in hanging them up will be that he starts flinching in the pocket? I don't buy that.

 

[Ivan]

So Tom Brady's problem that will be a significant factor in hanging them up will be that he starts flinching in the pocket? I don't buy that.

He hates Brady, claimed this was his last year and said he might stay as Garrapolos back up. Its just another opportunity for him,to sh.t on him.

Danger zone documented his trashing of Brsdy thoroughly the other day, backed up by over a dozen quotes.

 

[RobertWeathers]

Dude reducing the number of throws per game would be insignificant. Just consider all the times he throws in practice, spring camps, training camp, etc.

If you take all those throws into account, throwing the ball 40 times less per season would be statistically insignificant. And in those 40 attempts, he would probably get hit 3-4 more times per season. Which, again, are almost insignificant.

If you can reduce the number of hits (which on average the last few years TB is hit about 60-75 times a year by 25%, that's substantial.

 

[BTTA]

People disagree with me but the way to extend TBs career is to reduce his # of throws per game. By reducing the number of throws, you are slowing down physical wear and tear from throwing and taking hits.

In my opinion if they want to extend his career, they need to do 3 things (stating the obvious).
1) Continue to load up the D and control games so the O doesn't have to play from behind.
2) Evolve the o-line enough that it can physically dominate opposing offenses.
3) Acquire game-breaking RB(s) that can make plays- see Dillon.

You saw Denver and SF do this in the late 90s with Elway and Young.

Your formula is probably right even though I don't agree with the reasoning. The best way to extend Brady's career is to build a team around him that relies on him less and less as time goes on, so his performance can erode slowly as he ages but it matters less and less each year.

Rely more on D and on a running game, as you've listed above, so Brady can go from great to just good, and the team can keep winning anyway.

 

[ausbacker]

Your formula is probably right even though I don't agree with the reasoning. The best way to extend Brady's career is to build a team around him that relies on him less and less as time goes on, so his performance can erode slowly as he ages but it matters less and less each year.

Rely more on D and on a running game, as you've listed above, so Brady can go from great to just good, and the team can keep winning anyway.

In essence, finish his career with a team built the same way he began it? I say, another 3 in 4 Super Bowls to finish off his career would be fine with me.

 

[Oswlek]

If you can reduce the number of hits (which on average the last few years TB is hit about 60-75 times a year by 25%, that's substantial.

3 isn't 25% of 60. Did you misread that as 3-4 times per game instead of per season?