We CAN make the cap room to sign Peppers - Unsubstantianted Claim

AdamJT13 said:

Not exactly. There is no loophole around the 30 percent rule. Every dollar is either 1) subject to the 30 percent rule; 2) treated as a signing bonus and prorated, starting in this season; or 3) an NLTBE incentive.

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Any payment for an option or contract modification which is covered by the language of 7(b)(iv)(3) but not 8(d) would be prorated starting from the year in which the payment is made. Is that correct?

If so, it sure seems like a loophole (albeit a collectively bargained loophole).

Shockt327 said:

Since you didn't even make any new points and just reiterated the same thing as before...I just do the same:

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My original claim was this:

Peppers is NOT signing a long term deal at $7M/season.

He's got nearly $17M coming to him for just a single season if he signs the franchise Tender.

He's going to want compensation in the form of long term guarantees for every penny of that $16.7M he gives back.

Maybe he gives New England a discount, but I think $7M is insane. His agent should insist on resigning before he agrees to that deal.

Peppers would be INSANE to give up a guaranteed $17M/year contract in exchange for a $7M/year contract.

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My second claim was this:

His agent could easily argue that $7M/year could end up costing him $30M or $40M.

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If I have convinced you, I guess we're done.

solman said:

Any payment for an option or contract modification which is covered by the language of 7(b)(iv)(3) but not 8(d) would be prorated starting from the year in which the payment is made. Is that correct?

If so, it sure seems like a loophole (albeit a collectively bargained loophole).

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If that's a loophole, it's not a useful one because the player isn't assured of ever seeing any additional money, even if he plays out the contract. It's sort of a "we'll pay you more money if we feel like it" loophole.

INSIDE THE CAP with J.I. Halsell: Haynesworth Contract Details...Don't Believe Everything You Hear in the Media

Taking this into consideration, Haynesworth's maximum 2010 salary is $7.8M ($6M + $1.8M). When calculating 2010 for compliance with the 30% rule, one must remember that unlike signing bonus, the proration of an exercised option bonus is indeed factored into the calculation. With that in mind, Haynesworth's 2010 P5 of $3.6M + the $4.2M 2010 proration of his $21M option bonus make his 2010 salary $7.8M ($3.6 P5 + $4.2M option proration). Thereby making it compliant.

Let's apply the above to the proposed Brady deal:
Brady's maximum 2010 salary is $1.3M ($1M + $.3M). When calculating 2010 for compliance with the 30% rule, one must remember that unlike signing bonus, the proration of an exercised option bonus is indeed factored into the calculation. With that in mind, Brady's 2010 P5 of $1.3M + the $20M 2010 proration of his $100M option bonus make his 2010 salary $21.3M ($1.3M P5 + $20M option proration). Thereby making the deal non-compliant.

AdamJT13 said:

If that's a loophole, it's not a useful one because the player isn't assured of ever seeing any additional money, even if he plays out the contract. It's sort of a "we'll pay you more money if we feel like it" loophole.

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The Haynesworth option has been widely described in the press as guaranteed, but it doesn't start to count against the cap until it is exercised in 2010, at which point it counts against the cap on a prorated basis.

When the Redskins exercise the option, Haynesworth gets over $20M.

But if the Redskins don't exercise the option, a separate clause gives him the over $20M anyway.

The press calls the option "guaranteed", but it is not treated as guaranteed under the CBA. I believe that other contracts have used the same mechanism.

It is my understanding that because of Section 8(d), the option counts towards the 30% rule (but not the cap). But it would be a simple matter to craft an option or other "contract modification" that did not conform to the language of section 8(d), but still conformed to the language of 7(b)(iv).

Miguel said:

INSIDE THE CAP with J.I. Halsell: Haynesworth Contract Details...Don't Believe Everything You Hear in the Media

Taking this into consideration, Haynesworth's maximum 2010 salary is $7.8M ($6M + $1.8M). When calculating 2010 for compliance with the 30% rule, one must remember that unlike signing bonus, the proration of an exercised option bonus is indeed factored into the calculation. With that in mind, Haynesworth's 2010 P5 of $3.6M + the $4.2M 2010 proration of his $21M option bonus make his 2010 salary $7.8M ($3.6 P5 + $4.2M option proration). Thereby making it compliant.

Let's apply the above to the proposed Brady deal:
Brady's maximum 2010 salary is $1.3M ($1M + $.3M). When calculating 2010 for compliance with the 30% rule, one must remember that unlike signing bonus, the proration of an exercised option bonus is indeed factored into the calculation. With that in mind, Brady's 2010 P5 of $1.3M + the $20M 2010 proration of his $100M option bonus make his 2010 salary $21.3M ($1.3M P5 + $20M option proration). Thereby making the deal non-compliant.

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"one must remember that unlike signing bonus, the proration of an exercised option bonus is indeed factored into the calculation"

This is section Article XXIV Section 8(d), which I have repeatedly cited.

The Haynesworth option DOES fit within the language of section 8(d). Specifically, exercise of the option extends the term of the player contract. This was clearly the drafter's intent.

However, there are a wide array of things mechanisms in section 7(b)(iv) [things that are prorated and therefore excluded from the 30% rule] that are not covered by section 8(d).

solman said:

"one must remember that unlike signing bonus, the proration of an exercised option bonus is indeed factored into the calculation"

This is section Article XXIV Section 8(d), which I have repeatedly cited.

The Haynesworth option DOES fit within the language of section 8(d). Specifically, exercise of the option extends the term of the player contract. This was clearly the drafter's intent.

However, there are a wide array of things mechanisms in section 7(b)(iv) [things that are prorated and therefore excluded from the 30% rule] that are not covered by section 8(d).

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If I may come at this from a slightly different angle:

Given who was elected by the NFLPA, I wouldn't be playing games with the cap if I were an NFL team. It is likely that we are either going to see the owners break the union or the union get the government involved and crippling the owners. If the NFL wins, the salary cap numbers will likely be dropping or holding steady, which would hurt any team playing these games. If the union wins, all hell's going to break loose.

Either way, the smart move for teams is to play it relatively safe until the outcome is decided.

solman said:

"one must remember that unlike signing bonus, the proration of an exercised option bonus is indeed factored into the calculation"

This is section Article XXIV Section 8(d), which I have repeatedly cited.

The Haynesworth option DOES fit within the language of section 8(d). Specifically, exercise of the option extends the term of the player contract. This was clearly the drafter's intent.

However, there are a wide array of things mechanisms in section 7(b)(iv) [things that are prorated and therefore excluded from the 30% rule] that are not covered by section 8(d).

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And yet you created a proposal that is not in compliance with the 30% rule.

Please create a proposal that both complies with the 30% rule AND your previously stated goal of a 2009 cap hit of $7.62 million.

solman said:

The Haynesworth option has been widely described in the press as guaranteed, but it doesn't start to count against the cap until it is exercised in 2010, at which point it counts against the cap on a prorated basis.

When the Redskins exercise the option, Haynesworth gets over $20M.

But if the Redskins don't exercise the option, a separate clause gives him the over $20M anyway.

The press calls the option "guaranteed", but it is not treated as guaranteed under the CBA. I believe that other contracts have used the same mechanism.

It is my understanding that because of Section 8(d), the option counts towards the 30% rule (but not the cap). But it would be a simple matter to craft an option or other "contract modification" that did not conform to the language of section 8(d), but still conformed to the language of 7(b)(iv).

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Haynesworth's contract (and every other contract) complies with the 30 percent rule whether the option is exercised or not. His option bonus is not "guaranteed," per se, rather it is a "protected" option bonus -- if the bonus is not paid, he gets the money in the form of guaranteed salaries. Either way, he gets the same amount of money. And either way, it must (and does) comply with the 30 percent rule.

You're proposing a feaux option bonus with no material compensation for the player if the team doesn't exercise the option. He's still stuck with the same contract but without all of that money in the "option" bonus.

Miguel said:

And yet you created a proposal that is not in compliance with the 30% rule.

Please create a proposal that both complies with the 30% rule AND your previously stated goal of a 2009 cap hit of $7.62 million.

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The 30% rule is specified by Section 8(b) of Article XXIV of the CBA and specifically excludes compensation that would normally be prorated with this language:

CBA said:

excluding any amount attributable to a signing bonus as defined in Section 7(B)(iv) above.

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Unless otherwise specified, prorated compensation is not subject to the 30% rule.

Section 8(d) does specify an additional class of compensation which is subject to the 30% rule despite being defined in Section 7(B)(iv).

But the bulk of Section 7(B)(iv) compensation has apparently been intentionally excluded from the CBA.

Unless I am reading this wrong... (In which case I'd obviously like to know why section 8 doesn't apply in this manner.)

AdamJT13 said:

Haynesworth's contract (and every other contract) complies with the 30 percent rule whether the option is exercised or not. His option bonus is not "guaranteed," per se, rather it is a "protected" option bonus -- if the bonus is not paid, he gets the money in the form of guaranteed salaries. Either way, he gets the same amount of money. And either way, it must (and does) comply with the 30 percent rule.

You're proposing a feaux option bonus with no material compensation for the player if the team doesn't exercise the option. He's still stuck with the same contract but without all of that money in the "option" bonus.

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I'm not saying that the 30% rule doesn't apply. I'm saying that the 30% rule (i.e. Section 8) contains within it an exclusion that applies. [See my last reply to Miguel]

Or are you saying that the protection, and not the option, is what is triggering the 30% problem?

Solman, do you think that your Brady proposal is in compliance with the CBA??

I have shown why I do not think that it is.

AdamJT13 said:

Haynesworth's contract (and every other contract) complies with the 30 percent rule whether the option is exercised or not. His option bonus is not "guaranteed," per se, rather it is a "protected" option bonus -- if the bonus is not paid, he gets the money in the form of guaranteed salaries. Either way, he gets the same amount of money. And either way, it must (and does) comply with the 30 percent rule.

You're proposing a feaux option bonus with no material compensation for the player if the team doesn't exercise the option. He's still stuck with the same contract but without all of that money in the "option" bonus.

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I see you've met solman...

We seem to have sprouted a number of faux cap experts hereabouts lately...

one thing I noticed in these threads was mention that future (2010, etc) guaranteed money got accelerated into '09 cap hits, but the haynesworth contract seems to contradict this, assuming his '09 cap hit is ~7m.
was there no truth to that, then?

also, could I get a little distinction between the types of bonuses -- signing, roster, option?
I mean distinction in how they're treated differently w/respect to cap.
if the 2010 haynesworth bonus was signing, it would be amortized and subject to the 30% rule, just like the option?
what about roster bonus --- that would be handled differently, right?
is the wrinkle there that it wouldn't be guaranteed money?

eom said:

one thing I noticed in these threads was mention that future (2010, etc) guaranteed money got accelerated into '09 cap hits, but the haynesworth contract seems to contradict this, assuming his '09 cap hit is ~7m.
was there no truth to that, then?

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See Adalius Thomas' contract.

He got a 12 million signing bonus in 2007 and a 8 million option bonus in 2008.

eom said:

one thing I noticed in these threads was mention that future (2010, etc) guaranteed money got accelerated into '09 cap hits, but the haynesworth contract seems to contradict this, assuming his '09 cap hit is ~7m.
was there no truth to that, then?

also, could I get a little distinction between the types of bonuses -- signing, roster, option?
I mean distinction in how they're treated differently w/respect to cap.
if the 2010 haynesworth bonus was signing, it would be amortized and subject to the 30% rule, just like the option?
what about roster bonus --- that would be handled differently, right?
is the wrinkle there that it wouldn't be guaranteed money?

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Haynesworth's 2009 salary is guaranteed and his contract is compliant so his future salaries can be guaranteed as well. If his 2009 salary wasn't guaranteed then any future guaranteed salaries would accelerate to the 2009 cap.

Signing bonus is amortizable over the life of the contract to a maximum of 6 years (although under this expiring CBA it's 5 years in 2009). However all or part of a signing bonus is recoverable in the event a player screws up (or retires at a teams discretion) during the period in which the money is being prorated.

Roster bonuses are tied to a player being on the roster on a given date. Occasionally they are guarnateed in advance (Stallworth's apparently was...) but in any event once earned cannot be recovered. They hit the cap in full in the year paid unless they are converted to signing bonus (which teams often want to do to spread the hit but players are sometimes wise to decline to do as they then are open to be recovered if the player screws up...). Vrabel had a $1M roster bonus due 3/2 which is why he had to be gone one way or another before then or his dead cap hit when cut would have increased by $1M and the money would have been his to keep even if cut. Haynesworth's bonus couldn't be roster as it would violate the 30% rule. Roster can normally be converted to signing bonus for proration, but in this case the contract has to be in 30% compliance when written and would not have been if his option bonus was written as a roster bonus as one is automatically prorated (option) and the other is presumed not to be (roster).

Option bonuses are what they say - a vehicle by which a team extends a contract usually triggering another two or three seasons. They are prorated for cap purposes. They can be guaranteed, they can be protected (with language that says if a team doesn't pick an option up the player still gets salary guarantees equivalent to all or part of it over time) or they can be just an option (as was Donte' Stallworths with NE, which was not execised). Once picked up however they are considered earned and cannot be recovered if a player screws up (Ashlie Lelie arbitration decision which is why Washington included language in Haynesworth's deal allowing them to convert his to signing bonus if exercised).

Salary above certain mininums can also be converted to signing bonus for proration purposes. In this case that changes two things - the player gets it up front rather than in 1/17ths over the course of a season. But he also risks losing it if he screws up (team can go after it).

sweet --- thx for the explanation.

Miguel said:

See Adalius Thomas' contract.

He got a 12 million signing bonus in 2007 and a 8 million option bonus in 2008.

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I may be ******ed, but isn't the '09 to '10 bump in violation of the 30% rule?
edit: wait...let me go read that first --- is it just newer contracts?

Adalius Thomas - Peter King reported that "the breakdown, according to Management Council documents obtained Sunday night
Signing bonus: $12 million in 2007.
Option bonus: $8 million payable in 2008, applied for cap reasons in equal $2 million increments in 2008, 2009, 2010 and 2011.
Salaries: $900,000 in '07, $900,000 in '08, $1.9 million in '09, $4.9 million in '10 and $5.9 million in '11.
Workout bonuses: $107,000 annually if he participates in the Patriots' offseason workout program in Foxboro.
Cap numbers: In succession, beginning this year, $3.4 million, $5.4 million, $6.4 million, $9.4 million, $10.4 million.

more edits:

hey, this guy says the 30% rule doesn't count signing bonus amortizations -- is that true?

The "30% Rule" governs veteran contracts that are entered into in a capped year and extend into the final year of the CBA. The rule states that these contracts cannot have an annual increase of more than 30% of the salary, excluding amounts treated as a signing bonus, provided for in the FINAL CAPPED YEAR.

http://www.askthecommish.com/salarycap/faq.asp

solman said:

I'm not saying that the 30% rule doesn't apply. I'm saying that the 30% rule (i.e. Section 8) contains within it an exclusion that applies. [See my last reply to Miguel]

Or are you saying that the protection, and not the option, is what is triggering the 30% problem?

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Yes, any monetary protection a team can offer a player in case it doesn't exercise the option will trigger the 30 percent problem. No player will sign a contract in which a team has the option of NOT paying a huge bonus without getting something significant in return — either money (which would count toward the 30 percent rule) or contract years (which can't be a condition in your "loophole").

Believe me, if a little tweak of the wording in a contract could get around the 30 percent rule, NFL teams would be doing it right now instead of being burdened by the rule.

eom said:

I may be ******ed, but isn't the '09 to '10 bump in violation of the 30% rule?
edit: wait...let me go read that first --- is it just newer contracts?

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Contracts that were signed prior to the owners' opt-out (May 20, 2008) treated 2011 as the final capped year and had to comply with the 30 percent rule starting in 2011. Contracts must comply when they are signed, so there was no retroactive enforcement of the rule after the opt-out. So as long as those contracts haven't been renegotiated since the opt-out, they're still legal.