Tom Brady Restructures Contract - shifts $24 million

Miguel · Dec 31, 2014

Do not see how this deal makes Brady more tradeable. Why trade players and/or draft picks for Brady if you have any concerns that his performance will dramatically decrease?

Brady_to_Moss · Dec 31, 2014

Mike Reiss ‏@MikeReiss 1m1 minute ago
Brady on contract: "Been a privilege to play here. Love playing here. Great experience in my life. Hopefully I’m here 4 rest of my career.”

God i hope he never leaves

Spiral · Dec 31, 2014

dales804 said:
They own more than just the Patriots. Kraft's net worth is $4B.

AndyJohnson said:
They don't make Patriot decisions based upon their net worth or the health of other companies they own.

I think its pretty obvious what happened here. Kraft needed to put 24 million aside, and would rather use it to operate. They talked and I'm sure Brady got a handshake agreement that he isn't being cut any time soon, so they threw him a few bucks to back up the handshake and he changed his deal so $24 million doesn't sit around for no reason.

Even high net worth individuals (and companies) can have cash flow problems.

Your explanation is certainly reasonable, but I think everyone would agree that it's pretty unusual, and may be raising some eyebrows, and not just around here.

Dillon46 · Dec 31, 2014

Brady is a "Demi-God" plain and simple.

Very few pro-athletes playing the most important position and being among the best of all time would constantly bend and tweak every dollar out of their contract to help their team retain core players around them......I just hope BB maximizes this opportunity in the offseason and maybe signs a couple more impact players besides our own

"Nationwide" may be on Peyton's side but I'll take Brady on our side anyday of the week and twice on Sunday

Miguel · Dec 31, 2014

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?

captain insano · Dec 31, 2014

Brady_to_Moss said:
Mike Reiss ‏@MikeReiss 1m1 minute ago
Brady on contract: "Been a privilege to play here. Love playing here. Great experience in my life. Hopefully I’m here 4 rest of my career.”

God i hope he never leaves

i hope he stays with the pats is some meaningful position when his playing days are over.

Dillon46 · Jan 1, 2015

If Brady ever wore anything but a Pats Jersey in a proffesional NFL game I think bile would creep up the back of my neck......

There are limits to my tolerance of awful

Pro-Bowls not withstanding

mosi's man · Jan 1, 2015

I agree that the most common explanation, i.e. "cash flow", is the most likely reason for the brady adjustment. I just hope it's wrong. If this rationale is true it's very troubling. A billionaire owner has to reduce the cap space for the upcoming year so that he has the liquidity necessary to sign players for the upcoming year? Obviously this would be counterproductive. If it is true then the team has a problem and Felger et. al. have some credence in their prior complaints about how the Pats operate.

We have been going back and forth on this site for months regarding how the Pats will fit all their players/needs under the cap in the coming years and this team just reduced next years cap space so that the owner can save the interest on a theoretical loan? That would be a truly troubling development. I'd prefer to see the Krafts sell the Revolution or divest themselves of some real estate (and I'm a soccer fan as well). 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.

mosi's man · Jan 1, 2015

And Happy New Year everybody.

Oswlek · Jan 1, 2015

mosi's man said:
I agree that the most common explanation, i.e. "cash flow", is the most likely reason for the brady adjustment. I just hope it's wrong. If this rationale is true it's very troubling. A billionaire owner has to reduce the cap space for the upcoming year so that he has the liquidity necessary to sign players for the upcoming year? Obviously this would be counterproductive. If it is true then the team has a problem and Felger et. al. have some credence in their prior complaints about how the Pats operate.

We have been going back and forth on this site for months regarding how the Pats will fit all their players/needs under the cap in the coming years and this team just reduced next years cap space so that the owner can save the interest on a theoretical loan? That would be a truly troubling development. I'd prefer to see the Krafts sell the Revolution or divest themselves of some real estate (and I'm a soccer fan as well). 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.

One doesn't have to have cash flow problems to be prudent about how much money he spends.

mosi's man · Jan 1, 2015

The pats just added three million on to their cap over the next three years. I'm not very good with numbers but according to your calculations for an interest rate of about 8%, wouldn't that be about three million? That means, if they spend to the cap limit, the Pats are spending about the same regardless. The difference lies in paying Brady the money rather than the bank. And that's only if they needed to borrow the money. The only theoretical savings would come from spending less over the next three years on other team assets because they had "already spent to the cap". If that was the goal of this transaction I am very disappointed and Felger et al. have a point.

RobertWeathers · Jan 1, 2015

mosi's man said:
If that was the goal of this transaction I am very disappointed and Felger et al. have a point.

It wasnt.

mosi's man · Jan 1, 2015

robertweathers said:
It wasnt.

So what was the goal then? I cannot see a reason that would benefit both Brady and the Pats, if their goal is to remain together.

RobertWeathers · Jan 1, 2015

mosi's man said:
So what was the goal then?

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

mosi's man said:
I cannot see a reason that would benefit both Brady and the Pats, if their goal is to remain together.

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.

1960Pats · Jan 1, 2015

Mark12 said:
Tim Duncan is the Tom Brady of professional basketball.

Tim Duncan was supposed to be a Celtic.

patchick · Jan 1, 2015

mosi's man said:
I agree that the most common explanation, i.e. "cash flow", is the most likely reason for the brady adjustment. I just hope it's wrong. If this rationale is true it's very troubling. A billionaire owner has to reduce the cap space for the upcoming year so that he has the liquidity necessary to sign players for the upcoming year?

Managing liquidity is just a part of running a large business. $24 million is a ton of cash. (Yes, even to a billionaire. It's not as if Bob Kraft's billions are in a giant bank account waiting to be spent; the vast majority of his net worth is comprised of his company The Kraft Group and its top asset, the New England Patriots.)

Maybe having that extra cash on hand for operations right now allows them the flexibility to make other investments that will pay huge dividends down the road. Maybe cash is worth more to them now than in 2017 because they'll have paid off some major debt by then. Etc., etc. It doesn't have to mean anything "troubling" about the company's management.

Bruins29 · Jan 1, 2015

mosi's man said:
So what was the goal then? I cannot see a reason that would benefit both Brady and the Pats, if their goal is to remain together.

Are you the newest member of the Chicken Little club?

mosi's man · Jan 1, 2015

Bruins29 said:
Are you the newest member of the Chicken Little club?

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.

PatsWickedPissah · Jan 1, 2015

mosi's man said:
The pats just added three million on to their cap over the next three years. I'm not very good with numbers but according to your calculations for an interest rate of about 8%, wouldn't that be about three million?

In round numbers $1m/year on $24M is about 4% interest annually ($240K is 1%; 4X240K = $1M)
Kraft using Brady as a liquidity bank at decent rates

Ivan · Jan 1, 2015

I don't think there is anything to be concerned about this, in fact just the opposite, I think it signals that some n good things will be happening in the near future.

Tom Brady Restructures Contract - shifts $24 million

Patriots Salary Cap Guru

28-3....

PatsFans.com Supporter

On the Game Day Roster

Patriots Salary Cap Guru

Veteran Starter w/Big Long Term Deal

On the Game Day Roster

Practice Squad Player

Practice Squad Player

Veteran Starter w/Big Long Term Deal

Practice Squad Player

Member of the Seattle 7 & Roadie for Metallica

Practice Squad Player

Member of the Seattle 7 & Roadie for Metallica

PatsFans.com Supporter

Moderatrix

Veteran Starter w/Big Long Term Deal

Practice Squad Player

PatsFans.com Supporter

Hall of Fame Poster

Similar threads