Colts over cap by $6M

[coltsfan]

Baloney. The Colts franchise is worth $700 million. Are you telling me that Irsay couldn't raise the money to do Manning's contract whenver he wanted?

What really galls me more than anything is that Irsay actually used a $10 million payment from the city of Indianapolis to help fund Manning's bonus payments. Meanwhile, Irsay has the nerve to attack the "big revenue teams" that are building their own stadiums, doing internet webcasting, and paying a ton of money to marketing people to grow the sport. Irsay cries poor and threatens to sue the league at the very same time he is paying ridiculous money to a number two wide receiver. What does that do to the 31 other owners who also have to sign #2 wide receivers and don't feel like paying Jerry Rice money to David Givens or Randal El?

That's OK. I think Kraft and many other owners see a perfect opportunity to stick it to the Synders and Polians of the league this weekend and I think they fully intend to do so.

So what would be the reason they wouldn't give Manning the extension earlier? Do you think Irsay hurt the Colts chances to win by keeping Manning at humongous cap numbers just to prove a point to others?

Here's a paragraph from an article on ESPN today talking about the disparity the Colts have faced.

http://sports.espn.go.com/nfl/news/story?id=2354095
"That's because the teams in bigger cities have more corporate fat cats and can command more for their premium seating. The New England Patriots lease their suites for $100,000 to $300,000 a year, according to a team spokesman. Some of the Indianapolis Colts' suites go for as little as $34,000, according to the sports division of Fitch Ratings, which rates stadium bond issues. Reliant Energy pays $10 million a year to hang its name on the Houston Texans' stadium. RCA has been paying the Colts only $1 million a year for stadium "naming rights," according to Fitch."

Also, I'm not sure what the #2 receiver thing has to do with this. Wayne is a better player than Givens or Randle El. I would bet a team like the Browns or 49ers would have given him that same contract to be their #1 receiver. The Wayne deal may up the ante for receivers, but that happens every year when probowl type guys become free agents.

 

[hwc]

Here's a paragraph from an article on ESPN today talking about the disparity the Colts have faced.

Where is the paragraph about the taxpayers of Indiana handing the keys to a $500 million stadium to Irsay?

Don't you think Kraft would have liked a free stadium?

The Wayne deal is relevant because many owners spent the last week making hard decisions to get under the cap. Polian and Irsay spent the week saying, "to hell with the cap" and driving up the market for #2 wide receivers.

 

[Miguel]

Adam and Miguel:

Yes. Protecting the option bonuses would be essential. How long would they "pro-rate" the 2007 option bonus for in the cap calculations? Not at all? over three years? over the life of the contract? I can't find any concrete justification in the CBA for any number when dealing with a bonus paid in an uncapped year.

Even I am wrong about prorating option bonuses in 2007 and I probably am, it really does not matter . Without an extension to the CBA, 2007 will be uncapped. If 2007 is uncapped, then the Colts will release Manning in February, 2007 ending the contract and its 30% limitation. The Colts will then sign Manning to a new deal.

 

[ctpatsfan77]

Without an extension to the CBA, 2007 will be uncapped. If 2007 is uncapped, then the Colts will release Manning in February, 2007 ending the contract and its 30% limitation. The Colts will then sign Manning to a new deal.

Obviously I haven't bothered to read through the entire CBA, but it wouldn't surprise me if there were some sort of poison pill to prevent exactly this scenario from happening. . . .

 

[Miguel]

Obviously I haven't bothered to read through the entire CBA, but it wouldn't surprise me if there were some sort of poison pill to prevent exactly this scenario from happening. . . .

It would surprise me because
1.)what I am predicting is no different than what teams have done in the past - release a player and then sign him later on in the year.
2.) this type of poison pill has never been mentioned in all of the talks about how uncapped year differs from a capped year.

 

[workhorse]

Baloney. The Colts franchise is worth $700 million. Are you telling me that Irsay couldn't raise the money to do Manning's contract whenver he wanted?

What really galls me more than anything is that Irsay actually used a $10 million payment from the city of Indianapolis to help fund Manning's bonus payments. Meanwhile, Irsay has the nerve to attack the "big revenue teams" that are building their own stadiums, doing internet webcasting, and paying a ton of money to marketing people to grow the sport. Irsay cries poor and threatens to sue the league at the very same time he is paying ridiculous money to a number two wide receiver. What does that do to the 31 other owners who also have to sign #2 wide receivers and don't feel like paying Jerry Rice money to David Givens or Randal El?

That's OK. I think Kraft and many other owners see a perfect opportunity to stick it to the Synders and Polians of the league this weekend and I think they fully intend to do so.

Franchise value has nothing to do with it. If he didn't have the money in his pocket he can't give out the signing bonuses. The contracts each year can be paid by the profits being turned each season, but a $30 million signing bonus drops your bank account a lot in one day.

 

[arrellbee]

That's OK. I think Kraft and many other owners see a perfect opportunity to stick it to the Synders and Polians of the league this weekend and I think they fully intend to do so.

Isn't THAT an interesting thought !!

 

[hwc]

Franchise value has nothing to do with it. If he didn't have the money in his pocket he can't give out the signing bonuses. The contracts each year can be paid by the profits being turned each season, but a $30 million signing bonus drops your bank account a lot in one day.

Irsay's family acquired the Colts for $15 million. The franchise is currently valued at $715 million. Are you suggesting that Irsay doesn't have sufficient capital to operate his franchise?

Kraft acquired the Patriots in 1994 for $172 million. At the time he bought the team, it was the lowest revenue producing team in the league. Since then, he had privately financed the construction of a new stadium and increased the revenues to the second highest in the league. His franchise is currently estimated by Forbes to be the third most valuable in the NFL at a little over 1 billion. What has Irsay been doing since 1994?

 

[hwc]

Even I am wrong about prorating option bonuses in 2007 and I probably am...

I don't think you are wrong. I have no earthly idea. I can't find anything in the CBA that provides guidance on how long the proration should be for option bonuses paid in 2007 and beyond. Maybe that was one of the things a busy Special Master was ruling on this week for some team or another? Maybe Adam knows.

In playing around with various possibilities for option bonus restructures on Manning's contract, I can't solve the 30% rule problem. As I understand it, there can't be a 30+ percent increase at any time over the life of the contract. So, every solution requires Manning giving up a ton of salary in 2008 and beyond (at least on paper). They can save about $1 million by just guaranteeing $1.5 million of his roster bonus and stay legal under the 30% rule. That might be the easiest way to go.

Now, I see why Washington had to lop three years off Portis' contract. They had to get some salary numbers out of the equation.

I also see why Polian has decided to just ignore the cap while he threatens to sue the NFL. It's just mindblowing that the Colts signed the mega deal with Reggie Wayne as if they didn't have a care in the world. That's a $5.8 million cap charge for 2006 against cap room the team doesn't have. Heck, maybe Kraft should ignore the cap and sign Givens!

 

[arrellbee]

Irsay's family acquired the Colts for $15 million. The franchise is currently valued at $715 million. Are you suggesting that Irsay doesn't have sufficient capital to operate his franchise?

I'm not disagreeing with your sentiment. But the assett value is not liquid capital (ie money in the bank) that can be used to run the operation.

What has he been doing for the league ? Gosh. He probably hasn't had much time to spend on that because of all the time he's spending trying to get more freebies from Indiana/Indianapolis

 

[AdamJT13]

In playing around with various possibilities for option bonus restructures on Manning's contract, I can't solve the 30% rule problem. As I understand it, there can't be a 30+ percent increase at any time over the life of the contract. So, every solution requires Manning giving up a ton of salary in 2008 and beyond (at least on paper). They can save about $1 million by just guaranteeing $1.5 million of his roster bonus and stay legal under the 30% rule. That might be the easiest way to go.

Like I said earlier in this thread, they can save more than $2.2 million of cap room by giving him a base salary of $5.55 million and an option bonus of $8.95 million -- which would allow them to give him more money this season and just as much money (or more) in the long run. To save more cap room than that, though, they'd have to get him to accept less money overall, perhaps in exchange for more guarantees.

 

[hwc]

Pay him $4.5 million extra this year to save $2.2 million on the cap. How crazy is that? I guess that's what happens when you ignore the possibility of no CBA-extension in writing contracts.

Two questions:

If a team wanted to do option bonuses payable in 2007 and beyond, how many years would they be prorated for 30% rule calculations this week?

Also, would additional prorations from option bonuses impact the existing Deon Rule adjustments in Manning's contract? Do those prorations count in the same way as signing bonus prorations?

 

[MoLewisrocks]

Even I am wrong about prorating option bonuses in 2007 and I probably am, it really does not matter . Without an extension to the CBA, 2007 will be uncapped. If 2007 is uncapped, then the Colts will release Manning in February, 2007 ending the contract and its 30% limitation. The Colts will then sign Manning to a new deal.

Miguel - I know you're a capologist at heart but do you really believe FA Peymeaton Manning and his agent Tom Showmethebonus$$$ Condon are just going to sign this new deal with the Colts because Manning loves the people of Indiana? Or that an owner who needs to sell hundreds of new club seats and luxury boxes would risk that he would? Irsay will be forced pony up ANOTHER $30M+++ signing bonus. That would be the unwritten poison pill in this deal because Peyton Manning isn't Troy Brown or Willie McGinest - he's a HOF franchise QB in his prime. Can you imagine the fit Polian would pitch if suddenly after the release Condon wouldn't return his calls and John Clayton reported that Archie convinced Peyton he owed it to himself to, you know, test the market? If not for himself for his beloved brother Eli going forward. Plian might be forced to file multiple injunctions or something.

Irsay has appeared pretty flush this week - I would guess due in part to a little $30M buyout of the lease he held on the RCA Dome which will be leveled once the new Lubradome is up and running in 2008. But predictably Polian has already reinvested that one time cash windfall bonuses for his new revised triplets. In 2007 Irsay may be a couple of bucks short on a lot of fronts - especially considering he will be scrambling to pony up the $34M he was supposed to contribute to the not yet open Lubradome that was going to come from G3 loans the union won't approve without a new CBA. The Colts are his sole source of income. While he has managed to indulge himself and accumulate some personal assets over the years, he was actually forced to sell off most of his beloved rock and roll memorabelia collection to fund Peyton's last signing bonus. It's a two box of kleenex heartwarming story about a small market multimillionaire NFL owner making personal sacrifices to retain a multimillionaire QB I doubt Irsay wants to reprise.

Hell will freeze over before Tom Condon lets a client of his wave free agency in an uncapped NFL and re-sign to a new old deal that doesn't guarantee the most up front money in the history of the world. He'd be violating his fiduciary responsibility to his client and all for that matter all of his clients if he did. That's the same Tom Condon who wouldn't let an even more strapped JETS organization talk Noodle Arm into taking an $8M pay cut to save the franchise. Although I read somewhere yesterday that the 30% rule was going to put the functional kibosh on that plan too.

Come to think of it, the 30% rule may inadvertently be either the best or the most diabolical cap rule ever implemented by the NFL. Perhaps if they do get an agreement and they want to fix the cash over cap crisis for good they should just keep it.

 

[MoLewisrocks]

Pay him $4.5 million extra this year to save $2.2 million on the cap. How crazy is that?

I believe the JETS did something exactly like that to save cap space this year when they paid a guy whose $11M option bonus they were never going to exercise this season a $4M bonus in November last season when they were totally disgusted with him because his penalties exceeded his INTS.

The cap defies logic. Which is why more than a few owners may not be all that concerned about its possible demise.

 

[workhorse]

Irsay's family acquired the Colts for $15 million. The franchise is currently valued at $715 million. Are you suggesting that Irsay doesn't have sufficient capital to operate his franchise?

Kraft acquired the Patriots in 1994 for $172 million. At the time he bought the team, it was the lowest revenue producing team in the league. Since then, he had privately financed the construction of a new stadium and increased the revenues to the second highest in the league. His franchise is currently estimated by Forbes to be the third most valuable in the NFL at a little over 1 billion. What has Irsay been doing since 1994?

Just because the franchise is worth $715 million doesn't mean he has $715 million in the bank. It's what is in the bank that matters when it come to playing all those signing and roster bonuses.

 

[hwc]

Come to think of it, the 30% rule may inadvertently be either the best or the most diabolical cap rule ever implemented by the NFL. Perhaps if they do get an agreement and they want to fix the cash over cap crisis for good they should just keep it.

Oooh. I like that idea a lot.

 

[AdamJT13]

If a team wanted to do option bonuses payable in 2007 and beyond, how many years would they be prorated for 30% rule calculations this week?

Bonuses can't be prorated more than three years past the final capped year. So all prorations currently can't go past 2009.

Also, would additional prorations from option bonuses impact the existing Deon Rule adjustments in Manning's contract?

No.

Do those prorations count in the same way as signing bonus prorations?

They count against the cap the same way, yes, but there is no Deion rule in the final capped year (this year, if there's no extension).

 

[hwc]

Thanks, Adam.

I'm still LMAO at the thought of Irsay having to write a check for an extra $4 million to Manning this year to save a couple mil on the cap as the only way to keep from choking on that contract. I guess he'll be callin' the mayor for a little more help from the city. Condon and Manning are probably chuckling about it, too.

I imagine that there are probably some NFL owners who are not chuckling about Polian's public threat to sue the NFL because the Colts can't get a free pass on reworking Manning's contract.

 

[Miguel]

Miguel - I know you're a capologist at heart

MLR and hwc,

The bottom line is that I think that it is possible for the Colts to use option bonuses to get under the cap this year if there is no CBA extension. You two have yet to show me that it is impossible.

BTW, I rather be a capologist at heart and have been right about Brady's signing a long-term contract than to pretend not to be a capologist and have been wrong.

 

[dhamz]

There is no chance the Colts release Manning to resign him in the uncapped year. They couldn't risk it.

Mo was actually wrong. They would not have to pony up another 30 million $ signing bonus. It would have to be $50 million. Imagine how much Snyder will pay for him in an open market.