OT: Colts will take a financial hit on Simon

[MoLewisrocks]

Per Mike Chappel of IndyStar:

"Regardless of how the Corey Simon saga is resolved, it will remain a hefty financial investment for the Indianapolis Colts.

Team president Bill Polian said Monday the team still is gathering information regarding the health of the veteran defensive tackle and has yet to make a decision on his status for the 2007 season. However, the Colts have been unsuccessful in an attempt to recover an $8 million option bonus paid Simon prior to last season as part of the five-year, $30 million contract he signed as a free agent in 2005.

Polian described the decision as a "procedural issue'' determined by a similar case involving former Denver wide receiver Ashley Lelie. Based on language in the new labor agreement, the Broncos were unable to recover an option bonus paid to Lelie. A special master ruled in Lelie's favor in November, and a March appeal affirmed that decision.

The Colts had filed documents seeking repayment from Simon, but the Lelie decision rendered the team's actions invalid. The Colts and the league had agreed to abide by the outcome of the Lelie situation.

Two additional grievances involving the Colts and Simon are expected to be heard in June. They center around the team's decisions to place Simon on the league's non-football illness/injury list last October because of an undisclosed illness and not pay him $1.9 million of his $2.5 million base salary.

The team has been noncommittal regarding Simon's status. Signs indicate he has played his final game in Indy.

Including bonuses and base salaries, the Colts have paid Simon more than $14 million. He did not play last season after undergoing surgery on his left knee during training camp and reportedly battling polyarthritis. In 2005, Simon started 13 regular-season games and finished with 41 tackles.

If the team parts ways with Simon, who is scheduled to count $7.055 million against the team's $109 million salary cap, he will remain a financial liability. At the very least, the team would have to count the remaining portion of bonuses paid to Simon against the cap. That's approximately $9 million. A possible scenario is for the Colts to release Simon, and split the remaining portion between the '07 (approximately $3 million) and '08 ($6 million) salary caps."


http://www.indystar.com/apps/pbcs.dll/article?AID=/20070515/SPORTS03/705150422/1247/SPORTS

 

[DaBruinz]

This will definitely not help the Colts.

 

[Gumby]

and split the remaining portion between the '07 (approximately $3 million) and '08 ($6 million) salary caps."

huh???????

exactly how does that work?

If he is cut now in the 2007 season how can you move his cap hits out to 2008?

Do the "World Champion" Indianapolis Dolts get some special Salary Cap privileges the rest of the league doesn't?

(or am i just a continuing ignoramus on the salary cap that I thought I understood the basics of).

(or is Mike Chappel full of crud?)

 

[Pujo]

huh???????

exactly how does that work?

If he is cut now in the 2007 season how can you move his cap hits out to 2008?

Do the "World Champion" Indianapolis Dolts get some special Salary Cap privileges the rest of the league doesn't?

(or am i just a continuing ignoramus on the salary cap that I thought I understood the basics of).

(or is Mike Chappel full of crud?)

It's always been that if you released a player after June 30, you could spread the hit over two years. With the new CBA, the June 30 date became moot and any player released after the season could have their hit spread over two years. We took advantage of the same thing with Corey Dillon.

 

[patchick]

huh???????

exactly how does that work?

If he is cut now in the 2007 season how can you move his cap hits out to 2008?

That's the June 1 rule, I believe. If a player is cut after June 1 part of his bonus amortization is assigned to the following year's cap. (There's now a provision to allow June 1 rules on a certain number of earlier cuts too, to help those players hit the FA market at a more advantageous time.)

 

[MoLewisrocks]

Sorry Gumby, ignoramus wins. If you cut a player after June 1 (or under the new CBA cut up to two veterans prior to June 1) you are allowed to split their dead cap taking the current year hit now and absorbing the balance the following season. That is what we will reportedly do with Corey's dead cap which we are absorbing in total now but can and likely will divide come June 1.

 

[DaBruinz]

It's always been that if you released a player after June 30, you could spread the hit over two years. With the new CBA, the June 30 date became moot and any player released after the season could have their hit spread over two years. We took advantage of the same thing with Corey Dillon.

Sorry Pujo, the date has always been JUNE 1st, not June 30th.

And the new CBA makes it so that you can release up to 2 veterans prior to the June 1st date and spread the cap hit over 2 seasons. So the June 1st date is still valid.

What has become moot about the June 1st date is talented veterans being let go. There is so much money floating around that most teams don't NEED to let the talented veterans go. They can wait until they are in training camp and put the player and other teams at a disadvantage by not releasing them until late. That way you get the benefit of having the player in camp and seeing if he still has anything left or, at the very least, creating camp competition.

 

[MoLewisrocks]

What has become moot about the June 1st date is talented veterans being let go. There is so much money floating around that most teams don't NEED to let the talented veterans go. They can wait until they are in training camp and put the player and other teams at a disadvantage by not releasing them until late. That way you get the benefit of having the player in camp and seeing if he still has anything left or, at the very least, creating camp competition.

That's not exactly entirely true. In the first couple of seasons under the new expanding cap there have been less cap driven cuts than in the past - as was to be expected. But as salaries and contracts catch up to the cap, those will return. Even now there are teams this season who are again pretty tight against the cap - just not as many as there used to be.

That grouping will likely expand over the next couple of seasons given some of the silly deals being lavished on mid tier talent. As the top tier players begin to get deals structured in the atmosphere those deals are creating, cap and cash will begin to shrivel. And the first way to dance around it will always be cutting aging veterans entering the old backloaded years at the end of existing deals that have been tinkered with restructure wise, because that provides the most bang for your buck cap relief wise. Guys who are probably worth their salary, but not nearly worth their cap hit. The one's who can't restructure again without actually taking an actual salary cut (like say a Milloy or Law). And those are guys you can seldom hang onto through camp because they see the developing writing on the wall and it can render them offseason headaches not worth keeping in the locker room once you've identified their potential replacement.

Bill's bargain basement veteran market may never be as well stocked as it was in 2000-2005, but it will start to pick up again after this season or next.

 

[DaBruinz]

That's not exactly entirely true. In the first couple of seasons under the new expanding cap there have been less cap driven cuts than in the past - as was to be expected. But as salaries and contracts catch up to the cap, those will return. Even now there are teams this season who are again pretty tight against the cap - just not as many as there used to be.

That grouping will likely expand over the next couple of seasons given some of the silly deals being lavished on mid tier talent. As the top tier players begin to get deals structured in the atmosphere those deals are creating, cap and cash will begin to shrivel. And the first way to dance around it will always be cutting aging veterans entering the old backloaded years at the end of existing deals that have been tinkered with restructure wise, because that provides the most bang for your buck cap relief wise. Guys who are probably worth their salary, but not nearly worth their cap hit. The one's who can't restructure again without actually taking an actual salary cut (like say a Milloy or Law). And those are guys you can seldom hang onto through camp because they see the developing writing on the wall and it can render them offseason headaches not worth keeping in the locker room once you've identified their potential replacement.

Bill's bargain basement veteran market may never be as well stocked as it was in 2000-2005, but it will start to pick up again after this season or next.

Mo -
If you look back over the last 5 years, the trend has been going down. There have been fewer and fewer June 1st cuts.

I'm sorry, but I don't see it picking up again. Teams have just gotten too good at managing the cap and not needing to make the June 1st cuts. In fact, I believe more and more teams will be making cuts between March and June if they are going to make cuts of players.

 

[solman]

That grouping will likely expand over the next couple of seasons given some of the silly deals being lavished on mid tier talent. As the top tier players begin to get deals structured in the atmosphere those deals are creating, cap and cash will begin to shrivel. And the first way to dance around it will always be cutting aging veterans entering the old backloaded years at the end of existing deals that have been tinkered with restructure wise, because that provides the most bang for your buck cap relief wise. Guys who are probably worth their salary, but not nearly worth their cap hit.

This makes no sense. The salary cap is just an accounting measure.

The only money that you can save by cutting a player is the money that you have not yet paid to him.

Any team that has not flunked salary cap 101 will therefore make its decisions based on how much money that player is owed, and completely disreguard his cap hit during the current year.

Here is a salary cap 101 refresher:

Let C = Player X's cap hit in year Y if he is not cut this year
Let C1 = Player X's cap hit in year Y+1 if he is not cut this year
Let M = Money due to Player X in year Y
Let STUFF = C-M
Let A = Money paid to player X before year Y, but not counted against the salary cap until after year Y

Scenario 1: Player X is kept on the team
C = STUFF + M

Scenario 2: Player X is cut before June 1
C = STUFF + A

Scenario 3: Player X is cut after June 1
C = STUFF
C1 = A

As you can see, no matter what the team does, its salary cap will be charged for STUFF. The STUFF represents money paid by the team in previous years which is due to be counted against the team during the current year.

By cutting a player, the team saves M (the money that would have actually been paid to that player), but has no effect on STUFF.

If a team restructures the player's contract, it is possible to move some of the STUFF into the future.

If a team forces the player to repay some of the money he was previously paid, some of the STUFF can be recovered.

If a team cuts or trades the player, 100% of the STUFF will be charged against their salary cap.

The bottom line: a player's salary cap hit is irrelevant to the decision of whether or not to cut him.

 

[solman]

Two additional grievances involving the Colts and Simon are expected to be heard in June. They center around the team's decisions to place Simon on the league's non-football illness/injury list last October because of an undisclosed illness and not pay him $1.9 million of his $2.5 million base salary.

Do we know if this dispute will have any impact on the Colt's cap going forward?

In other words:

1. Was the $1.9M charged against the Colt's cap in 2006?
2. If so, will the Colts get this money added to their 2007 cap should they prevail?
3. If not, will the Colts be charged this money in 2007 should they have to cough up the money in 2007?

 

[Miguel]

Do we know if this dispute will have any impact on the Colt's cap going forward?

In other words:

1. Was the $1.9M charged against the Colt's cap in 2006?
2. If so, will the Colts get this money added to their 2007 cap should they prevail?
3. If not, will the Colts be charged this money in 2007 should they have to cough up the money in 2007?

http://www.jsonline.com/story/index.aspx?id=558631
Simon is counting $3.692 million against the cap. He counts an additional $955,883 for a grievance against the team that hasn't been resolved.


so it appears that the answers to your questions are
1.) no but 50% of it was.
2.) Yes but just half.
3.) Yes but just half.

Hope that this helps.

Miguel

 

[ctpatsfan77]

This makes no sense. The salary cap is just an accounting measure.

The only money that you can save by cutting a player is the money that you have not yet paid to him.

Any team that has not flunked salary cap 101 will therefore make its decisions based on how much money that player is owed, and completely disreguard his cap hit during the current year.

Everything you posted is true--and I agree that teams can't generally recoup money paid out, only keep money in their pockets that otherwise would have gone out. That said, the issue is not just how much that person is owed, but how much is left to count against the cap of the STUFF already paid.

This is one of the reasons why Wes Welker is essentially "uncuttable" this year: the Pats would take a $7M+ hit next year to cut him.