Reiss on a contract extention for Brady

[MoLewisrocks]

Wait, so this is what would happen under that scenario, assuming a generic 6-year deal with a $6M signing bonus.

2010: $1.2M amortization ($6M/5-year max)
(new CBA)
2011: $0.96M amortization ($6M-$1.2M/5-years remaining)
2012: $0.96
2013: $0.96
2014: $0.96
2015: $0.96

No, that deal would amortize at $1.2M for 5 years and it can never be adjusted or altered. However if he got $4M in signing bonus and $2M in option bonus due in 2011 - once the new CBA is signed that deal would amortize as

2010: $0.80M
2011-14: $1.2M ($0.80M + $$0.40M)
2015: $0.40M

And if there are any roster bonuses scattered throughout his deal those would amortize over however many remaining years are left in the deal up to whatever is the max amortization allowed under the terms of the new "current" CBA.

This is why I said I could see both Manning and Brady signing deals longer than 5 years - just to build in some future flexibility where amortization is concerned. In our case the use of split bonus also allows for some flexibility in layering the outlay of bonus money and spreading the risk. In Indy's case they have always been willing to postpone the inevitable (via roster bouses they convert) in the treatment of Manning's cap hit to accommodate having some other core pieces retained during his tenure. Polian already used his voidable 8th and 9th years (2011-2012) of that 2004 deal to spread some roster bonus amortization from 2006 and 2007... If they end up eating several million once he's gone, Polian won't care. It's about maximizing the effect while he's still here. And for both teams that strategy may work this time since I'm sure neither expects to have a double digit QB stepping into that cap slot for at least a time after each is gone.

 

[pats1]

No, that deal would amortize at $1.2M for 5 years and it can never be adjusted or altered.

Which is what I said a few posts ago. I said that a new CBA would not retroactively change the way the bonus was amortized.

However if he got $4M in signing bonus and $2M in option bonus due in 2011 - once the new CBA is signed that deal would amortize as

2010: $0.80M
2011-14: $1.2M ($0.80M + $$0.40M)
2015: $0.40M

And if there are any roster bonuses scattered throughout his deal those would amortize over however many remaining years are left in the deal up to whatever is the max amortization allowed under the terms of the new "current" CBA.

Roster bonuses are not pro-rated.

This is why I said I could see both Manning and Brady signing deals longer than 5 years - just to build in some future flexibility where amortization is concerned. In our case the use of split bonus also allows for some flexibility in layering the outlay of bonus money and spreading the risk. In Indy's case they have always been willing to postpone the inevitable (via roster bouses they convert) in the treatment of Manning's cap hit to accommodate having some other core pieces retained during his tenure. Polian already used his voidable 8th and 9th years (2011-2012) of that 2004 deal to spread some roster bonus amortization from 2006 and 2007... If they end up eating several million once he's gone, Polian won't care. It's about maximizing the effect while he's still here. And for both teams that strategy may work this time since I'm sure neither expects to have a double digit QB stepping into that cap slot for at least a time after each is gone.

Again, roster bonuses do not get amortized.

 

[PatsFanSince74]

Just when I think I understand the NFL, I read a thread like this and realize how little I know about parts of it, like the cap.

Could a capologist enlighten me?

If 2010 is an uncapped year, as it looks like it will be, would it be possible for the Krafts, if they have the cashflow, to frontload a lot of Brady's contract (and others for that matter) into it? Could they just pay a silly amount for one year or front load the bonuses? In addition, by front loading they would be able to reduce the overall value of the contract because of the "time value of money" that would put more value on a dollar payed out in year 1 vs. year 4 or 5.

 

[pats1]

Just when I think I understand the NFL, I read a thread like this and realize how little I know about parts of it, like the cap.

Could a capologist enlighten me?

If 2011 is an uncapped year, as it looks like it will be, would it be possible for the Krafts, if they have the cashflow, to frontload a lot of Brady's contract (and others for that matter) into it? Could they just pay a silly amount for one year or front load the bonuses? In addition, by front loading they would be able to reduce the overall value of the contract because of the "time value of money" that would put more value on a dollar payed out in year 1 vs. year 4 or 5.

No, 2010 is the uncapped year. 2011 is a lockout, after the expiration of the CBA in March 2011.

The only bonus who can really frontload is a roster bonus, because that doesn't amortize. Or you could guarantee his first-year salary.

There's two issues with that though. The first is the 50% rule, which says that if a contract cap hit decreases by more than 50% from one year to the next, the difference is treated as signing bonus and thus amortized over the life of the deal. The second is that guaranteed salaries are also treated as signing bonus, meaning that they too are amortized over the life of the deal.

I suggest you take a look at this.

 

[PatsFanSince74]

No, 2010 is the uncapped year. 2011 is a lockout, after the expiration of the CBA in March 2011.

The only bonus who can really frontload is a roster bonus, because that doesn't amortize. Or you could guarantee his first-year salary.

There's two issues with that though. The first is the 50% rule, which says that if a contract cap hit decreases by more than 50% from one year to the next, the difference is treated as signing bonus and thus amortized over the life of the deal. The second is that guaranteed salaries are also treated as signing bonus, meaning that they too are amortized over the life of the deal.

I suggest you take a look at this.

Thanks. Your email and link are both very helpful. So, basically the people who negotiated the uncapped year and the cap itself anticipate nearly every game people could try to play with it. Maybe we should turn these people loose on the deficit and health care costs...they actually seem to know what they are doing!

(PS: the 2010/11 was a typo which i corrected...thx for that too)

 

[MoLewisrocks]

Which is what I said a few posts ago. I said that a new CBA would not retroactively change the way the bonus was amortized.



Roster bonuses are not pro-rated.



Again, roster bonuses do not get amortized.

Tell that to Bill Polian... You can amortize salary or roster bonuses if you convert them to signing bonus for bookeeping purposes when you pay them...that is how teams historically create cap space. That's what we did with Brady to accommodate Moss. It's what's known as the simple restructure. Players don't lose or gain anything beyond getting their money up front in exchange for which the team gets to amortize it out and lower the present day cap. Remember how Colts fans kept thinking Manning was being a hero by "restructuring" his deal to avoid all those double digit cap hits early on...and all that talk of his deal being a cap killer was crap...only to end up with $20M cap hits at the end of his deal...which would have been cap killers had not the cap exploded in 2006.

 

[pats1]

Tell that to Bill Polian... You can amortize salary or roster bonuses if you convert them to signing bonus for bookeeping purposes when you pay them...that is how teams historically create cap space. That's what we did with Brady to accommodate Moss. It's what's known as the simple restructure. Players don't lose or gain anything beyond getting their money up front in exchange for which the team gets to amortize it out and lower the present day cap. Remember how Colts fans kept thinking Manning was being a hero by "restructuring" his deal to avoid all those double digit cap hits early on...and all that talk of his deal being a cap killer was crap...only to end up with $20M cap hits at the end of his deal...which would have been cap killers had not the cap exploded in 2006.

I realize that, but I read it as you specifically wanted to amortize roster bonuses.