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Split Bonus question - Miguel?

Discussion in 'PatsFans.com - Patriots Fan Forum' started by JR4, Feb 25, 2008.

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  1. JR4

    JR4 In the Starting Line-up PatsFans.com Supporter

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    .. or anyone.

    If a player signs a contract with a split bonus, part paid this year and
    part next year, is the CAP hit based on the total split bonus prorated or
    just the part paid this year prorated over contract life?
  2. ctpatsfan77

    ctpatsfan77 PatsFans.com Supporter PatsFans.com Supporter

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    AFAIK, any time money is guaranteed, it can be prorated over the remaining years of the contract. As an example: everyone's favorite Slot Machine received a $5.5M signing bonus in '07. That can be prorated at $1.1M/yr over the 5 years. He's also due to receive a $3.5M option bonus this year, which can be prorated at $875K over the remaining four years of the contract.

    Similarly, the Pats could guarantee Brady's salary, and prorate 1/3 of it over each of the next three years ('08, '09, '10).
  3. MoLewisrocks

    MoLewisrocks PatsFans.com Supporter PatsFans.com Supporter

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    The signing bonus paid this year would be spread over 6 years or the length of the contract (whichever is less) beginning this year. The option bonus is treated the same as signing bonus in advance for future bookeeping (cap) purposes. It would be spread over 6 years or the length of the contract starting in the year it is due. It comes off the cap if in fact it isn't picked up. What the split allows is for a team to not pay all the cash up front, and on a longer deal than 6 years it allows them to prorate bonus money over a longer term (i.e starting the 6 year clock over when the option is due as long as 6 or more years remain on a deal). It also allows for a lower initial cap hit. That can be a big benefit when you extend a player who has dead cap remaining from a prior deal too.
  4. JR4

    JR4 In the Starting Line-up PatsFans.com Supporter

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    So if Player X signs a 5 year contract that has 4M Bonus to be paid this
    year and a 6M bonus to be paid next year (split bonus) then for the Bonus alone the Team would get hit with what CAP hit assuming the team wants
    to pro-rate as many years as possible?

    So which of the following is then true?
    1) 10M over 5 years? 2M cap hit each year.
    2) 4 Mill over 5 years and 6Mill over 4 years.
    (Cap this year = .8 M and CAP next year .8 + 2.5 = 3.3M)
    3) something else
  5. ctpatsfan77

    ctpatsfan77 PatsFans.com Supporter PatsFans.com Supporter

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    (2), except there's an error in your math (the cap hit for the remaining four years is $0.8M + $1.5M [= $6M/4], or $2.3M).
  6. JR4

    JR4 In the Starting Line-up PatsFans.com Supporter

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    oops ... right ...

    well if this is how it works then that's good.
    So if you expect more CAP room next year then a Split Bonus could be
    useful. For example .... next year PATs won't have the almost 4M dead
    money for Dillon. So they could knock off 4M of a Bonus this year defraying
    it until next year when they pick up that CAP room.
  7. hwc

    hwc Rookie

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    If I'm not mistaken, Miquel tries to avoid "interpreting" contracts in his cap spreadsheets. If the future bonus is written as a one-time bonus (like a roster bonus), then Miguel lists it as a one-time non-prorated bonus in the year it will be paid (even though Miguel knows that the bonus will almost certainly be converted to a pro-rated bonus).

    For example, he had Stallworth's 2008 bonus listed as a one-time lump sum hit against the 2008 cap even though, had the Pats decided to keep Stallworth, that bonus almost certainly would have been juggled to pro-rate the money over the length of the contract.
  8. ctpatsfan77

    ctpatsfan77 PatsFans.com Supporter PatsFans.com Supporter

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    "decided to keep Stallworth under the original terms" would be more accurate. The Pats may well want him back, just not at the original $.
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