Colts over cap by $6M

[workhorse]

I have heard that there is actually no penalty on the books for teams over the cap. It is all at the discretion of the commissioner.
If the Colts are allowed to get away with being over the cap - whatever the number may be, what's the use??

I really cannot stand Polian.

They can be fined or lose draft picks.

 

[hwc]

Manning likely wouldn't agree to drastically reduced salaries. They can actually give him more money this season and almost identical amounts of money through each season of his contract and still 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. To save more cap room than that, they'd have to get him to accept less money overall, perhaps in exchange for more guarantees.

AdamJT:

I'm starting to think that part of the Special Master's ruling may have been that a team can't offer an option bonus to be exercised in the same league year in which the contract was written (or renegotiated). For example, to renegotiate a contract today with an "option bonus" next week (or next month) is really just a sham because there is no real "option" involved.

I don't understand what the Colts are doing at all. I did see one oblique reference in an article yesterday that the Colts had just said, "screw it" and had no intention of getting under the cap Thursday night -- a stance presumably predicated on a number of appeals they had pending.

I have reached the point where I would prefer to NOT see a new CBA reached this weekend. There are some franchises that deserve to have their teams blown up, IMO. If you didn't plan your cap with a contingency of a no-CBA possibility, then too darn bad. I'm not sure that there aren't enough owners who feel this way to block any agreement for now.

This whole "cash over cap" thing that reared its head today suggests that concern over cap abuses and massive backloading of contracts is an issue among the owners. The big backloaders really do screw up free agency for the teams that try to run a little tighter ship and it has to piss off some of those owners that there is never a day of reckoning.

 

[gomezcat]

I have heard that there is actually no penalty on the books for teams over the cap. It is all at the discretion of the commissioner.
If the Colts are allowed to get away with being over the cap - whatever the number may be, what's the use??

I really cannot stand Polian.

I understand that you have to have the NFL ratify all of your contracts. If the next contract is about to take you over the salary cap, they simply refuse to ratify it:

From http://www.askthecommish.com/salarycap/faq.asp

So...what happens if a team goes over the Salary Cap? Answer: The short answer is simply that NO team CAN go over the Salary Cap. Note that every contract must go through the NFL League Office before the deal can be made official. Presumably, one of the things the league must do at this time is determine whether or not the contract would violate the NFL's Salary Cap. If the deal does violate the cap, then the NFL will reject it.

There have been instances in which a team has managed to sneak a cap evading contract by the league. Upon further review, the violations were caught by the league and the respective teams were penalized. Penalties include fines and/or forfeiture of draft picks. In recent history both the Pittsburgh Steelers and San Francisco 49ers have been penalized draft picks, while the 49ers' front office personnel (Carmen Policy and Dwight Clark) were also fined.

 

[AdamJT13]

AdamJT:

I'm starting to think that part of the Special Master's ruling may have been that a team can't offer an option bonus to be exercised in the same league year in which the contract was written (or renegotiated). For example, to renegotiate a contract today with an "option bonus" next week (or next month) is really just a sham because there is no real "option" involved.

There's an option tied to every option bonus. And it's perfectly legal -- and has been done before -- to have an option that can be exercised in the same year the contract is signed. The special master's ruling was about guaranteed roster bonuses, not option bonuses.

 

[hwc]

The special master's ruling was about guaranteed roster bonuses, not option bonuses.

I know that the Special Master's ruling regarding the Manning and Harrison contracts was about guaranteed roster bonuses. However, there have been (obviously unconfirmed) reports that there was another Special Master ruling concerning other teams that pertained to option bonuses.

I would note that the rework of Clinton Portis' contract contained an option bonus exercisable in 2007, but not one exercisable for 2006.

======

BTW, I found the section of the CBA that explains why the Colts are busy adding cap dollars to their roster rather than trying to get under the cap, seemingly without a care in the world. Once you lose a Special Master ruling and a contract is ruled invalid, a team has ten days to renegotiate the contract with the player, regardless of any other CBA deadlines. So the article I saw suggesting that they weren't even going to try to get under the cap Thursday (or now Sunday) might make some sense.

 

[workhorse]

More details of the situation.

 

[hwc]

Workhorse:

Wow. Colts threatening to file a for an injunction against the NFL.

Gotta hand it to Polian. He's certainly ****y. It was ridiculous those contracts even made it to the Special Master. It was clear as day that the converting roster bonuses to signing bonuses would be subject to the limitation of the 30% rule. It took balls to even submit renegotiations in violation of the 30% rule.

The 72 hour delay is starting to make sense. With the Colts squawking about injunctive relief and the Redskins in dire trouble even finding a way to get under the cap, the NFL had a real meltdown on their hands Thursday night.

 

[Patsfanin Philly]

Actually, I think the Special Master's ruling was about the 30% rule.

You already know this, but for others playing along at home:

It's relevant because, for cap purposes, a roster bonus is counted as "salary" in the year it is paid. However, if you convert a roster bonus to a signing bonus so you can prorate it over four years, it no longer counts as current year "salary" when calculating compliance with the 30% rule.

I don't see how option bonuses are going to help the Colts. Option bonuses are treated just like signing bonuses and prorated. Thus, they wouldn't count as "salary" for 30% rule calculations either.

QUOTE]

http://www.indystar.com/apps/pbcs.dll/article?AID=/20060304/SPORTS03/603040488/1100
>>>Dan Emerson, the Colts' general counsel, said the team has not ruled out seeking a temporary injunction to Wednesday's decision by Stephen Burbank, a professor at the University of Pennsylvania Law School. Burbank, a special master who arbitrates disputes within the NFL, ruled the Colts could not convert substantial roster bonuses due Manning and Harrison into signing bonuses and prorate them for four years to lower each player's hit against the salary cap.<<<

The way I read that, roster bonuses can't be prorated and count in the year paid increasing the cap hit.........

 

[fgssand]

We are the Dolts, we overpaid for Harrison and Manning so we are allowed to cheat over our cap. If you do not like it, we will sue you. We do not care that everyone else is trying to or is under the cap (other than Washington).

 

[workhorse]

We are the Dolts, we overpaid for Harrison and Manning so we are allowed to cheat over our cap. If you do not like it, we will sue you. We do not care that everyone else is trying to or is under the cap (other than Washington).

Please. Everyone does the same thing. Heck, the Flacons did it with Vick a couple of days ago. Last season it was perfectly fine and if they agree to a new CBA it will be fine again. I'm sure the Pats do the same thing, so get down off your high horse.

 

[workhorse]

How shrewd you think Polian is depends on how you view the following cap numbers for a #2 wide receiver when you already have the highest paid WR in football on your roster:

Wayne's cap numbers

2006: $5.8 million
2007: $6.5 million
2008: $7.3million
2009: $8.1 million

Randle El wants the same type of deal. Link.

 

[hwc]

The way I read that, roster bonuses can't be prorated and count in the year paid increasing the cap hit.........

Right. A roster bonus is paid in a lump sum and treated as "salary" as far as the cap is concerned.

Manning, Harrison, (and Brady) all have large roster bonuses scheduled. What all of the teams planned to do is "guarantee" those roster bonuses, thus turning them into signing bonuses that can be pro-rated for cap purposes. At that point, the bonus is no longer treated as "salary" for cap purposes. This is all perfectly legal, as long as the resulting arrangement doesn't violate some other rule.

The problem the Colts have is that converting the roster bonus reduces Mannings 30% rule salary in 2006 from $10 million ($1 million salary plus $9 million roster bonus) to $1 million (just the base salary). According to the 30% rule, his salaries can only increase each year by 30% of this year's salary or $333,333. He would be limited to salaries of $1.333 million in 2007 and $1.666 million in 2008 and $1.999 million in 2009. Since his contract calls for much larger salaries than that, the contract would violate the 30% rule the instant they convert this year's roster bonus to a prorated signing bonus. Hence, they can't do it.

Between Polian and Manning's (very capable) agent, they had to have known this before they ever submitted the reworked deal. They knew that the contract would be denied and that their challenge to the special master would fail. For anyone in the NFL cap world, the 30% rule is child's play.

Brady's contract has exactly the same situation -- a $12 million roster bonus that I'm sure the Pats will guarantee and prorate to save some cap space when they need it this year. The difference is that Brady's base salaries ($4 million this year, $6 million next year, etc.) were set up for easy compliance with the 30% rule. They can convert all (or nearly all) of Brady's roster bonus and still be legal under the 30% rule.

I do not understand Vick's contract. On the surface, the numbers look like his restructure this week would have triggered 30% rule problems. So, either that contract is going to get shot down by the league or there are numbers in that contract that we don't know about.

 

[hwc]

Please. Everyone does the same thing.

I'm sure that every club occasionally submits a contract that violates some rule. But, I would be surprised if most clubs knowingly submit "illegal" contracts to the league office for approval. IMO, there is no conceivable way that the Colts didn't know the reworked Manning and Harrison contracts violated the 30% rule.

 

[Miguel]

Brady's contract has exactly the same situation -- a $12 million roster bonus that I'm sure the Pats will guarantee and prorate to save some cap space when they need it this year. The difference is that Brady's base salaries ($4 million this year, $6 million next year, etc.) were set up for easy compliance with the 30% rule. They can convert all (or nearly all) of Brady's roster bonus and still be legal under the 30% rule.

Brady does not have a $12 million roster bonus. He has a $12 million option bonus that is already being prorated $3 million a year. If Brady had a $12 million roster bonus, his 2006 cap number would be $20,523,750.

4,000,000 salary
12,000,000 roster bonus
4,523,750 signing bonus proration.

If Brady's 2006 cap number was over $20 million, why would Mike Reiss list it as $14.4 million on 1/22?? If Brady's 2006 cap number was over $20 million, why no mention in the Boston media???

Without an extension to the CBA, the Patriots will also be limited by the 30% rule if they want to lower Brady's $14.4 million cap number.

I do not know why the Colts are looking for an injuction.

If I were them, I would change the 2006 roster bonus into an option bonus for the 2013 season, the 2007 roster bonus into an option bonus for the 2014 season. Sure, Manning's 2008 renumeration would be lowered.

 

[hwc]

Brady does not have a $12 million roster bonus. He has a $12 million option bonus that is already being prorated $3 million a year. If Brady had a $12 million roster bonus, his 2006 cap number would be $20,523,750.

OK. So, the proration is already place by designating the bonus as "option" instead of "roster". In either case, Brady's contract is in compliance with the 30% rule.

If I were them, I would change the 2006 roster bonus into an option bonus for the 2013 season, the 2007 roster bonus into an option bonus for the 2014 season. Sure, Manning's 2008 renumeration would be lowered.

How would they get Manning to agree to that? The Colts could simply not excercise the options, Manning would be out $19 million in bonus money and all the Colts would give up is having him under contract in the option years when he will be 37 and 38 years old. The team can't do it on a "wink and a nod" basis as that is strictly prohibited by the CBA. They would have to come up with some other kind of buyout provision.

They will probably come up with something like that if there is no CBA extension. But, it will produce less cap savings than the illegal contract renegotiation they initially submitted to the league.

EDIT:

Question: Is the concept of proration for an option bonus in 2007 even valid? With the end of the salary cap, are there even any rules for how long to prorate the option bonus? I don't see anything that would suggest we should prorate that bonus over the length of the contract or any other period of time. With no cap, all that seems to logically go out the window.

 

[Miguel]

How would they get Manning to agree to that?

By making the 1st option payable a week after the contract is signed. Manning would then get his $10 million. As for not picking up the 2007 option the Colts would have no QB and about close to $18 million in dead money hitting the cap if there was a cap in 2007. Under my plan it would probably be cheaper to have Manning on the 2007 roster than not to have him.

 

[MoLewisrocks]

Please. Everyone does the same thing. Heck, the Flacons did it with Vick a couple of days ago. Last season it was perfectly fine and if they agree to a new CBA it will be fine again. I'm sure the Pats do the same thing, so get down off your high horse.

Polian has you guys brainwashed. Nothing is ever his fault. Lousy defense because he builds his on the cheap and ties up a third of his cap on 3 offensive players? Nope, just the other guys players getting away with playing a physical game physically. Remedy - screach for the competition committee to emphasize one rule to the extent it is now threatening the perceived integrity of the game. Failure to adequately plan for a worst case CBA scenario when signing your marquee players resulting in a one year case of the cap hell? Nope, just the other guys getting a break - so what if they followed some stupid set of 6 year old rules. Remedy - open pandoras box by suing the NFL.

Please this is classic Polian, and it's the same reason Colts players and fans end each season with that stupid assed stunned look on their collective faces. I'm surprised he hasn't sought injunctive relief against the NFL already for even holding a Superbowl this season without the team with HFA throughout in attendance. I mean, what up with that???

Your link on El doesn't work, but if he's looking for Wayne's deal, why wouldn't he now that Polian has upped the #2 WR benchmark? The Colts are supposedly a have not, yet if you look at the reported flash point issue going into yesterday's extension, cash over cap was the rallying cry of the small market teams. Oddly Polian is piling up cash over cap at an alarming rate this week. Why? Because he's already committed the Colts to shelling out $40M in bonus money for 2006 that he thought would only count as $8M. And because when Polian wants to pile up cash over cap to suit his purposes (as he did in 2004 when his payroll balooned to $108M vs. the Patriots $92M) it's not a problem. While the rest of the teams cautiously wait and watch the uncertain landscape this week, Polian charges forward - I guess with the caveat that if it doesn't work out the way he envisioned he can just pitch a fit and threaten a lawsuit.

Just maybe the Falcons planned well for the CBA contingency when structuring Vicks contract. Language reportedly already existed in Vicks contract that guaranteed him his bonus, so it's also probably fair to assume his salaries were also structured (or language existed to restructure them) in a way that pro rating it would not violate the 30% rule. Of course that probably cost them a bit elsewhere cap wise. Polian wasn't willing to pay that price, and now he wants someone to just bail him out because when things don't work it is never ever his fault (just like his QB).

 

[hwc]

By making the 1st option payable a week after the contract is signed. Manning would then get his $10 million. As for not picking up the 2007 option the Colts would have no QB and about close to $18 million in dead money hitting the cap if there was a cap in 2007. Under my plan it would probably be cheaper to have Manning on the 2007 roster than not to have him.

But, you had said make the options for tacking on additional years at the end of the contract.

You can't make the options be for adding years in the 2006-2012 time frame because he's already under contract for those years (hence no club "option").

 

[primetime]

Works for them, don't it?

Should we perhaps view it as ... raising the bar?

David Givens, answer your phone!

Hope Antowain Smith is still around to carry the load for the Colts next season, since that's about all they'll be able to afford.

 

[hwc]

Polian wasn't willing to pay that price, and now he wants someone to just bail him out because when things don't work it is never ever his fault (just like his QB).

That's why I hope there is no CBA extension this weekend. I think it's a good time for teams, players, and agents who have abused the cap system to pay the piper.