Ryan Lilja and Adam Vinatieri do indeed re-work contract; Colts have $5 million in cap space

I am SO glad its Friday!

After trying to stumble through, cross reference, read through conflicting reports etc.. I’ve come to the conclusion that nobody but the Colts and the NFL actually know how much salary cap space. If anyone says otherwise, or quotes a figure without saying they’re between 1 million and 15 million off, they’re lying or full of it.

*Summation at the bottom for the intimidated people that are scared of math or just want to know the gist.*

I’m not knocking the dude that made coltscap, but his numbers are off. I don’t know by how much, but there’s definite disparity between his numbers and how they add up. I COULD, based on my understanding, put together what I think their salary cap number is, but that would be a guess based on certain events that transpired after the initial signing of the contracts.

The Colts hold their cards very closely. They do it with injuries, and they do it with their cap number. The initial numbers are put out with total salary, signing bonus, and roster bonus numbers. However, when they restructure some deals, some places are definitely assuming things in what transpired.

For example; I know for a fact that both Peyton and Marvin’s contracts were specifically prohibited from converting their roster bonus to signing bonus. There was a special master ruling concerning it that ruled in favor of the league. Basically, they would have violated the 30% rule if they had converted his 9 million dollar roster bonus due in 2006 into a signing bonus because now that 9 million dollars would be considered a “signing bonus” rather than salary. Secondly, I know for a fact that at the very least, Marvin’s cap hit from being released is at least 1 million less than reported. He had his deal extended during the season and his 6 million dollar signing bonus started in the 2004 season, not 2009. They converted part of his salary his salary for that year into 1 million. That’s why there was a discrepancy between different places reporting a 7 year or a 6 year deal and a 1 million dollar in “guaranteed” money owed to him. It WAS technically a 7 year deal, but it started in the 2004 season.

Now if you’re still interested at this point, let me go into just Peyton’s contract for the moment. I already did a few on Marvin, and I think it’s significantly off. The way it was reported, they would’ve violated multiple rules, just like Peyton.

This is the initial contract’s breakdown as reported :

"The Colts named Manning their exclusive franchise player in February 2004 to ensure that he would stay off the free-agent market, then completed a seven-year, $98-million extension with him and agent Tom Condon on March 2, the day before the market opened. The deal included a $34.5-million signing bonus >>>>>

<<<<The contract calls for Manning to pocket all $34.5 million of the signing bonus by March 5, 2005. It begins with modest salaries of $535,000 for the upcoming season and $665,000 in 2005, but has roster bonuses of $9 million in 2006 and $10 million in 2007 to go with salaries of $1 million for each of those years. Its salary cap value jumps to $17.766 million in 2006."

A seven year contract signed in 2004 season ends after the 2010 season. He has 2 “voidable seasons” for 2011 and 2012. I actually believe Polian built those to account for his understanding, and how the league explained it to him at the time, of what he was allowed to do with the contract. It went to crap with the Special Master ruling though. But I’ll explain what the voidable years mean in a bit.

At the time, the CBA expired in 2006. And since Peyton’s contract extended beyond 2006 he was subject to :

"What is the "Deion Sanders Rule"?

Basically, it means that in a contract that extends into an uncapped year, the player’s combined salary, roster bonuses and reporting bonuses in all capped years must be equal to or greater than the combined prorated signing bonus allocations in the capped years.

If the latter is greater a cap debit is applied to the players salary cap number pertaining to the difference prorated over the capped years, then credited back to the players cap number in the uncapped year(s)."

It was enacted in 2006 because :

“There are many additional rules, some of them highly technical. An example is the so-called "Deion Sanders rule” that was enacted after Dallas owner Jerry Jones gave Sanders a (then-)astronomical $13 million signing bonus, combined with base salaries of the then-minimum salary of $178,000 for the first three years. The new rule states that the first three years of any player’s salary must equal the prorated amount of the signing bonus. The intent is to restrict circumvention of the salary cap."

Peyton’s bonus was 34.5 million. A 34.5 million bonus prorated over 6 years is subject to the rules of proration:

"(b) Signing Bonuses
(i) Proration. The total amount of any signing bonus shall be prorated over the term of the Player Contract (on a straight-line basis, unless subject to acceleration or some other treatment as provided in this Agreement), with a maximum proration of six years, in determining Team and Player Salary, except that:

Analysis: This is what enables teams to manipulate the salary cap in so many ways. In terms of cap hit, signing bonuses are spread out evenly over the length of the contract, up to 6 years."

Meaning the proration is an even number. A 34.5 million bonus prorated would be 5.75 million per yer over 6 years. They were allowed to prorate a contract in 2004 over 6 years, in 2005 it went to 5, in 2006 it went to 4. So now let’s add this up. 5.75 × 3 is 17.25 million. So Peyton’s salary MUST be equal to or greater than 17.25 million from 2004-2006. We know his base numbers are 535k, 665k and 1 million for those seasons. .535 + .665 + 1 = 2.2 million. 17.25 – 2.2 = 15.05. To not violate the Deion Sanders rule, Peyton HAD to make up 15.05 million in “salary”. 9 + 10 (roster) = 19. So at the time of signing, he was in the clear by 3.95 million and had a total salary of 21.2 million.

But here’s the twist. “The contract calls for Manning to pocket all $34.5 million of the signing bonus by March 5, 2005.” The contract was signed in 2004. Why would they specifically state that the entire bonus would be paid in 2005? Ah, because it wasn’t paid 34.5 million off the bat and now spans 2 seasons. Haynesworth did the same with his. He signed his contract on February 27th and his signing bonus is paid in entirety over 13 months. It’s accounting and costs less for the owner to do. The proration went from 6 to 5 years so they end at the same time. I also don’t know if it was a 50/50 split (two 17.25 million payments), but the bonus wouldn’t be a lump 5.75 per year. It would be 2.875 (17.25/6) the first year, and then 5 seasons of 6.325 (17.25/5 = 3.45 + 2.875) per season. That is an assumption of a 50/50 split, but I’m pointing out that the contract is complicated and there’s quite a few numbers moving. It would also change the amount of salary he had to have in ratio to bonus downwards. The new “salary” he would have would be 15.525 in the first three seasons, so he’s in the clear by 5.675 at this point.

And now came the “restructuring”. The reason I used the quotes is because neither Marvin nor Peyton “restructured”. They renegotiated. During normal NFL business transactions, players “restructure” to move money around. They’ve already been paid the money, it’s only an accounting tool. Everyone said “Oh Peyton didn’t take a pay cut, he just moved the money around.” However, I don’t believe he did. I don’t think he took a pay cut, but he pushed back the up front money to later years. So did Marvin. (Considering the risk associated with doing this, this actually puts both Peyton and Marvin in a class by themselves. It’s also the reason why I don’t believe Marvin was willing to restructure again. They probably asked him to give up some money that should have been paid to him in 2006. So not only did they ask him to give up future money, but money that was already promised to him. I don’t blame the Colts, but I definitely don’t blame Marvin if that’s the case.)

Now, let’s look at the numbers for Peyton if he “restructured”. Or in other words, converted his roster bonus to a signing bonus and prorated it.

2006 – 9 million/4 (max proration in 2006 was 4 yrs. This was also the one they were specifically prohibited from converting by the Special Master ruling) = 2.25/yr
9 – 2.25 = 6.75 million in cap relief
Reported cap relief from Peyton “restructuring” = “About” 5 million.
http://www.sofantasyfootball.com/nfl/f2/restructured-contract-peyton-manning-4286/

Huh? Yeah, as I said, oversimplified. Not to mention, now his salary to bonus ratio based off the assumption of converting and prorating is (15.525 + 9 = 24.525) (21.2 – 9 = 12.2). That, right there, now violates the Deion Sanders rule.

And now Peyton has another 10 million signing bonus due in 2007. They extend the CBA and now they can work with it. They can turn the 10 million bonus into a 10/6 or 1.667/yr. “Good idea! No problem, just prorate it through 2012 and we’re set!” Wait a second… (this is where I explain the voided part of his contract)

“Many contracts these days in the NFL included clauses for "voided years”. These are typically incentive laden additions to contracts that will allow the player to file for Free Agency sooner if certain goals are obtained. Void able years can be included when determining the term of years for signing bonus pro-ration. However, if the player meets the goal that voids the year or years of the contract, any amount of the signing bonus that was allocated to the voided year or years will be accelerated and added immediately to team salary. If the accelerated signing bonus puts the team over the Salary Cap, the amount that the team is over the cap will be deducted from the team’s Salary Cap for the next year. If a player can void a contract based on a "likely to be earned incentive," and the player is on the roster at a later time, there will be no acceleration. If a contract is renegotiated to reduce the number of years of the contract, the portion of the signing bonus that has not been allocated is included in team salary at the time of the renegotiation."

So, if they had simply converted and prorated, his proration of 2011 and 2012 would have already hit. I don’t know when his trigger for voiding is, but I do know that the trigger was minimum playing time. Which is something like 3 or 4 games a year. I had it somewhere but I’m late to go to my friends so I’m going to have to start wrapping this up. Anyway, that means that 3.33 million would be coming forward into the year the voided years hit. However, I don’t think the bonus was 1) Converted to a signing bonus and prorated and 2) Anything that was prorated never went to 2011 or 2012 but allowed Polian the flexibility to move money into those years if they extend him and the shit hit the fan. It was a safety net.

His total number of cap relief, if prorated through 2012 would’ve been 8.333. Which is close to the 8.2 in savings reported, but that’s still more than the 8-8.2 that’s been reported from various sources. However, since I believe he met his minimum playing time incentive before 2007 (again, I don’t know the exact wording but not missing games would’ve done it for him pretty quickly) the number would’ve been 10/3 or 3.33 million prorated for 3 seasons. So the savings would’ve been 6.67 for a conversion/proration.

There are other things I’m sure I need to go back and cover, but like I said, I’m late. So deal with it.

This is the total of the contract according to coltscap through 2010 (the length of the 7 year / 98 million deal). 94.667 million. The remaining is from the 3.333 in prorated roster money.

So in summation, to do Peyton’s contract the way people assumed after he restructured would violate the 30% rule and the Deion Sanders rule in 2006, and the voided contract rules in 2007. If the contract had included the voided years from the get go, it would have been reported as a 9 year 126 million dollar contract. Not to mention, the way the bonus money was prorated from the 34.5 million signing bonus is wrong in my opinion.

And while I don’t assume to know exactly how it’s structured, I do know that if it WAS structured the way people assumed from typical restructuring, Polian would’ve been in the bathroom cleaning himself with the CBA and laughing about it. Doesn’t it seem odd that we always seem to have money when we need it? I for one, think that Polian knew what he was doing.

P.S. I also think that if there is no CBA, the Haynesworth contract stands a very good chance of being voided. The reason I believe we seem like we’re hiding in a foxhole is because Polian is making sure that if there is no CBA, we don’t have to completely redo everyone’s contract. He’s waiting to make his move. We’ll know shortly if it’ll be redone, and if it isn’t, I still think he has something planned. Teams like the ‘skins and other people that are seemingly putting out huge contracts without much cap space are playing chicken with the situation. In the ’Skins case, they’re hoping there is a CBA, otherwise Haynesworth’s contract is going to superinflate. However, if they do complete the CBA, his cap number will allow them to do it for one year, but to keep him they’ll have to cut or renegotiate every year until they reach his “poison pill” in 4 years. I forget if I posted my response on Hayden’s contract, but the way it was designed made it failsafe. Or, at least if the entire 2009 salary is guaranteed it is.