First, here are Peyton Predicament Part 1 and Part 2.
As the Winter of Peyton continues with an expected divorce from the Colts (irreconcilable differences?), I have received scores of questions about the financial ramifications of such a move to the Colts. I will try to answer these both from a cash perspective and by pulling down the curtain on the closely guarded mechanics of the Salary Cap. Stay with me here…
Cash
As discussed previously, releasing Manning represents a significant and dramatic cash savings to the Colts. Were the option exercised, the team would be required to pay Manning a $28 million option payment plus a $7.4 million salary, for a total of $35.4 million in 2012. That, combined with the $26.4 million he received in 2011, would mean a combined $61.8 million over two seasons.
Salaries of $8.4, $9.4 and $10.4 million in 2013, 2014, and 2015 follow this year’s salary, although none of these amounts are guaranteed.
Were Manning to be terminated – his contract, not him – all of these numbers would be deleted from the Colts' ledgers.
ICONManning and Luck together would cost almost $51 million in 2012.
Thus, on a cash basis, the Colts would save $35.4 million in 2012 and $63.6 million over the next four years. And, as the Colts plan for the future, approximately $15 million of the 2012 savings and $23 million of the four-year savings will be allocated to the presumed top pick in the Draft, Andrew Luck.
Again, if somehow, contrary to all indications, the Colts exercise the option on Manning and draft Luck, the combined cash to the two players – who play the same position – would be close to $51 million paid in 2012. Paying $51 million for two players at the same position, only one of which will play, is untenable.
Cap
The Cap consequences to a Manning release are a bit more complicated.
One of the main features of Manning’s contract when it was negotiated in July was a $20 million signing bonus at its inception. As per the NFL Salary Cap – unchanged in the new CBA – signing bonuses are prorated over the length of the contract. Thus, the Cap charge for Manning’s signing bonus – before adding any salary -- is $4 million per year every year from 2011-2015.
Remaining signing bonus proration accelerates upon release of a player. Thus, were Manning released, the entire remaining unamortized bonus -- $16 million -- would accelerate into the 2012 Cap. This charge is commonly referred to as "dead money”: amounts on a team’s Cap for players no longer on the roster.
During my nine years in Green Bay, I was always conscious of was making sure that when our Peyton Manning -- Brett Favre -- either retired or was traded (releasing him was never a thought), the Cap acceleration of his contract would not cripple the team. There are graveyards of dead money charges above $10 million upon the retirements/releases/trades of players such as John Elway, Steve Young, Troy Aikman, Jeff Garcia, Mark Brunell, Steve McNair, etc. Favre's "dead money" charge to the Packers’ Cap upon being traded to the Jets was $600,000 (and yes, shameless tooting of my own horn!)
The Option Treatment
The Cap treatment of the option bonus, due to its timing, is rather unique. Since it is due and payable within the 2011 League Year -- the March 8th deadline precedes the March 13th 2012 League Year opening -- the option amount is prorated into 2011 as well as future years of the contract. Thus, $5.6 million – 1/5th of the $28 million option bonus – was allocated as a Cap charge in every year of the original contract.
In the event Manning is released, the Cap charges for the option will come off the books, meaning the $5.6 million charge for 2012 will be deleted and the $5.6 million option proration amount in 2011 will then become a credit to the 2012 Cap, reducing the Colts' Cap charge on Manning by that amount.
Manning's Cap charge, if somehow the Colts exercise the option and keep him, is the following: $4 million (the amount of prorated signing bonus) PLUS $5.6 million (the amount of prorated option bonus) PLUS $7.4 million (the amount of salary) EQUALS $17 million.
So what is Manning’s 2012 Cap charge to the Colts if released?
$16 million (the amount of accelerated bonus proration) MINUS $5.6 million (the amount of credited option bonus proration) EQUALS $10.4 million.
Thus, if the Colts move on from Manning, the consequences of the contract signed five months ago will be $26.4 million in cash and $10.4 million in leftover "dead money" Cap charges.
Stay tuned. Test coming soon.
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And, since Peyton has indicated his willingness to restructure, isn't the interesting question whether a restructured contract could be created that would simultaneously pay Peyton, his presumably reduced (as a result of his injury), market value and leave the Colts with a cash and cap burden that makes sense to them.
With the news coming out of North Carolina about Peyton's arm not being what it used to be irsay
should just cut the guy NOW - Get it behind you. What follows is 7-10 days of horrendous publicity - how could you, blah blah blah yada yada yada.
Then some genius notices - forsooth - the draft is coming, the draft is coming.
Come August of this year it will be 18 months since Sir Peyton threw a serious pass. In those 18 months he has had serious surgery and had gotten 18 months older - neither of which is a good sign.
@ gobizzle - answer is in the article: "Manning's Cap charge, if somehow the Colts exercise the option and keep him, is the following: $4 million (the amount of prorated signing bonus) PLUS $5.6 million (the amount of prorated option bonus) PLUS $7.4 million (the amount of salary) EQUALS $17 million."
Andrew:
Why did the Colts sign Manning to a contract last year when they knew that he was still recovering from neck surgery?
Didn't they just throw away 28 million dollars?
For the life of me, I can't figure out why Irsay signed this contract?
Can you explain why the Colts did this and if you agree with it?
Andrew
Multiple media outlets have been reporting recently that the f-tag number for Mario Williams would be 22.9 million. What hasn't been explained is exactly where that number comes from. Could you throw a little blurb into one of your pieces explaining how that 22.9 million tag number was calculated?
Here is what I believe will happen concerning Manning and the Colts. Peyton agrees to negotiate a new contract to stay in Indy. A 4 year deal for approximately $64M with $16M guaranteed, no bonus money. The 2012 salary is the one Irsay wants to reduce for cap purposes, and of course he wants protection if Manning doesn't fully recover.
2012: $12.5M
2013: $14.5M
2014: $17M
2017: $20M
All numbers are approximates, but Irsay wants some of last year's money to go towards this year, and Peyton will oblige him in my opinion. Peyton wants to stay in Indy, and will help the team by taking a lower salary as long as there are assurances of trading the top pick for additional pieces and cap room for free agents. The new Tv contract takes effect in 2014, and the salary cap should expand noticeably. Peyton wants to win more than he wants the money, he wants no rebuilding, and he realizes Irsay and Indy have been very good to him. And starting over in a new city is a pain.
The Browns are the team most likely to trade up for Luck. They trade their 4th and 22nd pick along with their top 4th round pick and next year's 2nd round pick to move to #1. Indy now has the 4th, 22nd, and 34th picks, their 65th pick, and 2 early 4th round picks. Looking at 6 top 120 picks, almost suredly will get 4 instant starters from this haul. Plus they have Peyton Manning, and a project pick on a Tannehill or Osweiler..
The Browns really traded Julio Jones and a 2013 2nd rd pick for Andrew Luck. Win-win for both teams, win for Irsay and Manning as well. Now the game is on for RGlll with Cleveland out of the mix. Don't count the Chiefs out.
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Feb 09, 2012
11:01 AM
so how much does manning count against the cap if he isnt released?