generaLee83 Posted February 20, 2007 Share Posted February 20, 2007 NFL contracts are not guaranteed correct? Is a signing bonus guaranteed? And if it is guaranteed and it has been agreed to have been paid over the course of the contract (10 million dollar bonus over 5 years) then does it count against the cap even if the player is released before the end of the contract? If nothing is guaranteed then what does it matter if a team 'amortizes the future'? Link to comment Share on other sites More sharing options...
Kelly the Dog Posted February 20, 2007 Share Posted February 20, 2007 NFL contracts are not guaranteed correct? Is a signing bonus guaranteed? And if it is guaranteed and it has been agreed to have been paid over the course of the contract (10 million dollar bonus over 5 years) then does it count against the cap even if the player is released before the end of the contract? If nothing is guaranteed then what does it matter if a team 'amortizes the future'? A signing bonus is paid this year, in full, and not over the course of the contract. A 15 million signing bonus is paid in cash, so of course it is guaranteed. The salaries for each ensuing year are not guaranteed. The league counts money as 'amortized" for salary cap purposes only. So a 15 million signing bonus on a 5 year contract, is paid in cash in full by the team immediately, but counts only 3 million per year against the cap for the next five years. If the player is released, all of the years left at the time of the cut are combined for salary cap purposes. So that same 15 million bonus, if he's cut after three years, becomes 9 million against the cap for that year and not 3 million each for the last three. There are ways around it, like guaranteed money and guaranteed roster bonuses in following years, but no player is going to accept 5 years of 3 million each in bonuses from the Bills when he can get all of the 15 million in cash from another team who does it the way everyone else does it. Link to comment Share on other sites More sharing options...
socalfan Posted February 20, 2007 Share Posted February 20, 2007 NFL contracts are not guaranteed correct? Is a signing bonus guaranteed? And if it is guaranteed and it has been agreed to have been paid over the course of the contract (10 million dollar bonus over 5 years) then does it count against the cap even if the player is released before the end of the contract? If nothing is guaranteed then what does it matter if a team 'amortizes the future'? A signing bonus is money you get for signing the contract. If you get a 10million signing bonus, you get all 10million the day you sign the contract. No one pays a signing bonus over the course of a contract. They all pay it up front....that's what it means to be a signing bonus. Guaranteed money means money you will get paid whether or not you complete the contract. So, unless you die between signing the contract and cashing the check....the signing bonus is considered guaranteed money. Finally, the NFL in order to accomodate deep pocket owners, allows a team to amortize the signing bonus for accounting purposes when calculating money spent towards the salary cap. The signing bonus is not literally amortized. It is paid out in one lump sum. The accounting purposes I'm speaking of here are not the standard account purposes that you hear most companies talking about during tax time. This accounting purposes means only that the NFL allows teams to flexibly manage the cap room they have. It makes no difference if a team "amortizes the future", if by "amortize" you mean "pays out a signing bonus in one lump sum and for accounting purposes when calculating free money under the cap". Because it is paid out in one lump sum, the owner just needs deep pockets to do this. The owner does not get to pay it out piecemeal. So the use of the phrase "amortize" is really incorrect in this situation. Link to comment Share on other sites More sharing options...
socalfan Posted February 20, 2007 Share Posted February 20, 2007 Here is an outlandished example. Suppose the Redskins trade with Oakland for the first pick of the draft. And suppose that the Redskins so love Brady Quinn that they cannot distinguish him from Joe Montana. And suppose that the agent representing Brady Quinn thinks likewise. And suppose that there is no rookie cap. Suppose the contract offered and accept by Brady Quinn is for 110million for 10 years. In this contract the following breakdown of payments is specified. 100million signing bonus and 1million in salary every year for the next 10 years. If the Redskins do not "amortize the future" then for a salary cap this year of 109million dollars the following would happen. The Redskins have to fit all of there other players into the 109-101=8million dollars remaining in cap room. Probably not do-able. If the Redskins "amortize the future" ... the NFL allows for "accounting purposes" the Redskins to treat the 100million signing bonus in 10 equal portions (Quinn however gets all 101milion this year). So this year the NFL allows the Redskins to report that Brady Quinn is costing them 10million in bonus plus 1million salary towards the cap this year. So, the Redskins are allowed to behave as if they have 109-11=98million cap room. Clearly poorer owners can not duplicate this and do not benefit as much as the weathier owners in using this strategy. Personally, I think this strategy should not be allowed. I think the teams should be forced to use cash to cap. That is Brady Quinn would count 101million dollars towards the Redskins cap this year. That would help level the playing field for all teams. Link to comment Share on other sites More sharing options...
Nanker Posted February 20, 2007 Share Posted February 20, 2007 Personally, I think this strategy should not be allowed. I think the teams should be forced to use cash to cap. That is Brady Quinn would count 101million dollars towards the Redskins cap this year. That would help level the playing field for all teams. The Players Union wouldn't allow it either. They want all their boys to get all they can and your first scenario allows that. The stars get the mad Hollywood Moviestar money and everyone else gets CEO money. C-2-C league-wide would mean every team would have The Bills payroll and no superstar money. Link to comment Share on other sites More sharing options...
generaLee83 Posted February 20, 2007 Author Share Posted February 20, 2007 All of this input is clearing the issue up alot in my mind. One more question though, why does a released players salary still count some against the cap then? With the release of Eric Moulds in '06 I believe he was slated to make around 10 million dollars but even after his release his salary still counted 6 million against the cap? How is this '6 million' figured? Is it a percentage or was that part of some bonus? Link to comment Share on other sites More sharing options...
JoeF Posted February 20, 2007 Share Posted February 20, 2007 All of this input is clearing the issue up alot in my mind. One more question though, why does a released players salary still count some against the cap then? With the release of Eric Moulds in '06 I believe he was slated to make around 10 million dollars but even after his release his salary still counted 6 million against the cap? How is this '6 million' figured? Is it a percentage or was that part of some bonus? The unamoritized portion of the bonus accelerates and is charged against the cap the year the player is released or traded. Its often referred to as "dead money". In Kelly's example-- the $15m bonus is amoritized at a rate of $3M per year over the 5 years of the deal. If the player is cut after year 3--$6M of the bonus (the final two years ) remains unamoritized and is charged in an accelerated manner against the teams cap for the coming season, Since base salaries are not guaranteed -- no cap charge occurs for base salaries. In Moulds' case the $6M charge was unamoritixed bonus. There are some nuances around this..I am not sure if the rule still exists --but it used to be if you cut a player after June 1st that the charge for the unamoritized bonus was spread over two season...but the basic concept is the same--the team needs to eat the entire unamoritized bonus as dead cap money if they cut a player before the end of his contract. Link to comment Share on other sites More sharing options...
Matt in KC Posted February 20, 2007 Share Posted February 20, 2007 Hey, I was just reading this thread and did a little research to find out if the June 1st rule still applied after the new CBA went into affect. I read on a 49ers board (in a Jonas Jennings thread!) that the team can cut two players before June 1st and choose to have their un-amortized bonus split over the current year and next (normal yearly amount current year, remainder next). This post sounded well informed, but I don't have time to research and confirm it. Here's the link. It's the last post (by TheWiz): http://forums.49ers.com/messageboard/showt...9588&page=4 Also, this article looks pretty comprehensive and easy-to-read Salary Cap FAQ page by Ask The Commish. Though I only had a minute to skim over it, I thought several of you here might like to read it: http://www.askthecommish.com/salarycap/faq.asp Link to comment Share on other sites More sharing options...
socalfan Posted February 20, 2007 Share Posted February 20, 2007 The Players Union wouldn't allow it either. They want all their boys to get all they can and your first scenario allows that. The stars get the mad Hollywood Moviestar money and everyone else gets CEO money. C-2-C league-wide would mean every team would have The Bills payroll and no superstar money. Yeah, I agree. So do the owners share revenues or do they use cash to cap to fix their problem? Link to comment Share on other sites More sharing options...
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