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  1. #1
    COJOMAY is offline Jersey Retired
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    Got a question on salaries

    OK, let's say we sign a player to a $25 million dollar contract -- $5 million per year for five years -- and he doesn't pan out. He's a dud. So we put him on the FA list the following year and no one picks him up. So we cut him. Are we stuck paying him the full $25 million or only the $5 million for the year he played?
    I know that it would depend a lot on how the contract was written but I'm talking in generalties.
    Kentucky Vikes Fan

    When you require nothing, you get nothing; when you expect nothing, you will find nothing; when you embrace nothing, all you will have is nothing.

  2. #2
    Del Rio Guest

    Re: Got a question on salaries

    "COJOMAY" wrote:
    OK, let's say we sign a player to a $25 million dollar contract -- $5 million per year for five years -- and he doesn't pan out. He's a dud. So we put him on the FA list the following year and no one picks him up. So we cut him. Are we stuck paying him the full $25 million or only the $5 million for the year he played?
    I know that it would depend a lot on how the contract was written but I'm talking in generalties.
    If it was the NBA yes you would be stuck forking out the cash. In the NFL however salaries are not guaranteed.

    In most cases you can cut a guy without having to pay the remainder of his contract.

  3. #3
    whackthepack is offline Jersey Retired
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    Re: Got a question on salaries

    You would take a salary cap hit for the bonus money that was guaranteed and spread out over the length of the contract.

    The player would not receive any of the salary part of the contract, unless the contract specifically said that it was guaranteed. In the NFL at the present time players salaries are almost always not guaranteed, sometimes the first year can be.

    That is why the Seahawks would not match the offer for Hutch, if he got hurt the first year and never could play again, with the guaranteed contract the next year the Seahawks would have been hit with almost 40 million against their cap for that year.

    Any bonuses that were guaranteed would have to be paid, but if they were not guaranteed like the 6 million to Culpepper, are not paid.
    What we've got here is failure to communicate.

  4. #4
    COJOMAY is offline Jersey Retired
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    Re: Got a question on salaries

    You would take a salary cap hit for the bonus money that was guaranteed and spread out over the length of the contract.
    What do you mean by "bonus money?" Salary isn't considered bonus money is it? In other words, this guy was promised $25 million in salary over five years. That pro-rates to $5 million per year. He gets let go after one year. I would not think there would be any hit against the salary cap at all or am I wrong?
    Is that why teams usually offer "bonus money" in the first year?
    Kentucky Vikes Fan

    When you require nothing, you get nothing; when you expect nothing, you will find nothing; when you embrace nothing, all you will have is nothing.

  5. #5
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    Re: Got a question on salaries

    "COJOMAY" wrote:
    What do you mean by "bonus money?" Salary isn't considered bonus money is it? In other words, this guy was promised $25 million in salary over five years. That pro-rates to $5 million per year. He gets let go after one year. I would not think there would be any hit against the salary cap at all or am I wrong?
    Is that why teams usually offer "bonus money" in the first year?
    There's really 2 meanings to Bonus Money.

    And no, salary isn't considered bonus money.

    There's the guaranteed bonus, which is the Signing Bonus. For example Michael Vick got a $32 million signing bonus on his 7 year deal. Now this $32 million is guaranteed to him. Whatever happens this money is his. However, the way it is handled in the Salary Cap is that the signing bonus can be spread out over the length of the entire contract (the term is "prorated signing bonus"). This means that, essentially, he will get 7 annual installments of $4.5 million unless he agrees to renegotiate. This is the money teams get stuck with for 2 years AFTER they cut a guy. Hence the significance of the June (or is it July?) cut date, which is the final point when a team can cut a guy and spread the Cap hit over 2 years.. after that point any guy that gets cut has his Cap hit slapped at the team in 1 hit.

    Then there's the non-guaranteed boni. (Yes "boni" is the plural of "bonus"). This includes Roster boni, workout boni, playing time, etc etc. Now these AREN'T guaranteed, and as such do not hit the team cutting the player with a Salary Cap hit related to how much the boni were worth. This is why you saw Daunte Culpepper with that $6 million Roster bonus for the 1st week of Free Agency. If the team chose to pay that $6 million bonus, they would have to set that against the Cap for the coming season, however, by putting the bonus in the middle of March, the Vikings forced a situation where they would either renegotiate the bonus, convert it to a Signing bonus and prorate it over the rest of his contract, or cut him. The latter became the only option.

    Then there's the workout boni and the like. These don't count against the Cap unless they are earned. This is why Daunte's $101 million deal is nothing near what it seemed. It was filled with incentives such as Special Teams play and the like. These are called 'Not-Likely-To-Be-Earned' incentives, and, unless they are earned, create a Cap 'credit' for the following season. This is how the Vikings got a start on their massive Cap space years ago. There are also "Likely-To-Be-Earned-Incentives", otherwise known as "Falling-Off-A-Log-Incentives", which are self-explanatory. Unless you're Kellen Winslow. His contract had massive boni dependant on incentives such as playing in 30% of all offensive plays (and considering he was going to be a starter from day 1 in Cleveland, he should have earned these easily), but because he broke his leg he didn't get a THING. However, those incentives have since been renegotiated so that they can be earned any year in his deal.

    Hope that helps!

    :grin:

  6. #6
    COJOMAY is offline Jersey Retired
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    Re: Got a question on salaries

    Great information Benet! Where the heck do you get the knowledge of this? So then, one more question????
    You explained "cap space" a bit but how does a NFL team earn cap space? I understand how it varies, but how do they get it in the first place. Is it the amount of money you are under in your payroll for the entire year that is set by the NFL?
    Kentucky Vikes Fan

    When you require nothing, you get nothing; when you expect nothing, you will find nothing; when you embrace nothing, all you will have is nothing.

  7. #7
    Prophet Guest

    Re: Got a question on salaries

    Benet is a walking encyclopedia. Push the submit button and he spews forth facts. Gotta love it.

  8. #8
    whackthepack is offline Jersey Retired
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    Re: Got a question on salaries

    "COJOMAY" wrote:
    You would take a salary cap hit for the bonus money that was guaranteed and spread out over the length of the contract.
    What do you mean by "bonus money?" Salary isn't considered bonus money is it? In other words, this guy was promised $25 million in salary over five years. That pro-rates to $5 million per year. He gets let go after one year. I would not think there would be any hit against the salary cap at all or am I wrong?
    Is that why teams usually offer "bonus money" in the first year?

    If his whole contract was salary and no bonus (so all 25 million salary), and if he was cut after the first year, you are correct he would get no more money, and no salary cap hit for the team.

    The bonus can be in the first year (commonly known as a signing bonus), but a lot of contracts have bonuses in different years (commonly known as a roster bonus), these type of bonuses are due when the contract says, if the player is on the team at that time.

    But they usually offer signing bonuses to get a player to sign the contract, because that money is usually guaranteed. If a player knows that he signs a deal for 40 million dollars, and gets a 15 million signing bonus he is guaranteed to get 15 million! So if he plays in a preseason game and breaks his back and never plays again, he is guaranteed to get the 15 million and no other money.
    What we've got here is failure to communicate.

  9. #9
    Benet's Avatar
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    Re: Got a question on salaries

    "Prophet" wrote:
    Benet is a walking encyclopedia. Push the submit button and he spews forth facts. Gotta love it.
    Not bad for an Englishman eh?

    :grin:

    "COJOMAY" wrote:
    Great information Benet! Where the heck do you get the knowledge of this? So then, one more question????

    You explained "cap space" a bit but how does a NFL team earn cap space? I understand how it varies, but how do they get it in the first place. Is it the amount of money you are under in your payroll for the entire year that is set by the NFL?
    You're right. It's the difference between a franchise's total salary (including prorated Signing boni and optioned Roster boni and such, because once a one-time bonus like a Roster bonus has been paid it is immediately charged, in full, against the Cap for that year) it pays out to it's players (because the Cap doesn't include coaching staff or anything else) and the limit the NFL has set for that particular season relative to Gross and now (a percentage of the top 15 teams earning) local revenues. This is why the Redskins, without fail, have to renegotiate loads of contracts at the end of each season, because their deals are so back-loaded that without the renegotiations they'd be 10's of millions of dollars over the Cap each year. The Vikings got so much Cap space for a number of reasons, and they, basically, revolve around that all-round amazing member of the front office:

    [size=18px]Super Rob Brzezinski![/size]

    He stacked Daunte's deal with 'Not-Likely-To-Be-Earned' incentives which inflated the numbers that made it to the media (ie: the reports Daunte got $101 million over 10 years, when in fact the number he would actually see is only a fraction of that), and unlike the Redskin's contracts, the Vikes aren't as backloaded, which means we won't have to have either force renegotiations or a salary Cap purge like was seen in Tennessee or the New York Jets. By using the 'Not-Likely-To-Be-Earned' incentives, the Vikes got a Cap credit because these incentives WERE NOT earned, and therefore did not raise the salary of the players who were trying to achieve them. Basically, to continue to use the Culpepper example: everyone at that negotiating table KNEW Daunte would never earn Special Teams time, why would a QB play on Special Teams? But it inflated the final numbers of the deal and made Mason Ashe look good. That's the only reason he accepted the deal on Daunte's behalf.

    Also; remember we traded Randy Moss. He was scheduled to earn aprroximately $8 million in SALARYlast year. That's after the prorated Signing Bonus. When he got traded, the Signing Bonus proration counted against the 2005 Cap, but now even that is gone because it doesn't count for us against the 2006 Cap, so that's another way for the Vikings to get money back.

    It's obvious now how the Vikings pursue Free Agents. We don't offer massive Signing Boni. With the most recent high profile signings we've made; Antoine Winfield, Fred Smoot and Steve Hutchinson, they were all offered massive ROSTER boni to front-load their deals so it cuts into our Cap NOW.. This way we don't have to prorate Signing Boni over 5, 6 or 7 years and accumulate multiple large Signing Boni contracts at the same time. By putting in Roster boni at the front of a contract, it means that, using the Smoot example, he got $10 million or so in immediate guaranteed money (while it was not strictly guaranteed in the sense the Vikes could have cut Smoot in the day between the contract being agreed and the date the Roster bonus was due, common sense basically shows it was guaranteed) up front, and while that took a chunk out of our Cap space last year, this league year the Vikes got $10 million back in Cap space as a result of the Roster boni being applied to LAST YEARS Cap.

    Hope that helps... Again!

    :grin:

    And for the record, my knowledge comes from a lot of talk shows, scouring NFL.com, ESPN.com, watching Mike Carlson on Channel 5 over here in the UK (he's one of the few analysts whose opinion I respect), boards like these (gotta give you guys and girls a plug!) and.. Well.. Probably most importantly.. Reading PFT every day for the past 2 years!

    :thumbleft:

  10. #10
    COJOMAY is offline Jersey Retired
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    Re: Got a question on salaries

    Again, for an Englishman you are darn smart and a good guy to have on this board! Heck, the most a lot of people know in the states is what they learn on Madden 2006! LOL
    Thanks for all your help! Yo have made this whole salary cap situation easy and helpful to understand.
    Kentucky Vikes Fan

    When you require nothing, you get nothing; when you expect nothing, you will find nothing; when you embrace nothing, all you will have is nothing.

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