Peyton Manning's Contract: Possible Impacts on the Colts
Joe Baker breaks down Peyton Manning's atypical contract and how it might affect the Colts as the team moves forward.
The biggest off-season question for the Colts is what to do with Peyton Manning and Andrew Luck. Can they coexist? Should they coexist? If not which QB do you go with?
The biggest obstacle to Manning and Luck being on the same roster may not be ego, or value, it might be the cap. Not the hit Andrew Luck's contract would put on the cap, the new rookie wage scale makes him quite affordable relative to top 3 picks pre-2011. It's the cap hit from releasing or trading Peyton Manning that could prevent the Colts from keeping both.
Peyton Manning's contract included $51million in bonuses, a 20million dollar signing bonus (which for cap purposes is spread evenly over the 5 years of the contract), a 3million dollar roster bonus in 2011 (which goes against the 2011 cap) and a 28million dollar option bonus (the cap hit of which is spread over the 4 years remaining on the deal).
Right now the Colts have paid Peyton 23 million in bonuses, and only had 7million count against the cap leaving 16mil outstanding. The Colts have to take this money against the cap, and if he's released or traded they have to take it over the following 2 years. 16mil is a lot of dead cap, but what happens if Peyton is still on the Colts roster when his option bonus is due, March 8th?
With 28million more paid to Peyton in March that would bring the outstanding bonus money to 44 million, making releasing or trading Peyton between March 8th and the 2012 season totally impossible. During the 2012 season 1/5th (4mil) of the signing bonus and 1/4th of the option bonus (7mil) will be counted against the Colts 2012 cap, reducing the outstanding bonus money to 33million. Still a monsterous cap hit to take, enough to cripple a team trying to transition to an Andrew Luck era. In 2013 another 11mil of that bonus money is paid on the cap getting the Colts within shouting distance of where they are now at 22mil. Cutting or trading Peyton after 2014 would leave 11mil of dead cap, by which point Andrew Luck will have sat on the bench for 3 years.
To recap:
Cut or Trade Peyton before March 8th: 16mil of dead cap
Cut or Trade Peyton after March 8th: 44mil of dead cap
Cut or Trade Peyton after 2012: 33mil of dead cap
Cut or Trade Peyton after 2013: 22mil of dead cap
Cut or Trade Peyton after 2014: 11mil of dead cap
After 2015: Peyton's contract expires
Also, what about cutting him, and re-signing him for cheap? He would be crazy to waste the rest of his career here, but he is crazy loyal.
It's not clear, so if Peyton is released before March 8th, what's the cap hit?
16 in 2012 and 16 in 2013, or 8 and 8, or something else?
Anyway, great job by Polians! /sarcasm
The logic is impeccable. Colts collapse without Peyton Manning . Solution? Cut Peyton Manning.
The numbers are not right there. The numbers make it a challenge not an impossibility. And drafting well solves a lot over the next two years
@GregC@rtmckeon You´re missing the point, Greg. Having 30 M of dead cap space is a good idea in today´s NFL if it allows you to build an unhealthy situation in a team between 2 QBs who legitimately should be starters. What could be more glorious than challenging yourself valiantly by shooting yourself in the foot?
I think folks are missig two key issues here an it is the reason I think the Clts keep Peyton if healthy and draft Luck, which i exactly what the should do. First, if the Colts had #18 this year, they would have been a palyoff contender and the same is true for next year.Denver got in with 8-8.Does anyoereallyhink that the Colts would have missed the playoffs this year wih Peyton? Same will be true next year. Also, this is the NFL, luck wil replace Manning when he beats him out, won't happen in year 1, but will happen befre the last yer of Peyton's contract
Wow great job.... question of the cap always comes up and this is a great insight into the cap situation.
Thanks much Joe!
Knowing that we're basically completely screwed if this option is signed and we don't trade the pick, wouldn't Peyton advocate having himself cut, then re-signed later on? Would that be the hypothetical best situation, if we did indeed want him back? Man, you would think SOMEBODY would've thought this through before all of the contract talks were happening last year. Hindsight's 20/20, though... =/
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@TheGreatMisdirect That is a valid option, but with that in mind, Manning's 2012 cap hit would start at 10.4. A new base salary would be added to that an a portion of whatever signing bonus he were to sign would be included in that as well.
In hindsight we should have resended his Franchise tag making him a free agent and sign him to a new deal if and when he was healthy. Everything else was just too much of a gamble. He wants to be a Colt. Irsay wants him to be a Colt, so they could have had a handshake agreement, or in the very least a smaller signing bonus with a larger option bonus, which would have made things more beneficial from the team perspective.
@Sarcasm
This is totally speculative, but I have to wonder if the drama around that contract and the way it played out was the beginning of the end for Irsay and Polian. Toxic behavior and lots of losing and all that, too, of course, but my gut says something significant changed to make Irsay's gut decide it was 'time for a change'.
@Sarcasm @TheGreatMisdirect What happens if we pick up the option and Manning can't pass the team physical? That's assuming he failed his exit physical and would have to pass one to practice.
@keep_the_eraser@TheGreatMisdirect That's above my pay-grade. Too many variables involved.
From everything I've read his 3/1 ability should be about where it is going to get. So we should have a pretty good idea.
@Sarcasm @TheGreatMisdirect That makes since. I was just curious if he couldn't pass a physical prior to or on 3/8 and we still signed him, then come time to start OTA and training camp or even up to the start of the the season and he still can't pass one are we still on the hook for the money. It would not make sense to sign him if he failed a physical but you never know.
@keep_the_eraser@TheGreatMisdirect He will have to pass a physical at that point. If he doesn't then the option bonus wouldn't be exercised.
These scenarios seem to be under the idea of keep him or cut him. If Peyton retires instead, does that change the numbers somehow?
@bluegirl It's more along the lines of picking up the option or not picking up the option.
If we do not pick up the option and he retires then the 2012 cap hit is 10.4 million and everything is over.
If the option is picked up, and he's forced to retire then the year-by-year scenarios are still in play.
Precisely the post we needed, Shake. Thanks for presenting it in such a clear way. Between that and Sarcasm´s info, we fans should have a good idea of where the team stands. At first (and second and third) glance, it seems completely outrageous to entertain the possibility of having Manning and Luck on the same team. Most of us feel pretty strongly about that. So, the million dollar question is, do you think there´s a way to make it work, someway, somehow? Or are you completely convinced it would doom the Colts to mediocrity and sink them until 2014 and maybe beyond?
With apologies to Shake and Sarcasm, if they can find out these numbers, I would assume that Grigson would be able to as well. (Heavan help us if he couldn't.)
So isn't it safe to assume that Grigson would go into his interview with Irsay armed with this information? And therefore wouldn't it also be reasonable to assume that Grigson would ask Irsay what his position on Peyton is? To which Irsay by all acounts would have responed "if Peyton is healthy we are keeping him and drafting Luck".
To which any reasonable person would respond, "are you effing nuts?"
I was passionately against Manning and Luck both being on the team before I knew these numbers. But now...
And what the hell does it say about Grigson if he would accept the job with this scenario looming?
@DougEngland The problem I see with this logic is simple: We don't really know what Irsay is thinking. Irsay would be unwise to completely share all of his information/opinions with all of the potential GM candidates. If I had to guess, he listened to their thoughts on the situation, and he made his decision without sharing all of his thoughts.
We also must remember that Irsay (and now Grigson) are helping the team most by showing absolute support of Manning and absolute desire for Luck until they know about Manning's status.
@mattshedd@DougEngland That is the hope I hold onto. They HAVE to act like they will draft Luck no matter what if they aren't going to devaluate it.
@DougEngland Just for the sake of argument, isn't the salary cap supposed to shoot through the roof in 2014 when the new TV contracts get signed? In that case maybe you re-sign Freeney to some goofy-ass backloaded contract, start rebuilding through the draft, and focus on just getting through the next two years.
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It is supposed to increase at that time, I haven't seen an estimate of how big the jump is supposed to be, but it is supposed to be significant increase.
Freeney's 19 million 2012 cap hit is made up of 14 million in a base salary and 5 million in bonus dollars that he has already received. A simple extension of the most of that 14 million dollars(let's say 10/4) would drop his cap # 7.5 for 2012, and would have 7.5 million in bonus dollars tied into 3 final years. He would have base salaries added to that, but that should be a quick fix and shouldn't have to have crazy back-loaded contract to free up some money.
On paper it should be pretty simple.
Grigson/New Head Coach(still hoping for one of those)/Irsay would have to determine if Freeney's age/ability merits an extension similar to that, but it should be an easy process.
@Sarcasm@squirrel@DougEngland How likely is that extension? Good to see Freeney´s situation is eminently manageable. Again, thanks for the info.
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I disagree with some of the #'s. They are close in my opinion but not entirely accurate.
If his option bonus is not picked up and he's released his cap # is $ 10,400,000.00 because we are carried at 5.6 credit in the 2011 season for his option bonus that would lower the 16million of accelerated cap dollars.
If he is paid the option bonus and then is cut, traded or retires and I use the word traded loosely because it's not feasible to do for obvious reasons, his cap hit:
prior to the 2012 season $ 38,400,000.00
prior to the 2013 season $ 28,800,000.00
prior to the 2014 season $ 19,200,000.00
prior to the 2015 season $ 9,600,000.00
Here is chart explaining this in more detail:
http://thesarcasm.files.wordpress.com/2012/01/salary010512.jpg
Another chart showing actual dollars that will be spent on the QB position 2011-2014.
http://thesarcasm.files.wordpress.com/2012/01/outofpocket.jpg
@Sarcasm
I keep seeing this $10.4 million number, as well. I don't understand why they would get a cap credit, if they don't actually pay the $28 million bonus. My understanding is that they get the credit for picking up the bonus at the end of the league year. Why would they still get the credit, if they don't picck up that bonus and cut him? That doesn't seem to add up. Seems like they would be on the hook for the full $16 million, since they didn't apply the $28 million bonus.
I guess I'm not clear on something - if it's a 2012 Bonus, which is what's being reported, you can't prorate the money from a 2012 bonus back to 2011 - how are you saying a 2012 Bonus gets prorated back to 2011? If I'm misunderstanding, and it's just a 2011 Bonus that's being misreported as a 2012 bonus, then that's the source of my confusion. @Sarcasm
Here is an article where Peter King addresses.
http://sportsillustrated.cnn.com/vault/article/web/COM1192410/5/index.htm
My understanding is that since the option bonus is due in the 2011 league year, then it can be "carried" or "credited" in 2011.
If the option isn't paid, then that is why it is treated as a credit to the 2012 acceleration of 16 million.
@Shake1n1bake@GregC@Sarcasm The 2012 season starts on March 13th, right? That's the date I could find after some digging.
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@Sarcasm Thanks, whether the option bonus was split over 4 or all 5 years was the point I wasn't totally sure on. Same general outline, but that makes the numbers a bit less extreme.
It stumped me to start with on how the reports of a 16 million cap hit in 2011, 17 in 2012, were coming about it took some number crunching, and Peter King has had some comments about the 10.4 figure being his cap # if the option bonus isn't picked up.
The Andrew Luck #'s, are based on a 5% increase to Cam Newton's current deal, and the Salary Cap info is based on a slight 1% increase which is in line with what people like King and Andrew Brandt have reported.
@Sarcasm yeah, I couldn't find solid info so I went with what made the most sense, but charging it against the cap then giving a credit if they don't pick it up makes sense too.
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Nice work, Joe. Thanks for laying this out in terms the average fan can understand.
Irsay has been saying for weeks 'We have a serious cap issue'. Sounds to me like they've invested heavily in 18 over the next 4 yrs (who can blame them?), and a healthy Peyton really is the best option.
Yet Irsay has also hinted about building for the future. Does that mean they take a QB as well as keeping 18? Doesn't make sense to me, but maybe they figure they can make it work. Personally, I think they're posturing and will trade the pick when the time comes.
If Manning is healthy, he will be signed and on the Colts. If that is the case, Luck and his dad will have just enough time between March and the draft in April to discuss trade options with Irsay because Luck will understand by then that it won't make much financial sense for him to sit on the bench for 4 years A) for himself and his career or B) for the Colts.
It's not far fetched to predict an Elway or Eli scenario here on the part of the Luck's and if Peyton is back in 2012 I am very comfortable with that.
great analysis. This tells me that Manning is going to get cut. There is no way a franchise can take a financial risk like this for a 36 year old QB with 3 neck surgeries. They will never pick up that $28 million bonus. If he gets hurt or is simply not capable of playing at close to the same level as before the team is screwed. Luck will count about $4 million against the cap. I don't even think its a close call.
I'm sure they won't just throw a dart against a wall or flip a coin to make the Manning decision. There will be many doctors involved and many secret Manning workouts and throwing sessions to test his skills and arm strength so they know for sure where his "health" stands.
@javen If he is healthy, they can. From what I've heard, if the injury heals, there is no increased risk of re-injuring the neck.
Everything from Irsay's mouth indicates that he is going to pick up the option.
@gizzardfanny let assume he is healthy. A VERY big if. Are you confident that a 36 year old QB who hasn't taken a snap in over a year and a half will perform at the level he used to? No fall off because of age or time off? Because if he can't perform or gets hurt the Colts will be set back for years
@omahacolt@AnotherWriter@BMS@javen You can guarantee that Luck is going to be better than average?
@gizzardfanny@javen 100% healthy? What if he is only 90%, 80%, etc... At what level does the likely output from Peyton become less than the likely output from Andrew Luck?
@omahacolt@BMS@javen@gizzardfanny Funny that an average QB can still win games and put his team into the championship round of the playoffs. I'm not exactly calling him elite, but he'd fit into that good category. Who would you consider good to great?
@AnotherWriter@BMS@javen@gizzardfanny i didnt read the article
flacco is not elite. i am not reading something that ranks him up there. he is as average as it gets. same with matt ryan
@omahacolt@BMS@javen@gizzardfanny Really, what do you define as good-great? What is your minimum requirement for good. I think the article clearly points out at least 10 in the elite category. People you could argue are elite based on stats and measurables. There are another 10, at least, considered serviceable. So I'd say you're underestimating those who don't get talked about on ESPN or whatever sports shows you're watching.
@AnotherWriter@BMS@javen@gizzardfanny there are about 10 or 12 good to great qb's in this league. those teams are usually successful. if the colts want to be successful, they need a good to great qb
it just so happens that andrew luck can be drafted and problem solved
@omahacolt@BMS@javen@gizzardfanny I thought about it, then figured I'd show you what people who know and report on football think. There are at least ten "good" QBs in this league. And quite a few more that fall into a category such as Alex Smith's. Oh, and if you weren't watching today, even mediocre/system QBs can be effective with help.
@AnotherWriter@BMS@javen@gizzardfanny i dont know if there are 16 good qb's in the nfl right now. which tells me that it isnt nearly as easy as you try and make it out to be to get one.
yeah. i thought about it and i am right
@omahacolt@BMS@javen@gizzardfanny Look on the starting line-up of teams league-wide. There are quite a few. If you consider that every three years a good-great QB comes along, thats 5 QBs in fifteen years. You're arguing there have been less than that to come along since Manning was drafted?
@BMS@javen@gizzardfanny i keep hearing that good to great qb's come around every 2-3 years.
if that is true, then why arent they in the nfl? name all of these good to great qb's
@javen@BMS@gizzardfanny I'm not arguing taking a QB later in the draft. I'm arguing that if Manning is healthy and ready to play, we can draft a QB when he is done since we will have a high draft pick again.
The Colts were able to get most of the QBs drafted between 1985 to 1998 since they were pretty bad and therefore in good draft position. They just went out of their way in trades that didnt help them very much. Did I mention that Irsay was a horrible GM?
If Manning isnøt healthy, of course they have to take Luck. I'm not arguing that.
@BMS@gizzardfanny There were a number of excellent QBS between Manning and Elway. How many were the Colts in a position to take without having to make a huge trade?
In the league today your chances of getting a great QB go up a lot the closer you get to the top of the draft. While its true that some good QBs can be found later in the draft there are way, way more chances of finding QBs that can't play.
Luck is the safest and smartest choice.
Between Elway in 83 and Manning in 98 there were several more great QBs to come through the pipe. That is what is being missed here with all this Luck hype...he isn't the only QB to come around and he won't be the last. Good and great QBs come around every 2-3 years. Luck is not a guarantee and the thought that there won't be another great QB to enter the draft before the midway to end point of Manning's contract is also naive.
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@gizzardfanny Yes, but no, just no! (Not very articulate, I know) I mean, last year was an aberration. The Colts were not a sinking team. Their future, if handled carefully, if handled the same way it had been handled under the Polians, was bright. And suddenly if you´re Irsay you just blow it up? Oh, maybe not in an obvious way, you manage to maintain the illusion of levelheadednesss, but you´re departing the vision that led your team to greatness, you´re decisively abandoning the guidelines that were in place and structured you through any difficulty with astounding results. What kind of sense does it make? You would have been fine anyway! You were fine.
Because it's the easy way to go where you don't make any moves that will be criticized by uninformed fans and media heads.
@gizzardfanny@javen At this point everything seems to indicate that. I´m left feeling like we´re staring and staring and staring at an impending disaster knowing it could be avoided. I just don´t understand how anyone can think having both Luck and Manning is a good idea. The reasoning behind it is like those armchair fantasy builders GM who just stockpile big names and think it sounds perfect (in theory). How can the people who effectively handle a team´s material fortunes not incorporate these numbers into their worldview?
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@javen The Elway situation didn't set the Colts back 15 years, Irsay being a horrible GM did.
Again, everything coming out of Irsay's mouth indicates that he's going to both keep Manning and draft Luck. The Colts are only in a rebuild if Manning isn't healthy and they keep him.
I honestly hope that you are right, because that will at least mean they go with one of the two. I just fear that Irsay will do what seems to be the easy, uncontroversial decision (aka. the no decision) and both keep Manning and draft Luck. I have no faith in Irsay making these personel decisions.
I also don't think they have to take Luck. There are huge talents every year and they will have a chance to draft a successor later when Manning finally hangs up his cleats, if it isn't this year.
@gizzardfanny I disagree. Irsay lived through the Elway debacle and it was a decision that set the Colts back 15 years. He needs to rebuild and the only fiscally responsible way to do it is with Luck and without Manning.
The Colts are in a rebuild. A healthy Manning, assuming no fall off or injury, will not get this team to the Super Bowl. If Manning is signed and he is not the same guy, or regresses, or gets hurts sets the Colts back years both in salary cap and also no QB replacement.
No one is claiming Luck is a sure thing. But he is a huge talent at the most important position on the field. You have to take him and I think they will.
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@javen If he's healthy, yes. I am much more confident in a healthy Peyton Manning than I am confident that Andrew Luck will be that much better than next year's (or the year after that) greatest draft prospect ever.
Also, everything coming out of Irsay's mouth says he will hold on to Manning no matter what his injury status is.
I fear that Irsay will go with both and hurt the team for years.
