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Cap Question

this is a discussion within the Saints Community Forum; Hopefully someone here can shed some light on this.. If a team has say..30 mil in cap space, that is deemed the amount for a players salary right? Where does the gaurenteed money come from? How can a team afford ...

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Old 03-15-2012, 02:36 PM   #1
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Cap Question

Hopefully someone here can shed some light on this..

If a team has say..30 mil in cap space, that is deemed the amount for a players salary right?

Where does the gaurenteed money come from? How can a team afford to give 20+ mil as a signing bonus? Where does that money come from?
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Old 03-15-2012, 02:57 PM   #2
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Bonus money is usually spread out as well, it's very uncommon for a player to get a huge signing bonus in a single payment - like Haloti Ngata f.e. does this year with the option bonus of $10M coupled with the 1/5 of the $25M signing bonus.

Vilma's last contract had a $6M signing bonus, but that was divided equally to all of the 5 contract years with a $1.2M/year bonus, so players don't usually get the bonus outright - the contract includes $17.2M total of guaranteed money.

Bonuses count toward the overall cap hit, but the difference is that they are usually guaranteed (f.e. signing bonus) and they can be divided in many different ways as opposed to the base salary.

Incentive based bonuses and escalators are a whole other thing.

But I'm not really an expert on the issue.

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Old 03-15-2012, 03:03 PM   #3
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Originally Posted by FinSaint View Post
Bonus money is usually spread out as well, it's very uncommon for a player to get a huge signing bonus in a single payment - like Haloti Ngata f.e. does this year with the option bonus of $10M coupled with the 1/5 of the $25M signing bonus.

Vilma's last contract had a $6M signing bonus, but that was divided equally to all of the 5 contract years with a $1.2M/year bonus, so players don't usually get the bonus outright - the contract includes $17.2M total of guaranteed money.

Bonuses count toward the overall cap hit, but the difference is that they are usually guaranteed (f.e. signing bonus) and they can be divided in many different ways as opposed to the base salary.

Incentive based bonuses and escalators are a whole other thing.

But I'm not really an expert on the issue.
That's more than I knew.
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Old 03-15-2012, 05:50 PM   #4
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Originally Posted by Rugby Saint II View Post
That's more than I knew.
Ditto.. still about as clear as mud though..lol

If we only started the year with a 7 to 9 million dollar cap space, we have already signed a few people and now we just signed Grubbs to a 7.5 million a year for 5 yrs with 10 million dollar signing bonus...still don't get it.

Looking at it from the surface, where is Drews money going to come from and anyone else for that matter?
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Old 03-15-2012, 05:54 PM   #5
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Yeah, i'm in the dark on this one. I know clubs are very good at manipulating the cap and finding ways around it. Let's just let Loomis work his magic and get it done!
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Old 03-15-2012, 06:08 PM   #6
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Originally Posted by CharityMike View Post
Ditto.. still about as clear as mud though..lol

If we only started the year with a 7 to 9 million dollar cap space, we have already signed a few people and now we just signed Grubbs to a 7.5 million a year for 5 yrs with 10 million dollar signing bonus...still don't get it.

Looking at it from the surface, where is Drews money going to come from and anyone else for that matter?

I think it's safe to say that they are over the salary cap at the moment.


What I failed to explain to you was the actual advantage of handing out signing bonuses in regards to the salary cap.

As I already stated earlier, signing bonuses are hardly ever payed in full initially, but that was a misrepresenting wording that I used, because the players do in fact usually receive the signing bonus after they sign (logical). But the advantage is that the bonus will be prorated to cover the whole contract length and will only count towards the cap that smaller part annually.

This is how teams are able to actually pay players a lot of money (as in actual money in the bank account), which naturally makes the player happy and more willing to sign, but the result of this big payment will be incremental payments spread out evenly for the duration of the contract.

I don't know if I made it any clearer or if I made it sound more confusing.

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Old 03-15-2012, 06:09 PM   #7
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Originally Posted by CharityMike View Post
Ditto.. still about as clear as mud though..lol

If we only started the year with a 7 to 9 million dollar cap space, we have already signed a few people and now we just signed Grubbs to a 7.5 million a year for 5 yrs with 10 million dollar signing bonus...still don't get it.

Looking at it from the surface, where is Drews money going to come from and anyone else for that matter?
Remember that we restructured Smith and Evans, and that part of the money for Chase, DLP, McBride, Colston, and Grubbs was already accounted for: we paid salaries for those positions last year. The cap space we had is eaten up by the raises that they got this year.
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Old 03-15-2012, 06:21 PM   #8
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Just as a side note, the player gets the entire amount of the signing bous as the ink dries.

The team is able to spread the amount evenly over the contract life.

If they cut the player mid-contract, the yearly bonus amount remaining is immediately applied to the cap.

Thats why cutting Roman Harper would cost us about 17 million against our 2012 cap.

He received 23 million in bonus and guarantees. Spread out over 4 years thats 5.75 per year for 4 years, but if we cut him in year 2, the "accellerated" cap hit would be (5.75 x 3 = 17.2 million).

Obviously his contract structure is more complicated, but thats the general basics.
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