Cap Question

CharityMike · 03-15-2012, 03:36 PM

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?

FinSaint · 03-15-2012, 03:57 PM

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.

Rugby Saint II · 03-15-2012, 04:03 PM

Originally Posted by FinSaint

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.

CharityMike · 03-15-2012, 06:50 PM

Originally Posted by Rugby Saint II

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?

JimmyWalker · 03-15-2012, 06:54 PM

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!

FinSaint · 03-15-2012, 07:08 PM

Originally Posted by CharityMike

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.

ScottF · 03-15-2012, 07:09 PM

Originally Posted by CharityMike

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.

Danno · 03-15-2012, 07:21 PM

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.

03-15-2012, 03:36 PM	#1
CharityMike Site Donor 2018 Join Date: Oct 2011 Location: Mid City, New Orleans Posts: 3,556	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?

03-15-2012, 03:57 PM	#2
FinSaint Site Donor 2015 Join Date: Aug 2011 Location: Finland... formerly Southern Virginia Posts: 4,961	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.
	"I'm not bashing people, I'm bashing their opinions because in my opinion their opinion is wrong" - Danno

03-15-2012, 04:03 PM	#3
Rugby Saint II Bounty Money $$$ Join Date: Oct 2008 Location: 5800 Airline Dr. Metairie, LA. Posts: 24,052	Originally Posted by FinSaint 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.

03-15-2012, 06:50 PM	#4
CharityMike Site Donor 2018 Join Date: Oct 2011 Location: Mid City, New Orleans Posts: 3,556	Originally Posted by Rugby Saint II 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?

03-15-2012, 07:08 PM	#6
FinSaint Site Donor 2015 Join Date: Aug 2011 Location: Finland... formerly Southern Virginia Posts: 4,961	Originally Posted by CharityMike 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.
	"I'm not bashing people, I'm bashing their opinions because in my opinion their opinion is wrong" - Danno

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03-15-2012, 06:54 PM	#5
JimmyWalker Rookie Join Date: Mar 2012 Location: Raleigh, NC Posts: 18	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!

03-15-2012, 07:09 PM	#7
ScottF 5000 POSTS! + Join Date: Feb 2007 Location: Atlanta Posts: 6,324	Originally Posted by CharityMike 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.

03-15-2012, 07:21 PM	#8
Danno Truth Addict Join Date: Dec 2003 Location: Spanish Fort, AL (via NO and B/R) Posts: 24,720	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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