Archives for Jim Irsay

There’s Always More to the Story

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This morning, Bill Polian sat on a panel at the Sloan Sports Analytics Conference about “sports breakups,” in which he told us several excellent stories about the emotions involved with cutting players and firing coaches (and what makes a coach last) and in which he also showed some of his famous stubbornness and made the laughable assertion that the Colts could very well have kept Peyton Manning AND Andrew Luck after the 2012 draft.

It occurred to me that a lot of people just assumed that the reason Bill Polian was fired was because he stopped hitting home runs in the draft and because he was incorrectly (but also occasionally correctly) regarded as a jerk.

That’s certainly part of it; the drafts certainly contributed. But what they contributed to – the 2012 salary cap situation – is the bigger issue, more than anything draft or behavior-related. Because the 2012 Colts were going to be screwed even if Peyton Manning’s neck had been 100% all along.

Much has been made about all the dead money that the team carried. And without some June 1 designations, they could have had even more cap trouble. And sure, if Manning had been kept, they wouldn’t have eaten quite the same sum of his contract all in one year. (They just would have been locked into eating millions more of it in future years, making it even worse.) But people tend to forget just how bad the rest of the Colts roster was by 2011. Manning made everyone around him better, sure, but he wouldn’t have been able to do very much with what was left in 2012 after all the necessary cuts would have been made.

So it is very very convenient and interesting that a mere four hours later, Bob Kravitz published a gem of an interview with Colts owner Jim Irsay, wherein he touches on some of the things that everybody forgets: Keeping and paying Peyton Manning would have crippled not only the 2012 Colts, but several more years worth of teams as well. It simply could not work. At all. And being a good and smart owner, Irsay knew it all along.

“…and he understood the cap room situation where, if he’d stayed, there would have been no Reggie Wayne, no Winston Justice, no Samson Satele, I’m not sure about Robert Mathis. We couldn’t have kept anybody. I mean, our offensive line would have been even worse than it was. The worst thing you can imagine would have been to see (Manning) struggling with a team completely deprived of talent, being 1-6 or something like that and then calls for Andrew to come in and play over Peyton. I could see it happening. The cap situation was that dire.

As we have discussed before, paying Manning’s option bonus last year would have locked him in for the next four seasons. Tom Condon negotiated a gem of a deal (and don’t believe what Polian said this morning about it “absolutely” being up for re-structuring; there was no incentive whatsoever for Peyton to do that and Condon wouldn’t have). And doing that would leave the team without the successor that fell into their laps and without a whole lot of other pieces to build with either.

Pardon the pun, but the team got Lucky as could be in 2011. A healthy Manning would’ve taken them to the playoffs, but the team would have struggled for the next decade. Heck, even one more win might have ensured that same fate! 2011 was a necessary evil, and may very well have been one of the best things to happen to the franchise since their previous #1 pick in 1998.

I think the world of Bill Polian. But draft misses – or even just singles where he used to hit doubles – led to him paying to keep veterans like Gary Brackett and Kelvin Hayden and Joe Addai where he previously made the difficult but correct decisions like letting Mike Peterson and Edgerrin James walk. And those contracts spread signing bonus prorations out into their years of decline and kicked the can down the proverbial road. 2012 was going to be a bloodbath, Manning or no Manning. And it was all avoidable. There’s always more to the story, of course, but the 2012 cap situation was a mostly-overlooked element that played a very large role in the switch that landed Ryan Grigson in Indianapolis.

Mar 1, 2013

Peyton Manning’s (New) Contract

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Well, now there’s even more proof of the genius of Tom Condon, the super agent that makes self-declared super agent Drew Rosenhaus look like a child.

Less than nine months after he secured an injured Peyton Manning a $26.4 million payout, breaking hearts in Indiana and nationwide in the process, he has now negotiated a bigger and better deal for his client, who is now going to be locked in for another year for even more money!

This contract, which I must repeat is for a player who missed all of last year and will be 40 when it ends in 2016, is for 5 years and a whopping $96 million, eclipsing the previous contract’s 5/90 total that was unrealized. Coming off a one year $26.4 million deal in reality, Manning now has signed a 1 year deal with $18 million guaranteed (all salary), after which (if he is on the roster at the end of the 2012 league year, on March 11, 2013) a new guarantee will kick in and net him  a total of $38 million guaranteed for all injury for 2013-2014 and $58 guaranteed through 2015 if he doesn’t have a neck injury in 2013. If he is on the roster at the end of the 2014 league year, his 2015 salary becomes guaranteed at $19. The same is true the following year.

So there are no bonuses and no tricks: Manning gets paid $18 million in 2012 whether he plays or not. The Broncos can cut him before March 11, 2013 and owe nothing more. Otherwise they owe $40 million for the next two seasons and then have the option to cut him or pay him $19m before each of the next two seasons. If he can play in 2012, it’s likely that the total, barring retirement or a total dropoff, will be the full $96 million over five years, ending when he is 40 years old.

This is, for sure, a more team-friendly deal for the Broncos than the one he signed in July 2011 with the Colts, who will be eating $10.4 in dead money in 2012, had to cut a legend, and already suffered through one bad season and may have to weather another one or two more before contending again. But it’s still a giant contract for a player coming off a series of surgeries, with major question marks, who will be 40 at the end of the term. It’s not a big win for the Broncos financially. And it makes me wonder why exactly John Elway made a big show of firing a very well qualified and loyal executive in Mike Bluem recently (coincidentally, he was hired by the Colts last week) in order to hire a “bulldog” of a negotiator (former agent Mike Sullivan), only to see his shark negotiator get run over writing a deal that any of us could easily have done just as well.

 

Mar 21, 2012

Peyton Manning’s Contract

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The looming release of Peyton Manning has led to a lot of analysis of the details of his contract by people that otherwise haven’t really cared very much about contracts in the past. There’s a lot of basic information out there but I’ve been seeing a lot of incorrect assumptions and minor errors that may be coloring some thinking or influencing opinions (such as those about whether the Colts can or should keep Manning AND draft Luck, about what happens to their cap if he’s cut, about whether Manning can be traded, etc). I suppose I’ll add my voice to the chorus.

When I look at the Manning contract I see a stroke of brilliance by agent Tom Condon. It looks even smarter in hindsight now, given that he got a client – who was known to be injured –  paid $26 million to miss an entire season and may have set him up for another big payday as history’s biggest free agent, but even with that aside, he wrote a contract that put the Colts to a decision that, if made, would effectively lock them in to four more years of an older QB. This is Peyton Manning, so it’s not as if being stuck with him is exactly a bad thing, but as a general rule, if you can lock a 35 year old player into four more years of income, you’ve done your job as an agent very well. And if you can lock him in as the highest paid player in the game at the time, one whose AAV is to be surpassed only by another one of your own clients, even better.

Even more brilliant was that Condon seems to have seen all this coming and set it up so that the Colts would be the ones that came out looking like the villains if it did come to this. He knew that this Colts team was going to be awful without Manning and he knew they’d be in cap trouble in 2012. Injury or no injury, he created a bit of an out for himself and his client: because of the structure of the deal and the dates on the $28 million option bonus, the Colts MUST* be the ones to cut him. And because of this, we have seen a bit of a childish PR battle back and forth as both sides hoped to save face in advance of the coming cut. Given the status of the roster for 2012, there’s no way in hell Peyton Manning is all that excited about playing in Indianapolis. But now he doesn’t have to be the guy that asks for a trade or alienates fans. That honor is now given to owner Jim Irsay.

*- The reason they can’t just let the date pass without action is that there is – for some reason – a non-exercise fee of the same $28 million. The Colts would be penalized that same bonus amount for inactivity. Essentially, this tells us that Condon wanted Manning either locked in for four years – taking him to age 39 with a rich contract – or to hit an open market full of teams willing to compete financially for his services. And he wanted to force the decision on to them. There’s no other reason to put that clause in there, and further, to structure the dates into the 2011 league year so that they can’t be pushed back or renegotiated (as explained here by Andrew Brandt).

I don’t really know why the Polians allowed themselves to get run over quite so thoroughly on this contract. Manning was already known to be injured and the team knew even more about the extent of his injury and surgeries than was ever reported in the press. But they paid an injured player  a $20 million signing bonus and $6.4 million salary, and on top of that they gave that player and his agent all the power in the world when they didn’t really have to. Condon and Manning even managed to spin it into near heroism that Manning “gave the team an out” in case he was too hurt to ever play again. (Some out; only $26.4 million in cash and a 2012 dead money figure of $10.4 million.**) Such is the leverage of being a beloved sure-fire Hall of Famer whose contract was allowed to expire.

**- His signing bonus proration of $16m ($20/5 years) would accelerate onto the 2012 cap, but they also get a $5.6m ($28/5 years) credit because of the placement of the $28m option bonus exercise date within the 2011 league year. 16-5.6 = 10.4)

It is this option bonus that is both the brilliant part of the negotiation by Condon and also the most misunderstood part that I’m reading on fan sites. Whether it’s mislabeled as a roster bonus (which would then count only against the 2012 cap) or incorrectly divided into 4 years of $7m proration, it messes with the numbers a little bit. One needs only to notice the conveniently neat round numbers in each yearly cap hit to see the way the contract is structured:

2011 Cap Hit: $16 million.  ($6.4 salary / $4 SB proration / $5.6 OB proration)

2012 Cap Hit: $17 million.  ($7.4 salary / $4 SB proration / $5.6 OB proration)

2013 Cap Hit: $18 million.  ($8.4 salary / $4 SB proration / $5.6 OB proration)

2014 Cap Hit: $19 million.  ($9.4 salary / $4 SB proration / $5.6 OB proration)

2015 Cap Hit: $20 million.  ($10.4 salary / $4 SB proration / $5.6 OB proration)

There’s no reason to make all the salaries a precise X.4 except to make it round off with the $5.6 option proration.

So what we see is a one-year deal with a cash payout of $26.4 million, of which the previously described $10.4 falls onto the 2012 ledger, or the 5/90 with the ascending $16-20 million cap hits. Having committed to a $48 million in bonuses that would accelerate at $9.6 million per season, the Colts simply wouldn’t be able to absorb the dead money if they were to cut him (due to age and a likely decline in performance) at any point before maybe the final year of the deal. And if Manning was unable to play because of his nerve recovery (or lack thereof), they will have committed a huge sum of cash – $54.4 million before the start of the 2012 league year – to a player that didn’t take any snaps. And all of that has to be accounted for in the cap.

The Colts simply can’t take the risk. Not when they lucked into the first pick of a draft with two can’t-miss QB prospects. If they pay Manning and he can’t play, they can’t field a team. With or without Luck. Even if he can play, they’re already down a handful of useful players – Robert Mathis and Dwight Freeney included, most likely – because they have to clear out that much more cap room every year ($6.6m more in 2012 but the full 18-19-20 more in subsequent years).

It just isn’t a good situation for the Colts anymore. Even if Manning could be at 100% tomorrow.

The real problem, though, would be what they’d be facing if they had gotten unlucky and ended up 3-13 with something below the top two picks in the draft. Which very easily could have happened. Now THAT would have been a disaster.

The Colts are going to cut Manning. There’s no chance they’ll keep him now that Luck has fallen into their lap. It sucks, but it’s the best – and only – choice. And it isn’t even close.

Feb 5, 2012