Archives for Peyton Manning

Decision Day in Denver

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I’m surprised Florio hasn’t piped in with this one yet, since it’s right up his alley, but today is a D-Day of sorts for the Broncos. If they don’t choose to cut Peyton Manning today (they won’t, of course, as he played at an MVP level and was more than they could have ever hoped for, carrying a team with re-tread wide receivers to the AFC’s 1 seed and representing a massive upgrade over Tim Tebow), they’re on the hook for his 2013 and 2014 salaries at $40 million in total guarantees.

Maybe the reason this is such a non-item is that this year there’s no question as to his health and his effectiveness. And if Joe Flacco is worth $20.1 million a year, Peyton F. Manning is sure as hell worth $20.

Mar 11, 2013

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