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How do you account for this in your cap?


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I was reading over some of the contracts for the rookies and came across Carson Palmer's. How in the world do they know what is going to count against the cap? His contract could be 7 years with the average at $3 million a season or 6 years with an average at over $8 million a season. I know they use language in these things that will all but guarantee it doesn't end up at 8 mil a year but this seems crazy. I read a few more like this. :doh:

1. QB Carson Palmer, Southern California (No. 1 overall): Signing bonus: $10,010,000. Base salaries: $1,070,000 (2003); $1,338,000 (2004); $1,605,000 (2005, plus $4,000,000 option bonus); $1,872,500 (2006); $2,140,500 (2007); $2,407,500 (2008); $1,267,500 (2009). Note: The base salaries for 2005 and 2006 are fully guaranteed and $522,500 of the base salary for 2007 is guaranteed. If certain performance and playing time benchmarks are achieved in 2003 or 2004, the base salaries escalate to $3,420,000 (2004); $3,750,000 (2005); $4,750,000 (2006, plus $1,500,000 roster bonus); $5,875,000 (2007, plus $1,500,000 roster bonus). The base salary for 2008 escalates to $8,125,000 based on minimum playing time in either 2005 or 2006. The 2009 season is voided if player achieves minimum playing time levels in any season between 2005-2008. Total: seven years, $21,710,500, or six years for up to $49 million. Cap charge: $2,500,000.

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I think it's fairly straightforward, even as to a contract such as Palmer's w/ lots of contingencies: the league counts all bonus money -- even when the payout is deferred (and likely to be earned incentives, which aren't applicable to rookies, I believe), then counts all seasons in the contract (even voidable ones). Divide, and you've got the annual pro-rated cap hit. Add in that year's salary and there you go (folding in earned reporting bonuses, though I think incentives don't kick in until the end of the year, even if they're earned before then, but I'm not sure).

(And I think Larry's right, see below, that guaranteed salary doesn't count against the cap until that year unless the player is cut, in which case I think the guaranteed salary accelerates just as if it were a bonus.)

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The "cap" rules as I "know" them.

  • Salarys count against the cap in the year that they're paid. If they're guaranteed, then they still count that year. (Guaranteeing a salary just means it counts that year, even if he's not there the whole year.) (Don't know what happens if he's cut before that year comes around.)
  • Signing bonus gets divided equally among all the years of the contract. (I suspect that, for voidable years, it still gets divided among those years. If the years get voided, then the cap hit would accelerate, just like if he'd been cut, traded, or retired.)
  • I seem to remember reading, somewhere, that roster bonuses get added to the "dead pool", in the year they're earned. (They then get divided among the remaining years of the contract.) (Why they don't simply count against the cap the year they're earned, like salary, I don't know. But I think I read that.)
  • Performance bonuses (bonuses that're earned on the field) are treated as "likely" or "not likely" to be earned. (Based on whether the bonus would have been earned in the previous year.)
    1. For LTBE (Likely To Be Earned) bonuses, the team has to budget enough room under the cap that year. (For cap purposes, you have to assume the guy's going to earn the bonus.)
    2. NLTBE bonuses don't count untill they're earned. If there's room under the cap for the bonus at that time, then it counts right then. If there isn't room under the cap, then the bonus gets counted under next year's cap.
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    Now, I think I'll go hide from all the folks who know a lot more about this than I do.

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