"Cap hit" and player's salaries

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"Cap hit" and player's salaries

Postby Irn-Bru » Tue Feb 08, 2005 6:58 pm

I have a couple of questions that stem from the general dubiousness of how much a typical player "makes" in a year. All of the time we hear about guys that sign 28 million dollar contracts including a 4 million bonus; but it turns out that they end up playing for 6 figures a year (because of backloading) and are cut / traded / or restructure before any of the significant numbers come into play. Therefore, a lot of the big contract is simply for show (he's a 60+ million corner, they might say about Champ), and they never will see the money--or so it seems to me. With that in mind:

(1) Are all signing bonuses always paid out in full, even if it takes up to the 7 years (or so) to do it? In other words, if I'm a draft pick that gets a 6 million dollar bonus, and I show up and sign that document, does this guarentee that I will see 6 million dollars come into my bank account within 5 or 6 years? Or does part of signing bonus depend on if I'm playing and not retired, or if I'm still with the team, etc.?

(2) I've seen the annual talk about "cap hits" again, and each year what I wonder is this. Is a "cap hit" literally the money that we will have to pay that player if we cut him? Do people like Trotter get really happy when they are cut rather than traded, since this seems to accelerate the payment on their signing bonus (and they get more of it if we are impatient)? Or is "cap hit" a little more theoreotical, kind of a made up number based on contracts in order to have a managed salary cap in the league?

If either of those questions are unclear I can try and qualify a bit more. . .
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Postby BossHog » Wed Feb 09, 2005 7:52 am

1) All of it. it is a SIGNING bonus... it is a bonus received for SIGNING the contract. The league allows it's cap hit to be pr-rated over the term of the contract, and in some instances that bonus is even paid in installments, but for all intents and purposes... the bonus is owed right away.

Which is why people mistakenly ASSUME that if a player retires, the team gets some cap back. The team can APPLY to get cap back if they can prove to the league that the player retired unceremoniously and never intended to honor the term of the contract --> a la Barry Sanders. HOWEVER... you don't automatically get a cap break if a player retires, in fact in most instances, you probably won't. Teams sometimes work out settlements, but they rarely save much space.

2) A cap hit is just how much cap space a player takes up. Are you referring to dead cap? Money owed to a player that no longer plays for the team?

You get your signing bonus money when you're traded too... in fact, as already stated... the player might/probably will already have all the money... the TEAM is just prorating the VALUE of the bonus over the term for cap purposes. BUT on a cap note, if you trade a player... you must immediately absorb the remainder of the guaranteed money in that player's contract on that year's cap number.

Hope that answered all your questions.

... make sure you check the cap threads in this forum for answers... i'd swear I've answered these questions before. :hmm:
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Postby 1niksder » Wed Feb 09, 2005 7:33 pm

In addition to the Signing bonus which is the biggest part of most bonuses some contracts will have a Reporting bonus, Workout bonus and/or Roster bonus. How do they effect the salary cap and what happens (to the Cap) when a player with a roster bonus due is cut?
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Postby BossHog » Fri Feb 11, 2005 7:51 am

A roster bonus counts aginst the cap the same as any other money does... the ONLY real difference is that if a player is cut... the team does not pay him the roster bonus (he's not on the roster) and they receive no cap hit.

Of course... any signing bonus money would immediately be pro-rated to that year's cap for the player
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