Ed Hochuli 3:16 Posted March 5, 2012 Report Share Posted March 5, 2012 I'm not good at math, at all, and I'm not very good with the cap space thing too, so I have a question. People say the Bears need to extend Forte to a bigger deal so $7.7m isn't on the cap this year and they keep saying it's because of the guaranteed money. How does that work? To help me, just use this: 5 years, $40 million, $20 million guaranteed. Does this mean it's only like 5 years, $20 million against the cap, or what? Thanks in advance. Quote Link to comment Share on other sites More sharing options...
adam Posted March 6, 2012 Report Share Posted March 6, 2012 I'm not good at math, at all, and I'm not very good with the cap space thing too, so I have a question. People say the Bears need to extend Forte to a bigger deal so $7.7m isn't on the cap this year and they keep saying it's because of the guaranteed money. How does that work? To help me, just use this: 5 years, $40 million, $20 million guaranteed. Does this mean it's only like 5 years, $20 million against the cap, or what? Thanks in advance. It depends on what the salary is each year. So they may sign him to a 5/40 with a 20 mil signing bonus. If his salaries were 2, 2, 4, 4, and 8 mil; then the cap hits would be: 6, 6, 8, 8, 12 mil with the bonus or guaranteed money ($4 mil per year) pro-rated over the life of the deal. In reality they are paying him $22 mil this year, but only $6 mil counts against the cap. After that point, they can release him at anytime, but would take a cap hit immediately for the remainder of the bonus that was not yet applied to the cap. So if Forte was released after year 3, they Bears would have a cap hit of $8 mil in year 4 without Forte, but would not incur anything in year 5. So to Forte, he could essentially double or triple his guaranteed money with a new deal compared to the $7.7 he is getting now. A new deal, with creative salaries also could reduce the cap hit for the first few years compared to the franchise value at RB. Quote Link to comment Share on other sites More sharing options...
Ed Hochuli 3:16 Posted March 6, 2012 Author Report Share Posted March 6, 2012 It depends on what the salary is each year. So they may sign him to a 5/40 with a 20 mil signing bonus. If his salaries were 2, 2, 4, 4, and 8 mil; then the cap hits would be: 6, 6, 8, 8, 12 mil with the bonus or guaranteed money ($4 mil per year) pro-rated over the life of the deal. In reality they are paying him $22 mil this year, but only $6 mil counts against the cap. After that point, they can release him at anytime, but would take a cap hit immediately for the remainder of the bonus that was not yet applied to the cap. So if Forte was released after year 3, they Bears would have a cap hit of $8 mil in year 4 without Forte, but would not incur anything in year 5. So to Forte, he could essentially double or triple his guaranteed money with a new deal compared to the $7.7 he is getting now. A new deal, with creative salaries also could reduce the cap hit for the first few years compared to the franchise value at RB. Where does this come from though? Quote Link to comment Share on other sites More sharing options...
adam Posted March 6, 2012 Report Share Posted March 6, 2012 Where does this come from though? The $20 million is the signing bonus or "guaranteed money" pro-rated over the life of the contract, thus 20 / 5 = 4. Quote Link to comment Share on other sites More sharing options...
chwtom Posted March 6, 2012 Report Share Posted March 6, 2012 The $20 million is the signing bonus or "guaranteed money" pro-rated over the life of the contract, thus 20 / 5 = 4. I think the guaranteed money is not necessarily all signing bonus. There may be other portions of the deal which are fully guaranteed, but not part of the signing bonus. One of the confusing parts of the way signing bonuses are structured is that they are accounted for in a different way than they are paid. If someone gets a 20 million dollar signing bonus, they get a check for $20 mil that year. But the way it's accounted for in the cap is different. That cap charge for the signing bonus is divided equally over the number of years in the deal. So a 20 mil signing bonus on a 5 year deal counts 4 mil against the cap each year, even though all 20 mil of it was paid in 2012. The "cap hit" comes when someone is cut or traded before the end of their deal. In that case, the cap charge becomes all of the remaining portions of the signing bonus. So if player X gets a 20 mil signing bonus on a 5 year deal, and gets cut or traded after 2 years, they would have a 12 mil cap hit that year (3 years times 4 mil). They wouldn't actually get paid any of that money (because they got it all up front), but the team would have to account for it. There are some nuances to that, like post-June 1, etc, but the above is essentially how it works. Quote Link to comment Share on other sites More sharing options...
jason Posted March 6, 2012 Report Share Posted March 6, 2012 It depends on what the salary is each year. So they may sign him to a 5/40 with a 20 mil signing bonus. If his salaries were 2, 2, 4, 4, and 8 mil; then the cap hits would be: 6, 6, 8, 8, 12 mil with the bonus or guaranteed money ($4 mil per year) pro-rated over the life of the deal. In reality they are paying him $22 mil this year, but only $6 mil counts against the cap. After that point, they can release him at anytime, but would take a cap hit immediately for the remainder of the bonus that was not yet applied to the cap. So if Forte was released after year 3, they Bears would have a cap hit of $8 mil in year 4 without Forte, but would not incur anything in year 5. So to Forte, he could essentially double or triple his guaranteed money with a new deal compared to the $7.7 he is getting now. A new deal, with creative salaries also could reduce the cap hit for the first few years compared to the franchise value at RB. See, I'm actually good with math and you kind of lost me with this post. To clarify: Salaries per year: 2,2,4,4,8 = 20 Guaranteed money prorated per year: 4,4,4,4,4 = 20 CAP HIT Year 1: 2+4 = 6 (i.e. Salary + Guaranteed prorated money for the year) Year 2: 2+4 = 6 Year 3: 4+4 = 8 Year 4: 4+4 = 8 Year 5: 8+4 = 12 Cap Hits Total: 6,6,8,8,12 = 40 So, the cap hit is the guaranteed money that year - which is prorated for cap purposes over the lifespan of the contract (i.e. 4), plust the actual yearly salary (i.e. 2). Notice that the initial cap hit is the full dollar value of the contract. The trick: The player actually gets the entire signing bonus / guaranteed money (i.e. 20) and the yearly salary (2) right away. So the team pays, in this situation, over 50% of the money of a five year contract in the first year. This is exactly why I am sick and tired of players signing these kinds of contracts and then bitching in year four about their salary. Quote Link to comment Share on other sites More sharing options...
bradjock Posted March 7, 2012 Report Share Posted March 7, 2012 [ So, the cap hit is the guaranteed money that year - which is prorated for cap purposes over the lifespan of the contract (i.e. 4), plust the actual yearly salary (i.e. 2). Notice that the initial cap hit is the full dollar val The trick: The player actually gets the entire signing bonus / guaranteed money (i.e. 20) and the yearly salary (2) right away. So the team pays, in this situation, over 50% of the money of a five year contract in the first year. This is exactly why I am sick and tired of players signing these kinds of contracts and then bitching in year four about their salary. Damn good analysis. The Bears have been damn good at staying under the cap by having a big signing bonus for players. We pay now rather than later. That kills us when Chester Taylor flops, but Peppers has a reasonable cap number. Thus we always have the opportunity to be big players in free agency. (that and not having to have the #4 pick and signing unproven guys like Cedric Benson to high contracts). Quote Link to comment Share on other sites More sharing options...
adam Posted March 7, 2012 Report Share Posted March 7, 2012 See, I'm actually good with math and you kind of lost me with this post. To clarify: Salaries per year: 2,2,4,4,8 = 20 Guaranteed money prorated per year: 4,4,4,4,4 = 20 CAP HIT Year 1: 2+4 = 6 (i.e. Salary + Guaranteed prorated money for the year) Year 2: 2+4 = 6 Year 3: 4+4 = 8 Year 4: 4+4 = 8 Year 5: 8+4 = 12 Cap Hits Total: 6,6,8,8,12 = 40 So, the cap hit is the guaranteed money that year - which is prorated for cap purposes over the lifespan of the contract (i.e. 4), plust the actual yearly salary (i.e. 2). Notice that the initial cap hit is the full dollar value of the contract. The trick: The player actually gets the entire signing bonus / guaranteed money (i.e. 20) and the yearly salary (2) right away. So the team pays, in this situation, over 50% of the money of a five year contract in the first year. This is exactly why I am sick and tired of players signing these kinds of contracts and then bitching in year four about their salary. Man, I read my post again and I swear I said the same thing, just not in a tabular format, but its cool, at least we are on the same sheet of music. Quote Link to comment Share on other sites More sharing options...
Ed Hochuli 3:16 Posted March 7, 2012 Author Report Share Posted March 7, 2012 I'm still lost though with how this saves significant cap room over a franchise tag. Quote Link to comment Share on other sites More sharing options...
adam Posted March 7, 2012 Report Share Posted March 7, 2012 I'm still lost though with how this saves significant cap room over a franchise tag. I wouldn't say it is significant, normally a couple of million depending on how creative they are on the salaries. If the base for this year is only $1 mill, then the cap hit could be down to $5 with the $4 million applied annually. Quote Link to comment Share on other sites More sharing options...
LT2_3 Posted March 7, 2012 Report Share Posted March 7, 2012 I'm still lost though with how this saves significant cap room over a franchise tag. Actually, anyone saying that a long term contract would save cap space for the Bears really doesn't know what they are talking about. Chances are that any comments like that are coming from Forte's agent in an effort to stir up fan support for a long term contract. There is another point I'd like to throw out there: Guaranteed money doesn't always come in the form of a signing bonus that gets prorated. One of the hallmarks of Cliff Stein's work managing the cap is that there are often roster bonuses involved that hit in the same cap year. For instance, if Forte gets $18 million guaranteed, there might be an $8 million roster bonus and a $10 million signing bonus. On a 5 year contract, the signing bonus would prorate at $2 million per year, but the $8 million roster bonus would hit this year. The benefit of that is that it would save cap space in future years and make it more palatable to release him if he starts to suck. That being said, his cap hit in year 1 would be $8 million roster bonus + $2 million signing bonus pro-ration + salary. Needless to say, that truly points out that signing Forte to a long term deal isn't going to save us any cap space - in fact, it would mean taking MORE cap space. Quote Link to comment Share on other sites More sharing options...
Stinger226 Posted March 7, 2012 Report Share Posted March 7, 2012 Actually, anyone saying that a long term contract would save cap space for the Bears really doesn't know what they are talking about. Chances are that any comments like that are coming from Forte's agent in an effort to stir up fan support for a long term contract. There is another point I'd like to throw out there: Guaranteed money doesn't always come in the form of a signing bonus that gets prorated. One of the hallmarks of Cliff Stein's work managing the cap is that there are often roster bonuses involved that hit in the same cap year. For instance, if Forte gets $18 million guaranteed, there might be an $8 million roster bonus and a $10 million signing bonus. On a 5 year contract, the signing bonus would prorate at $2 million per year, but the $8 million roster bonus would hit this year. The benefit of that is that it would save cap space in future years and make it more palatable to release him if he starts to suck. That being said, his cap hit in year 1 would be $8 million roster bonus + $2 million signing bonus pro-ration + salary. Needless to say, that truly points out that signing Forte to a long term deal isn't going to save us any cap space - in fact, it would mean taking MORE cap space. It would be best to leave the tag, and do it again next year then move on to younger legs. Quote Link to comment Share on other sites More sharing options...
Chitownhustla Posted March 9, 2012 Report Share Posted March 9, 2012 http://espn.go.com/new-york/nfl/story/_/id...ants-cap-relief This is what confuses me, says they get cap room but manning gets paid the same.? Quote Link to comment Share on other sites More sharing options...
Ed Hochuli 3:16 Posted March 9, 2012 Author Report Share Posted March 9, 2012 It would be best to leave the tag, and do it again next year then move on to younger legs. That's what I said about a month ago, but I won't take credit as I quickly jumped off that bandwagon. I guess it escaped my thoughts with FA and the draft. This wouldn't be a bad idea. If my math is right, the 2013 season will be Forte's 6th NFL year. Typically, that's when RB's legs begin to go bye-bye. For this reason alone, I'd like to see the Bears take a RB in round 4 or 5 this year. Quote Link to comment Share on other sites More sharing options...
adam Posted March 9, 2012 Report Share Posted March 9, 2012 http://espn.go.com/new-york/nfl/story/_/id...ants-cap-relief This is what confuses me, says they get cap room but manning gets paid the same.? Ok, his base salary was $10.75 for this year, that entire amount would have been a cap hit. They reduce it to $1.75 million with $9 million as a bonus, still totalling the same amount paid to him. So $1.75 + $9 = $10.75, the same amount. However, they can now apply the $9 million bonus over the remaining 4 years of the contract ($2.25million per year) So this year's cap hit will be: $1.75 Base Salary (new amount) $2.25 Pro-rated Bonus ($9 million spread over 4 years) ------- $4.00 Million Cap hit So they started with a $10.75 million cap hit and reduced it to $4 million, saving $6.75 million in cap space for this year. Quote Link to comment Share on other sites More sharing options...
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