great post DZ - very well written.

this should be a mandatory appendix item to all the inevitable contract bashing articles that are sure to come.

I'm also getting real tired of all the people out there that have run with this idea that because there is no cap next year, Jim Irsay is just going to open the checkbook for everyone (he already said he would for Peyton).

I know it is hard for us average people to conceive, but a million dollars here are there is enough to make the Colts profitable or not. The last time Forbes did their study of sports teams, the Colts were coming off a Super Bowl win, and were in the red!

This is how Irsay makes his money, so the difference between Lilja and a cheaper replacement can be the difference between keeping and firing Colts operations staff. Too many years in the red and Irsay may not be comfortable fielding a quality team.

Thats why what should be more important to Colts fans than the negotiations between the players and the owners, is the negotiations between the owners about revenue sharing. Without it the Colts become much less financially viable (I assume, numbers are notoriously hard to get, the players can't even get them for their negotiations).

Interesting perspective that I hadn't thought about.

That is why I come back to this site.

Even in the off-season.


Go Colts and f**k the Pats!

This is a great post, and you make superb points that I have never heard voiced anywhere else.

However, if your conclusions are correct (and they sure seem logical) then why wasn't Tom Brady under the same pressure from his teammates and the players union to maximize his deal?

In an un-capped year, who cares? The team will just front-load the guaranteed money and bonuses, and only the base salary, roster bonuses, and incentive bonuses will ever impact any future cap - and if they do it right, the base salaries will be commensurately reduced by whatever signing bonus/etc. gets written off in 2010.

So, go ahead, Manning: get every cent that you have coming to you!

However, if your conclusions are correct (and they sure seem logical) then why wasn't Tom Brady under the same pressure from his teammates and the players union to maximize his deal?

Because Brady wasn't worth as much as Manning. One could argue that Brady *did* maximize his contract.

That was part of it. Beyond that, it has had negative ramifications for the Pats. The Pats are seen as cheap. They don't pay their vets. I would argue that the long term emotional health of that franchise was compromised by Brady's deal.

The Colts are cheap because "a few players eat up all the cap space". In other words, it's Manning (and Freeney's fault). The difference is the Colts have had a steady parade of star players getting rewarded with nice deals.

The Pats have a steady parade of stars being shown the door.

A young guy on the Pats knows he will get screwed if he stays there. A young guy on the Colts knows that if he becomes a star he'll make some green, but if he doesn't he's gone. Which system has the better motivation?

Love it - One other thing to think about is that Manning understands the legacy. Archie's biggest deal was 400k. If he would have taken 350 back in 1982 (or whenever), the deal that he got in '98 and '04 would have looking x% smaller. He sees the bigger picture and understands because he grew up with it.

As far as the Pats, Brady took less money and then saw Branch jettisoned. If I recall at the time, Brady was pretty ticked - because his deal was designed to be able to keep the extra parts and then Branch was 86'd regardless.

Polian gets criticism for overpayment of guys like Freeney and Clark, but I like his philosophy. If the guys is one of our core guys, we are going to pay him well and take any potential strife out of the equation. We will err on the side of overpayment vs underpayment for harmony in the locker room. If you are seen as one of the core guys you will get paid - it is only a matter of determining the haves and have nots.

As bubbadeez said, a perspective I hadn't considered. Damn I'm starting to fall in love with this site.

The Colts reward production, simple as that. If you're a key cog in the machine, you'll get paid a market or above-market deal. If you're replaceable, you're out. I don't think I've ever seen the Colts do any shenanigans with player contracts.

Manning's deal will be the max contract for the foreseeable future. They could even start rating players using a Manning Percentage, as in, what percentage of Peyton Manning are you as valuable to this franchise as? Someone like Tom Brady, 75%. Darrelle Revis, 60%. JaMarcus Russell, -25%. Etc. Because realistically, no one should be making more than Peyton Manning.

How can the average salary increase if there is a cap and everyone (almost) spend up to it? A high salary necessarily makes less room for the others unless the cap for future years is pushed up as a result.

DZ, great, great piece. You really explained your theory well, and got in the obligatory Pats dig. That is a perfect recipe.

@LovinBlue, don't fight it. Your love for this site is true love. BTW, How's it going over at SB. I decided after the Super Bowl that I would exile myself from it until the offseason because the comment board is too addicting.

RE: Cap

The difference between the salary floor and the salary cap was about $30 million last year. Not all teams spend to the cap every year, some spend dramatically less. It's just not true that almost everyone spends to it. Last year the cap received a $4 million last minute bump (remember, that's what let us fit Jeff Saturday in) because not enough teams spent to the cap. As a penalty in the CBA the cap INCREASED so as to force more revenue into the system.

The Colts spend right up to the limit every year, and annually are among the league leaders in most money spent. That's what the union wants. That's why the union encourages players to take as much money as they can. That situation doesn't exist everywhere.

So, in terms of the Colts, they might spend the whole $130 million no matter what, with Manning taking $20 million. But remember that other teams that don't spend to the cap are affected by Manning's deal. They have to pay their star players proportionally to the going rate for NFL stars (a rate set by players like Manning). That then helps set the market for other Colts as potential free agents.

Moreover, the cap wasn't a hard cap. In other words, you could spend WAY more than the cap if you wanted, you just had to push the money out into the future by prorating bonus payments (which Indy has done PLENTY of). So even though Manning's deal cramped the cap, the Colts still paid out big dollars to key players by pushing money forward (see the Freeney, Hayden and Sanders deals).

It's just not true that almost everyone spends to it.

That would explain it, but how do you know this? How many teams have to spend short of the limit to invoke a bump? Could it be just a few?

It is crazy hard to get final real cap numbers spent for NFL teams. It's easy to find out how much cap space they had BEFORE free agency and the draft, but hard to find out what they really spent.

Here's the story explaining why the cap was increased more than expected:

http://sports.espn.go.com/nfl/news/story?id=4169590

Here's the numbers for total payroll from last year. This IS NOT CAP numbers. The Colts are middle of the pack in money spent, but were up against the cap due to big layouts in other years. They had to eat $6 million in 'dead' money to Harrison for instance. Still it gives you an idea of how little money some teams really spent last year. Indy lead the league in total payroll in 2006, and the last several years they've had to start accounting for some of that money.

http://content.usatoday.com/sp...?year=2009

This site lists the top 15 payrolls from 2008, but they don't match up at all with USA today numbers

http://articles.sfgate.com/2009-02-17/sports/17190916_1_nfl-players-association-figures-payrolls-compliance-deadline/2

Finally, this is total cash outlays per win from 2004-2008. YOu can see that Indy spent the 3rd most real $ in that time span (the chart is screwy...the first two numbers are the wins, the rest is the money spent)

http://blogs.nfl.com/2009/06/29/more-moneyball-the-economics-of-wins-and-losses/

Reed Albergotti (http://online.wsj.com/article/...49070.html) of the WSJ also noted the relative lack of "competitive balance" in the NFL this season and questions if it is a result of the clubs increasingly adroit "cap management". Mr. Albergotti reports that there is a trend of more clubs both exceeding the cap and spending less than the "salary floor" (85% of the cap).

According to team executives, agents and union officials, this season's results point to a larger truth about the league that has, until now, only been the subject of whispers. The engine the NFL uses to enforce parity--a cap on player salaries--has so many loopholes, they say, that it no longer prevents teams from spending drastically different amounts on talent. And while it's difficult to make a precise connection, there's evidence that this imbalance may be responsible for lackluster games.

AND

A person familiar with the finances of the Tampa Bay Buccaneers says that last season, the team signed two free-agents, running back Noah Herron and defensive end Patrick Chukwurah, for contracts that totalled $25 million. Under the rules of the salary cap, the Buccaneers were charged that full amount for the players. But to actually earn that money, each player had to, among other things, block six punts apiece--an exceedingly difficult prospect. In the end, neither player ended up taking a single snap. Mr. Herron was paid $157,000 and Mr. Chukwurah $71,000, although the team's salary-cap number reflected the full value of their contracts. Tampa Bay, which ranked among the lowest teams in spending last season, has lost all six of its games. Tampa Bay and NFL officials declined to comment.

On the other side of the ledger, teams that want to spend more than the cap allows have found ways to do so. This season, the Minnesota Vikings have surged to an unbeaten start after putting on one of the league's biggest spending sprees. According to people familiar with the numbers, the Vikings spent $7 million in cash over the cap last season to get free agents like defensive end Jared Allen. In the off-season, the team picked up quarterback Brett Favre for $12 million.

Last season, six teams spent less than the league's official salary minimum in actual dollars, while 13 teams spent above the maximum, according to a person familiar with the matter. This season, the spread between the league's biggest payroll and the smallest was a whopping $66 million, enough to cover Indianapolis quarterback Peyton Manning's salary six times over.

While it's not clear how much a team's actual spending translates to wins and losses, a person who has seen these figures says that some of the NFL's better teams, the Vikings, the New York Giants and last year's champions--the Pittsburgh Steelers--have been near the top of the pile in actual spending while two of its worst--the Kansas City Chiefs and the Tampa Bay Buccaneers, are at the bottom.

In the aforementioned piece from David Naylor, he also attributes the increased competitive imbalance in the league this season, at least in part, to a less effective salary cap. Under the former CBA, the salary cap was calculated on the players' share of national revenues. The current CBA was changed to include local revenues in calculating the players' share. The introduction of many new stadiums generating greater local revenues via premium seating, better signage, better concessions etc., has resulted in local revenues now accounting for upwards of 20% of overall league revenues. This is a drastic change from early 90s (when antitrust litigation ended a long era of labour wars and resulted in the 93 CBA) when local revenues were a relatively paltry sum of league revenues.

The cap is supposed to force teams to make tough choices on talented players for financial reasons, in theory freeing some of those players to sign with lesser teams. But the rejigging of the cap formula in 2006 -- to include local revenues -- contributed to an increase of more than 50 per cent from its 2004 level of $80.6-million (all currency U.S.). Since then, 2006: $94.5-million; 2007: $109-million; 2008: $116-million; 2009: $127-million.

By result, the better teams have had more latitude to keep their best players. When the cap was more stable, it served to equalize talent around the league.

http://www.thefreelibrary.com/Does+the+NFL+Salary+Cap+Still+Work?-a0211181147

So on the one hand, basically nothing is forcing teams to keep up with rising salaries, and in fact, the worst of teams aren't keeping up.

On the other hand, there's effectively no real cap for the teams that want to shop for free agents, so there's always room for them to bid up players' salaries.

Well, there is a floor, but if teams spend under it, all that happens is that the remaining money not spent is divided up among the current roster, so there is not much impetus to try and spend over that floor.

The truth is the owners dumped the cap because what they really hated was the floor. The cap wasn't really a factor for controlling spending for most teams.

Hence, the pressure on stars to collect big pay days by the union.

This is another example of why I think unions are an atrocity. They had a purpose 70 years ago, but the labor laws now make them irrelevant. The only purpose they serve is to drive a steep wedge between the price of a good employee and the actual value they produce. They also result in higher unemployment as companies cannot afford to hire as many people. I realize not all of this applies to the NFL. I just really hate unions.

Tom Brady also happens to be the Pats' union rep. and has said that players make too much money as it is (easy for him to say when he has gotten a "big" contact once).