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grooves12
01-23-2004, 10:10 PM
Does anyone know how the bonuses we owe Zach are structured??

According to:this (http://www.thefinforum.com/SiteContent/Content/DolphinsSalaryCap.asp) $4.5 million of the $8.3million he is scheduled to make this year is an OPTION bonus which activates the remaining year (through 2008) of his contract.

Is this bonus GUARANTEED if he is on the roster or is it truly an OPTION on the team's part and if we decide not to activate it that his contract would run out at he would essentially be a free agent next year, leaving us with no dead money???

If that is the case, I think it might be our teams best interest NOT to excercise the option, and take this oppurtunity to start looking to the future. That is a LOT of money for a guy who is on the downhill side of his career.

VanDolPhan
01-23-2004, 10:33 PM
It's $6 million and $4.5 million this year. Total signing bonus was $10.5 million. Impossible to eat because that's nearly a $5 million cap hit not to mention no replacement for him. As long as Thomas can keep his level going for 3 more years he's earning the bling.

TonyStrong
01-23-2004, 10:38 PM
If the Dolphins gave up Zach Thomas there would be 20 teams calling up for his services, that says something about how he plays, he's a keeper!!!

Clumpy
01-24-2004, 12:31 AM
I haven't seen anything about it being guaranteed. If it's an option bonus, then it's amortized over the last 5 yrs. If it's a roster bonus, then I'm sure the Fins will do something with his contract. I believe it to be an option bonus and can't imagine that it was negotiated any other way.

grooves12
01-24-2004, 12:34 AM
Originally posted by clumpedplatelet
I haven't seen anything about it being guaranteed. If it's an option bonus, then it's amortized over the last 5 yrs. If it's a roster bonus, then I'm sure the Fins will do something with his contract. I believe it to be an option bonus and can't imagine that it was negotiated any other way.

So, if that's the case what happens if the fron office decides NOT to excercise the option??

How would that affect us cap wise??

Also, if it is an OPTION bonus as you state... and it is then amortized over the remaining years... why does it show up as being counted completely in THIS year's cap, in your spreadsheet??

Wouldn't it be $4.5million / 5 = $900,000 for the cap hit this year?? Thus lowering his cap number by #3.6million compared to what you have listed??

Clumpy
01-24-2004, 01:31 AM
If it's an option, it depends on if it's an option for the remaining 5 yrs of his deal or similar to Fielder's where it only applies to future yrs. I'm quite sure it's for the remaining 5 yrs, thus, if not paid....Zach is UFA. This would apply if it's a roster bonus.

I wouldn't worry....Zach is going no where

Merman
01-24-2004, 08:55 PM
Originally posted by grooves12

Also, if it is an OPTION bonus as you state... and it is then amortized over the remaining years... why does it show up as being counted completely in THIS year's cap, in your spreadsheet??


This should help.

http://espn.go.com/nfl/columns/pasquarelli_len/1530836.html

http://www.finheaven.com/boardvb2/showthread.php?s=&postid=383206#post383206

grooves12
01-24-2004, 09:42 PM
So, basically what it boils down to is his cap hit for this year is miscalculated on the Salary Cap Spreadsheet on this webpage.

It is shown as being counted COMPLETELY in this year's cap, where it should be prorated from 2004-2008. This lowers his cap impact this year to $4.745 million.

That is a SIGNIFICANT difference... and if that is the case, we likely don't HAVE to do anything with him. As it stands (assuming all the other calculations on the spreadsheet are fairly accurate) ... just relasing Fiedler (who's option bonus looks to be misrepresented in the "Savings" columns) and Griese, would get us just about even with the salary cap... and Thomas' roughly $4 million difference would put us UNDER the cap by that amount, with room to still restructure Madison (paycut) and Surtain (extension.)

Merman
01-25-2004, 02:40 AM
Originally posted by grooves12
So, basically what it boils down to is his cap hit for this year is miscalculated on the Salary Cap Spreadsheet on this webpage.


If you follow the second link in my previous post you will find a side letter concerning options. Options can be paid, renounced or just not paid. If not renounced or paid the amount stays in team salary and the team receives a credit next year.

grooves12
01-25-2004, 02:17 PM
But, isn't that basically the least likely thing to occur...

as I see it

A) They will pay him the money possibly renegotiationg lowered/guaranteed base salaries... but that really isn't necessary at this point because his cap impact isn't THAT high. $4.745 million isn't that high for a player of Zach's caliber.

B) They will nenounce the payment and try to renegotiate an extension that is structured differently. This is possible, but I really don't see the benefit to the team seeing as they just went through tough negotiations last year, and once again... Zach cap impact isn't THAT high.

So, basically what you are saying though, is that according to league calculations. The $4.5 million bonus counts against THIS year's cap, until the day it is excercised... at which point it then becomes prorated among the remaining years??

grooves12
01-25-2004, 02:34 PM
Originally posted by Merman


If you follow the second link in my previous post you will find a side letter concerning options. Options can be paid, renounced or just not paid. If not renounced or paid the amount stays in team salary and the team receives a credit next year.

Also, nowhere in that section of the CBA does it say the FULL amount is to count against this year's cap at any time. That last section only states that if nothing is renounced or paid that any amount counted against THAT year's salary cap will be credited the next year. The way I understand that is the league will assume the option is excercised if they are not informed otherwise.... and therefor the amount will be prorated.

So, for Zach that means an extra $900,000 cap impact this year... not $4.5million

It just doesn't make sense for the teams to give option bonuses in that way if it is to impact them so severely.

But really what it all boils down to, is the Dolphins are in MUCH better shape cap-wise than your spreadsheet represents... because it boils down to there are MUCH more savings to be had by not paying Fiedler his bonus, and releasing him than shown... and Zach is going to count FAR less than the $8million is he slotted for.

Merman
01-25-2004, 10:37 PM
I suggest you reread the legalese and think about the situation a little more. An option gives various alternatives. A big one was spreading out the $10.5 million signing bonus. Another is having the option to again assess a player's performance in the future without paying all the money up front or at least paying for the right to do so. A player has the opportunity of another payday or having the term of his contract shortened or voided to seek employment elsewhere. A contract with options also makes it easier for both sides of an agreement to tolerate longer terms.

As for the way an option is accounted for: why should teams that negotiate contracts with options have an unfair advantage over other teams that negotiate straight forward contracts??? The easiest way to insure fairness is to include all compensation in team salary in the year due. Then if the option is exercised the actual results can be recorded. If a team decides to do nothing then leaving the option amount in team salary seems appropriate.

grooves12
01-26-2004, 05:40 PM
I guess we are just interpreting things differently. I haven't put as much time and effort into getting all the numbers put together, but the Salary cap and all its intricacies have always intrigued me, so I have followed things like this for quite some time.... and I have NEVER seen anything that shows the total amount of ANY signing bonus (which is what an option bonus is) be included completely in one year's salary cap.

From the first paragraph pertaining to option bonuses in your link:


* Any amount specified to be paid for the exercise of an option by a Club to extend the term of a Player Contract shall be treated as signing bonus, prorated over the remaining term of the contract commencing in the League Year in which it is exercised OR the last League Year in which the option MAY BE exercised, whichever comes first

... wouldn't 2004 be the last league year in which the option bonus MAY BE excercised??

So, to me, that says that it will be calculated as a signing bonus and prorated over the remaining term of the contract beginning on the first day of the 2004 league year, whether the option has been excercised at that point or not. The league is assuming the contract WILL BE excercised for cap calculation purposes, and treating it as signing bonus, until the team notifies them otherwise.

I don't know... if you see something that says the TOTAL amount is to be included anywhere in there... please point it out to me. But I think that first section is pretty clear.

Merman
01-26-2004, 06:28 PM
The CBA states

* Any amount specified to be paid for the exercise of an option by a Club to extend the term of a Player Contract shall be treated as signing bonus, prorated over the remaining term of the contract commencing in the League Year in which it is exercised or the last League Year in which the option may be exercised, whichever comes first. Such an option amount shall, immediately upon execution of the contract, renegotiation or extension, be included in any calculation for purposes of the 25% Rule for Rookies, set forth in Article XVII, Section 4(e) of the CBA, and/or the 30% Rule, set forth in Article XXIV, Section 8 of the CBA, prorated over the remaining term of the contract commencing in the last League Year in which the option may be exercised. Notwithstanding the foregoing: (i) if a Club renounces its right to exercise the option, the option amount shall not be included in Team Salary as of the date of such renunciation; and (ii)

Page 136

if the club does not renounce, but nonetheless does not exercise the option, the full amount of the option amount previously counted against Team Salary shall be credited to the Club's Salary Cap in the next League Year.

*Side Letter 10/21/96: Sec. 4

The first sentence tells you an option to extend the term of the contract is involved and is considered a signing bonus. If you go to the section of what is a signing bonus you find the same thing.

The second sentence that is in bold type tells you that "notwithstanding " (in spite of) the fore going (what was said before), if a Club renounces its right to exercise the option, the option amount shall not be included in Team Salary as of the date of such renunciation. It's written in the negative but is saying if the option is renounced then the option is taken out of team salary. The next part of the clause reinforces the point by saying if the option is not renounced or exercised the full amount of the option will be left in team salary for the year and the team will get a credit next year.

You are focusing on how to prorate the bonus. The last league year is probably the last year of the CBA agreement but I would have to research that more.

grooves12
01-26-2004, 07:13 PM
I think you are overextending the meaning and power of that sentence.

I think the only reason it is written that way is to show that once a team renounces the money disappears. Because, normal signing bonuses ALWAYS get counted in one way or another. So, what this is saying is ... it is exactly the same as a signing bonus EXCEPT if the team renounces it the get the amount previously counted against the cap back, as in the team has an OPTION on if they really want to pay it or not.

The way you are describing it just doesn't make any sense... they would not calculate it one way and then magically a certain day passes and it gets calculated a completely different way. I know the salary cap is complicated... but not THAT complicated. The CBA goes to great lengths to decide whether certain kinds of pay/bonuses are SALARY or SIGNING BONUS to keep things easier to keep a handle on and keep calculated correctly... and I don't see how or why they would make something SALARY up until a certain point... and then either:

A) it disappears completely OR
B) becomes signing bonus.

There is just no sound reason on why it should EVER be counted as salary when those are the ONLY two outcomes of that money.

Also... in your explanation of how you are coming to the conclusion that the full amount is to be included in salary you are missing what I consider the KEY part of that sentence.


amount previously counted against Team Salary

The way I understand it, that amount is the prorated amount as per the first sentence.


... but you sound like you have your mind pretty made up about this. (As do I) ... so I don't think there is any need to keep arguing about our interpretations of the wording. But in all my experiences following cap articles I never remember seeing anything that said, "As soon as team XXX excercises the option bonus for player YYYY, $4million will drop off from their books."

Clumpy... Whats your take?

Merman
01-26-2004, 07:55 PM
Originally posted by grooves12

Clumpy... Whats your take?

Strange. I thought you were telling us that the salary cap chart on this web site was wrong because it included Zach Thomas' option bonus in team salary.

Now you are wondering what's Clump's opinion ???

grooves12
01-26-2004, 07:58 PM
I hope you didn't take offense to our discussion... It just didn't seem right to me.

Plus, I just remember seeing him say in another thread that he saw something that said option bonuses would not be included until they were excercised, and never saw a resolution on that.

Merman
01-26-2004, 09:07 PM
No, I haven't taken offense to our discussion and rereading your first post you did reference my Salary Cap Chart not the one on this web site.

http://www.thefinforum.com/SiteContent/Columnists/capcorner.asp

If you reread the other threads, Clump at first agreed with me then changed his mind on Fiedler's $2 million option due 4/15/04. Thomas' and Tim Bowens' options have stayed in team salary. I asked him why and he did not answer. There was later a reference in a different thread that Fiedler's option is for future years. My understanding is what is stated in the side letter. An option that extends a contract's term. What has been reported in the media about Fiedler's option is: the the option is to pick up the 2006 year of the contract. In other words if the option is renounced or not paid, Fiedler's contract only runs through the year 2005. A reduction in the term of the contract. If there is a renouncement of the $2 million payment, it drops off team salary as there is no new bouns to amortize, the signing bonus that has been amortized through the year 2006 also has to be accelerated per signing bonus rules.

grooves12
01-26-2004, 09:27 PM
Okay, that seems a little contradictory to the way the salary cap normally works also.

In Fiedler's case if his current contract only runs through 2005... wouldn't the original signing bonus only be pro-rated over THOSE years. Why would it also be pro-rated over 2006 if that portion of his contract has not been excercised yet??

I understand it has been pre-negotiated... but the way I see it is with these option bonuses that extend the length of the contract, that whey would essentially be treated exactly as a normal contract extension would... the only difference being that they are pre-negotiated. So, perhaps the amount that you have calculated for the amortization of the original bonus is slightly off (could be the case in Zach's or TimBo's contract also, but we don't have as many details about the option in their cases.)

I understand it works this way when there are incentive clauses that allow a contract to be voided... but in this case that is not what is happening. It is essentially a 4-year contract on its face, but can be CHANGED to a 5-year contract at a later date. So, I would think the bonus amortization on the original bonus would be spread over 4 years and not 5...

Merman
01-26-2004, 09:52 PM
Originally posted by grooves12

I understand it works this way when there are incentive clauses that allow a contract to be voided... but in this case that is not what is happening. It is essentially a 4-year contract on its face, but can be CHANGED to a 5-year contract at a later date. So, I would think the bonus amortization on the original bonus would be spread over 4 years and not 5...

You have to read the signing bonus rules and see that if the player does not have control over the option year or years in question are to be prorated.


The CBA states

(2) Any contract year in which the player has the right to terminate based upon events within his sole control shall not be counted as a contract year for purposes of proration. In the event the NFL and the NFLPA cannot agree upon whether an option is within the player’s sole control, such issue shall be resolved by the Impartial Arbitrator.

This section is also written in the negative. If you don't want to accept this rule either I can't help you.

grooves12
01-26-2004, 10:02 PM
Where are you getting all this information from the CBA?? I would like to read through it myself.

Merman
01-27-2004, 01:27 AM
The CBA is the Collective Bargaining Agreement. It is the NFL's labor agreement.

http://www.nflpa.org/members/main.asp?subPage=CBA+Complete

Clumpy
01-27-2004, 12:34 PM
Page 103

5 (iv)

(3) Any consideration, when paid, or guaranteed, for option years, contract extensions, contract modifications, or individually negotiated rights of first refusal


When/If Miami pays Fiedler's option for 2006, it counts, not before and it's prorated.



(5) The unamortized portion of any signing bonus contained in an NFL Player Contract that is renegotiated to reduce the number of years of such Player Contract shall be included, to the extent attributable to such reduced year or years, in Team Salary at the time of the renegotiation.


This, I believe, states that the amortized bonus from the 2006 season will be equally split between 2004 & 2005, as long as Fielder is on Miami's roster in 2004


My numbers for Fielder:

salary: $3.7 million
amortization: $1.24 million
cap hit: $4.94 million

still have $2 million option for 2006.

If paid:

salary: $3.7 million
previous amortization: $1.24 million
new amortization: $666,666
cap hit: $5,606,000 (increase by the amortization amount)

Not paid and remains with team in 2004(without restructure)

salary: $3.7 million
previous amortization: $1.24 million
portion of 2006 amortization: $620,000
cap hit: $5.56 million

If plain out released: "dead cap" of $3.72 million ($1.24 million x 3 yrs). Original cap hit of $4.94 million. $4.94-$3.72=$1.22 million savings in 2004.


For argument sake: If $2 million option counted in full NOW

salary: $3.7 million
previous amortization: $1.24 million
Option bonus: $2 million
Cap hit: $6.94 million

If then paid per above:

If paid:

salary: $3.7 million
previous amortization: $1.24 million
new amortization: $666,666
cap hit: $5,606,666 (increase by the amortization amount)

represents a savings of $1.333 million.

However, it's really a moot argument. If it counts, you add $2 million to the cap now but save $1.333 million when exercised OR add $666,666 to the cap if it doesn't count and exercised........either way.......YOU END UP EXACTLY THE SAME

Clumpy
01-27-2004, 12:43 PM
My take on Zach Thomas:

Salary: $2.845 million
Prior amortization from $5 million signing bonus paid as part of contract extension in 2003: $1 million
Roster bonus of $4.5 million
Cap hit: $8.345 million


For purposes of the Salary Cap and Entering Player Pool, any roster or reporting bonus which is earned or paid before the start of the Club’s pre-season training camp shall be treated as a signing bonus.

*Side Letter 6/23/93: Sec. 6

This, I believe, states that the bonus is amortizable at $900,000/season. Thus, I will be changing my cap page to reflect this because I'm relatively positive that Miami will be paying it.

Salary: $2.845 million
Original amortization: $1 million
New amortization: $900,000
Cap Hit: $4.745 million


Thus, by paying the $4.5 million roster bonus, Miami saves $3.6 million on the cap. If they don't pay the roster bonus, Zach is UFA

Merman
01-27-2004, 03:03 PM
Originally posted by clumpedplatelet

5 (iv)

(3) Any consideration, when paid, or guaranteed, for option years, contract extensions, contract modifications, or individually negotiated rights of first refusal


When/If Miami pays Fiedler's option for 2006, it counts, not before and it's prorated.

I agree when the option is paid it is a signing bonus. Until then its an option and should be accounted for as such. As you already know I think the side letter I have previously posted addresses options of the kind we are discussing.



Originally posted by clumpedplatelet
Quote:
(5) The unamortized portion of any signing bonus contained in an NFL Player Contract that is renegotiated to reduce the number of years of such Player Contract shall be included, to the extent attributable to such reduced year or years, in Team Salary at the time of the renegotiation.


This, I believe, states that the amortized bonus from the 2006 season will be equally split between 2004 & 2005, as long as Fielder is on Miami's roster in 2004


I looked at that and believe it does not apply as the option should not be considered a renegotiation. Instead in the same section :

the CBA states
(4) Any contract year that the player has the right to terminate based upon a contingency shall count as a contract year for purposes of proration until the contingency is fulfilled, at which time any amounts attributed to such year shall be accelerated and included immediately in Team Salary. To the extent that such acceleration puts the Team over its Salary Cap, the difference shall be deducted from its Salary Cap for the following year.

I was going to post what a renegotiation is per the CBA but felt it was a little too much for this post.

Merman
01-27-2004, 03:16 PM
Originally posted by clumpedplatelet
My take on Zach Thomas:

Salary: $2.845 million
Prior amortization from $5 million signing bonus paid as part of contract extension in 2003: $1 million
Roster bonus of $4.5 million
Cap hit: $8.345 million


Your signing bonus number is off by $1 million but that's not the important part as your totals are correct.

It has been reported that Zach received a $10.5 million signing bonus paid $6 million in 2003 and an option bonus of $4.5 million due in the Spring of 2004. What information do you have that the $4.5 million is a roster bonus???

Merman
01-27-2004, 03:34 PM
Now what about Tim Bowens??? It has been reported that he was due a $1.8 million option for years and recently reported that its to keep him under contract for the 2005 and 2006 years. Are you also considering this a roster bonus???

The other point that we have not mentioned is that other than Fiedler these options are probably payable on 3/03/04 or the start of the new year in part to resolve the negative cap consequences.

Eshlemon
01-13-2005, 04:31 PM
Clumpy, thanks for all the work you put in. Great work.

My question is I'm confused a little about Zach's contract. Miami prorated his bonus over 6 million/6 years and 4.5 million/5 years. And with his contract expiring in 2003 shouldn't his proration be 1.9/year? ZT's contract has the prorated bonus at 2,337,000 in 2004 & 2005. Did I miss an extension for that 437,000?
Assuming I missed a 437,000 extension. With 4 yrs left on contract at 2,337,000/yr, why isn't the 2005 dead money 9,348,000 instead of 9,785,000?

Clumpy
01-21-2005, 12:02 PM
Clumpy, thanks for all the work you put in. Great work.

My question is I'm confused a little about Zach's contract. Miami prorated his bonus over 6 million/6 years and 4.5 million/5 years. And with his contract expiring in 2003 shouldn't his proration be 1.9/year? ZT's contract has the prorated bonus at 2,337,000 in 2004 & 2005. Did I miss an extension for that 437,000?
Assuming I missed a 437,000 extension. With 4 yrs left on contract at 2,337,000/yr, why isn't the 2005 dead money 9,348,000 instead of 9,785,000?


Sorry, I haven't given ya an answer til now.

Zach Thomas restructured last off-season. He converted a $4.5 million roster bonus to signing bonus. However, Miami also converted some salary to bonus. His salary went from $2.845 million to $660,000. The additional $2.185 million/5 yrs= $437,000


You are correct about the dead cap....I'll include a correction with the updates I'm gonna send Muck soon

Eshlemon
01-21-2005, 01:36 PM
Sorry, I haven't given ya an answer til now.

Zach Thomas restructured last off-season. He converted a $4.5 million roster bonus to signing bonus. However, Miami also converted some salary to bonus. His salary went from $2.845 million to $660,000. The additional $2.185 million/5 yrs= $437,000


You are correct about the dead cap....I'll include a correction with the updates I'm gonna send Muck soon

Thanks for the response and no worries about any delay. The cap page has to keep you busy enough w/o us fans nitpicking over your work.

Clumpy
01-22-2005, 01:26 AM
Thanks for the response and no worries about any delay. The cap page has to keep you busy enough w/o us fans nitpicking over your work.


That "nitpicking" keeps me on my toes and I'm always willing to answer questions. That's how we all learn.

:cool:

korl68
01-22-2005, 05:45 PM
So Clumpy in your opinion strictly based on our cap situation Zach, JT and Madison are not going anywhere at least this year correct?

Who else has to be kept based just on cap issues?