Cap Question

[cwadley]

I have a (hopefully basic) cap question:

How is existing bonus money handled when a player's contract is renegotiated?

For example, assume Joe Player is under contract with the following terms:

Signing bonus: $400,000
First year salary: $1,000,000
Second year salary: $1,000,000
Third year salary: $1,000,000
Fourth year salary: $1,000,000

As I understand the rules, Player's yearly cap cost is $1.1 million. If I cut him before the season, I eat $100,000 in lost cap space for the current year, and $300,000 in lost cap space for the second year.

What if I renegotiate Player's contract before the season, instead? Assume the following renegotiated terms:

Signing bonus: $400,000
First year salary: $600,000
Second year salary: $1,000,000
Third year salary: $1,200,000
Fourth year salary: $1,400,000

Do I incur any cap penalty? For example, do I eat $100,000 in lost cap space based on the original bonus, plus the $700,000 I incur under his renegotiated terms ($800,000 total hit). Similarly, do I eat $300,000 in lost cap space for the second year, plus the cap cost of $1.1 million under the renegotiated terms ($1.4 million total hit)?

Or do I not incur cap penalties for rengotiating. In that case, I assume my total cap cost in the first year would be $700,000 and $1.1 million in the second year.

Thanks in advance!

[Joe]

the original bonus combines with the new bonus offered, and is spread out over the life of the contract

edit: You don't have a cap hit in future seasons. Cap cost for the first year would be $800K, 2nd year 1.2M, etc.

[cwadley]

the original bonus combines with the new bonus offered, and is spread out over the life of the contract

edit: You don't have a cap hit in future seasons. Cap cost for the first year would be $800K, 2nd year 1.2M, etc.

I understand. Thanks for the prompt response!

[cwadley]

Follow-up:

On the contract renegotiation screen, does the amount of the bonus offered reflect the remainder of the preexisting bonus, or must I keep the old bonus in mind when offering a new bonus?

[Joe]

Follow-up:

On the contract renegotiation screen, does the amount of the bonus offered reflect the remainder of the preexisting bonus, or must I keep the old bonus in mind when offering a new bonus?

The old bonus is reflected in the cap cost it gives you. But the bonus listed at the top of that screen is just the bonus you are offering in the new contract.

[cwadley]

The old bonus is reflected in the cap cost it gives you. But the bonus listed at the top of that screen is just the bonus you are offering in the new contract.

Thanks again!

[cwadley]

Another question for you cap experts:

What happens to the remainder of a player's signing bonus if he retires mid-contract? Am I charged with it in the same way I would if, say, I cut the player instead of him retiring?

Thanks.

[Joe]

It becomes "dead cap space" in the season in which he retired. Not the same as cutting him, which spreads it out over the current season and the balance of the bonus hitting the following season.

[cwadley]

It becomes "dead cap space" in the season in which he retired. Not the same as cutting him, which spreads it out over the current season and the balance of the bonus hitting the following season.

Okay. If you'll bear with me, I think an example will help me understand. Joe Player has the following contract structure:

Bonus: $300,000
2008 Salary: $1,000,000
2009 Salary: $1,000,000
2010 Salary: $1,000,000

Player retires following the 2008 season. What's the cap cost, if any, in 2009? 2010? Thanks again.

[Joe]

Okay. If you'll bear with me, I think an example will help me understand. Joe Player has the following contract structure:

Bonus: $300,000
2008 Salary: $1,000,000
2009 Salary: $1,000,000
2010 Salary: $1,000,000

Player retires following the 2008 season. What's the cap cost, if any, in 2009? 2010? Thanks again.

$200,000 in 2009. $0 in 2010.

[cwadley]

$200,000 in 2009. $0 in 2010.

Thanks again!

[Joe]

cheers