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PennyBoy's Salary Cap Implications


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Answer Man, you have written both expertly and voluminously about the salary cap. But I have still another question - In the unfortunate instance where a player sustains a career-ending injury, does all of the guaranteed portion of his contract (presumably the signing bonus) accelerate into the current period the way it does when a player is cut? Just thinking about it, it would seem a contract like Mike Vick's has the potential to "bankrupt" a team's salary cap in a given year were that to occur. Thanks!

Answer Man: Doug, I

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So basically they swallow a HUGE hit and sign no one and cut players (bye Johnny Abe) if they cut Penny after the season?

I forsee him on the roster at least this season and next.

I agree BlackLabel.

The Jets can not cut him until at least after the 2006 season.

I look for the Jets to keep him either on the IR or PUP list at least through next season.

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I agree BlackLabel.

The Jets can not cut him until at least after the 2006 season.

I look for the Jets to keep him either on the IR or PUP list at least through next season.

They will keep him around, as Chad will convince the team to allow him to undergo a long rehab program, etc. So he will e here a couple of years.

I wonder if they will restructure his contract, to lower the cap hit if they need to cut him? I wonder if this can be done with someone on the PUP list??

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I posted on GangGreen.com the entire salary cap ramifications.

Basically, if the Jets cut ties after this season, there would be a net 0 cap hit. He'll take up 12M of our cap if he's on the team or if he's cut (12M of his 18M signing bonus would accelerate).

This is why a restructuring would take place. Pennington would not want to lose out on the 38M remaining on his deal. The Jets would want Cap relief.

I say the Jets would give Pennington an incentive based contract, which would maybe put a few million more back in his hands, but would give the Jets 6-7M of cap relief for 2006. His contract was structured the way it was to "trigger" a restructuring after this season anyway. They'll do it, but this time, the Jets will make more money "performance" based.

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I say the Jets would give Pennington an incentive based contract, which would maybe put a few million more back in his hands, but would give the Jets 6-7M of cap relief for 2006. His contract was structured the way it was to "trigger" a restructuring after this season anyway. They'll do it, but this time, the Jets will make more money "performance" based.

aec4,

In order to restructure, both parties have to come to an agreement.

What "incentive" would PennyBoy have in agreeing to a restructured contract?

Are you saying that the Jets give him a couple mil in guaranteed money as an incentive to restructure?

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So basically they swallow a HUGE hit and sign no one and cut players (bye Johnny Abe) if they cut Penny after the season?

I forsee him on the roster at least this season and next.

so let me get this straight: you think the Jets will cut J Abe so they can afford to keep Pennys cap hit manageable? I think there are other options then getting rid of one of the only 2 impact players on the team, the other being Vilam

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aec4,

In order to restructure, both parties have to come to an agreement.

What "incentive" would PennyBoy have in agreeing to a restructured contract?

Are you saying that the Jets give him a couple mil in guaranteed money as an incentive to restructure?

If he's cut, he loses out on 38 million dollars.

If that's not incentive, I don't know what is.

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aec4,

In order to restructure, both parties have to come to an agreement.

What "incentive" would PennyBoy have in agreeing to a restructured contract?

Are you saying that the Jets give him a couple mil in guaranteed money as an incentive to restructure?

If he's cut, he loses out on 38 million dollars.

If that's not incentive, I don't know what is.

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aec4,

In order to restructure, both parties have to come to an agreement.

What "incentive" would PennyBoy have in agreeing to a restructured contract?

Are you saying that the Jets give him a couple mil in guaranteed money as an incentive to restructure?

If he's cut, he loses out on 38 million dollars.

If that's not incentive, I don't know what is.

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If he's cut, he loses out on 38 million dollars.

If that's not incentive, I don't know what is.

How's he loss out on $38M? Only his signing bonus is guarenteed. If he can't play at an NFL starting level the Jets would be stupid not to cut him. The question is when is the best time to cut him for salary cap purposes. The only way he renegotiates the current deal is if he gets more guarenteed money.

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How's he loss out on $38M? Only his signing bonus is guarenteed. If he can't play at an NFL starting level the Jets would be stupid not to cut him. The question is when is the best time to cut him for salary cap purposes. The only way he renegotiates the current deal is if he gets more guarenteed money.

He loses out on 38M if he is cut. This is why he'd take a pay decrease to stay signed. He wouldn't be able to recover the money on the open market. He also knows that the Jets, by cutting him, have him on the cap for 12M for 2006. If he restructures/takes a pay cut, he may still stand to make 10-15M, but at the same time, the Jets may save 6-7M on the 2006 cap.

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here is aec4's post on TGG...

I'm posting this in it's own thread so you can all see. Of course, the data I have is not 100% perfect, but based on it, here is the cap situation.

Before 2004, the Jets and Pennington agreed on a 7 year, 64.2M contract. He was given an 18M signing bonus at that point, 2M roster bonus before 2005, and is due a 3M roster bonus before 2006. The 2M roster bonus was guaranteed, but the upcoming one is not. Here are his base salaries:

2004 1000000.00

2005 1000000.00

2006 6000000.00

2007 4000000.00

2008 6000000.00

2009 7000000.00

2010 6300000.00

2011 10172000.00

Since the CBA only allowed the signing bonus (18M) to be on the cap for 6 years (3M per year) because it needs to be renegotiated, here are the cap hits:

2004: 4M

2005: 6M (1M + 3M signing + 2M roster)

2006: 12M (6M + 3M signing + 3M roster)

2007: 7M

2008: 9M

2009: 10M

2010: 6.3M

2011: 10.172M

Now, the real question.. cutting him, or trading him...

If he's cut after the following seasons, prior to June 1, here are the details. I'm not sure of the date of the signing bonus in 2006, but most likely, it's in March, so he wouldn't be able to be cut after June 1, since w'ed have to pay the bonus..

2006: 0 net cap hit. He's going to cost 12M on the cap regardless. Why? If he's cut, all 12M accelerates.

2007: 9M accelerates, but 7M comes off, which means it costs us 2M to cut him. Having him on the team would save us 2M

2008: 6M accelerated, but 9M comes off, saving us 3M

2009: 3M accelerates, but 9M comes off, saving us 6M

2010: 6.3M comes off, 0 accelerates

2011: 10.172M comes off, 0 accelerates

In other words, if we do not cut him after this season, he's on the team thru the 2007 season

My gut feeling? The contract was set up to be restructured, and even a simple restructuring (which we may not want to do) which turns 9M owed to him into bonus (stretched over only 4 seasons since that's all that would be allowed without a CBA extension) would reduce CHad's cap # from 12M to 5.25M, saving 6.75M. I bet we ask him to take some cuts, or move some money to incentives based on playing time.

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