|02-23-2005, 12:32 AM||#1|
Join Date: Feb 2004
Cap implications of the Coles situation
Good info here:
The Laveranues Coles situation severely tested the salary-cap acumen even of people around the league who know the intricacies of the system well.
At one point Monday evening, an executive from one NFL team well-versed in salary-cap rules said he thought it would be virtually impossible for the Washington Redskins to trade the wide receiver even if Coles agrees to give back a sizable portion of his $13 million signing bonus. The executive said his understanding of the rule was that any give-back by Coles would give the Redskins a salary-cap savings in the 2006 season, not next season, and that would make a trade next to impossible on the Redskins' 2005 salary cap.
He was close. But he wasn't exactly right, and there is enough of a difference to mean that trading Coles indeed is feasible for the Redskins from a salary-cap perspective -- at least if Coles agrees to a proposed signing-bonus give-back before March 2, the start of the league's fiscal year.
Under the salary-cap rules, a signing-bonus give-back by a player results in a salary-cap savings for his team in the next league year, meaning that the Redskins can make a Coles trade work on their salary cap for the 2005 season only if Coles agrees to his signing-bonus give-back before March 2. That gives Coles, the Redskins and whatever team to which they'd like to trade him until only the middle of next week to work it all out. The clock is ticking.
Here's how it all works from a salary-cap perspective:
Coles is two seasons into a seven-year, $35 million contract with the Redskins that included a $13 million signing bonus. Since the signing bonus is prorated over the duration of the contract for salary cap accounting purposes, Coles's signing bonus counts $1.86 million against the Redskins' cap for each season that he is with the team. He is on the books to count $3.36 million against the Redskins' salary cap next season (the $1.86 million signing-bonus proration plus his $1.5 million salary for the 2005 season).
Under salary-cap rules, if a player is traded or released, the remainder of his signing-bonus money that hasn't yet counted against the cap is "accelerated," and counts against his former team's salary cap the following season. In Coles's case, that would mean that he would count, under normal circumstances, $9.28 million against the Redskins' salary cap next season if they would trade him or release him (his $13 million signing bonus minus the $3.72 million of it that already has counted against the cap in his two seasons with the club). That's $5.92 million more than the $3.36 million that he'd count against the Redskins' cap by staying with the team, and that would be enough of an additional cap hit to keep him from being traded or released. The Redskins couldn't come up with the nearly $6 million in additional salary cap space without tearing apart their roster.
(Coles would count only $1.86 million against the Redskins' salary cap next season if the club would release him after June 1, actually saving the team $1.5 million from the $3.36 million charge if he remains on the roster. But waiting until then to cut Coles wouldn't solve the Redskins' immediate problem of having a player who doesn't want to be around. It wouldn't solve Coles's problem of wanting to get to another team while other clubs still have jobs and money available. And it would leave Coles counting a cumbersome $7.42 million against the Redskins' salary cap in the 2006 season.)
This is where the signing-bonus give-back comes in. And, in fact, it's not even a matter of Coles giving back money that he already has received; it's a matter of him forfeiting money that he's about to receive.
Redskins owner Daniel Snyder makes it a policy not to pay a hefty signing bonus to a player in a single lump sum. He divides it up into a series of payments. That's what happened with Coles, who is due to receive a $5 million deferred payment (from his original $13 million signing bonus) on April 1. To free himself from the Redskins, Coles apparently is willing to forfeit that $5 million.
And this, in turn, is where the give-back rule comes in. If Coles agrees by March 2 to forfeit the $5 million, the Redskins would get credit for the $5 million on their 2005 salary cap. So instead of their salary cap having to absorb an extra $5.92 million hit for trading Coles, the additional cap hit would be a far-more-manageable $920,000. Suddenly, trading Coles goes from not do-able against the salary cap to do-able.
Coles and his agent, Roosevelt Barnes, apparently would expect any team trading for Coles to pay him the $5 million that he would agree to waive from the Redskins. The Redskins, in a trade, would get a draft pick or a player in return for their disgruntled player.
The problem, of course, is finding a team willing to pay $5 million and surrender a draft choice or a player for a disgruntled player with an ailing foot who could end up being released if no trade is completed. What would be in it for that team?
It would be getting Coles -- who, even with his disenchantment in D.C. and his bad foot, played at a near Pro Bowl level in 2003 and had 90 catches this past season -- without having to worry about pursuing him on the free-agent market, in which the competition to sign him could drive the financial parameters higher. One source familiar with the situation, speaking on the condition that he not be identified because the deliberations are at a sensitive stage, said Monday that a possible trade was in the works.
The Redskins' leading trade partner for Coles could end up being the New York Jets, the team from which they stole Coles in restricted free agency prior to the 2003 season. The Jets wanted to keep Coles but were unwilling to match the Redskins' offer, and took a first-round draft choice as compensation instead. But Coles had a great relationship with Jets quarterback Chad Pennington. And anyone who watched the Jets play this past season knows that their offense remains in dire need of one more receiving threat.
The Redskins probably would want defensive end John Abraham in return. The Jets have designated Abraham their franchise player. But with Coles's diminished value, given the league-wide wariness about the soundness of his foot and the fact that other teams believe the Redskins might release Coles if they can't trade him, it probably would take more than Coles to pry Abraham from the Jets.
The Baltimore Ravens remain desperate for help at wide receiver a year after trying but failing to land Terrell Owens. But the animosity between the two I-95 neighbors might preclude a Redskins-Ravens trade. Dallas Cowboys Coach Bill Parcells drafted Coles for the Jets in 2000. The Cowboys need help at wideout. But it's highly doubtful that the Redskins and Cowboys, as heated divisional rivals, would be trade partners.
|02-23-2005, 09:10 PM||#3|
Join Date: Aug 2004
Re: Cap implications of the Coles situation
Wow good stuff Matty......I wondered how this would all pan out in dollars and sense.