(PFT, FWIW:) Law's contract details

[CupidStunt]

DETAILS ON LAW DEAL

We've obtained from a league source specific information regarding the first two years of cornerback Ty Law's contract with the Chiefs.

As we suspected, it's no bell ringer.

Law got $4 million to sign, and will be paid a $1 million base salary in 2006. (As a vested veteran, his base salary is fully guaranteed if he's on the Week One roster.)

In 2007, there's a $1 million option bonus due in March, a $3 million base salary, and a $1 million roster bonus.

This leaves a whopping $25 million over the last three years of the deal -- and it's highly unlikely that Law will ever see that money.

For now, then, it's a one-year deal with a team option for year two. And kudos to the Chiefs for pushing the bigger hit in 2007 deeper into the league year. As a result, the Chiefs can choose to pay the $1 million option bonus in March and squat on Law's rights before making a decision in August as to whether he merits the remaining $4 million that he's due to receive in 2007.

The better deal for Ty would have been to require the Chiefs to fish or cut cheese on day one of the league year, via a $4 million roster or option bonus. Then, if the Chiefs had opted not to keep him, Law would have been on the free-agent market early (at which time his agents would have demanded too much money, no one would have been interested, and he would have signed another deal like this one in late July).

Still, it's not as if Law and his agents had much leverage to force the decision day into March. We're told that they made a last-ditch effort to shop the deal in search of something better, but generated no interest.



Don't think this was posted.......

[ct]

Awesome!!

[htismaqe]

If true, it's a very good deal for the Chiefs.

[penguinz]

DETAILS ON LAW DEAL

We've obtained from a league source specific information regarding the first two years of cornerback Ty Law's contract with the Chiefs.

As we suspected, it's no bell ringer.

Law got $4 million to sign, and will be paid a $1 million base salary in 2006. (As a vested veteran, his base salary is fully guaranteed if he's on the Week One roster.)

In 2007, there's a $1 million option bonus due in March, a $3 million base salary, and a $1 million roster bonus.

This leaves a whopping $25 million over the last three years of the deal -- and it's highly unlikely that Law will ever see that money.

For now, then, it's a one-year deal with a team option for year two. And kudos to the Chiefs for pushing the bigger hit in 2007 deeper into the league year. As a result, the Chiefs can choose to pay the $1 million option bonus in March and squat on Law's rights before making a decision in August as to whether he merits the remaining $4 million that he's due to receive in 2007.

The better deal for Ty would have been to require the Chiefs to fish or cut cheese on day one of the league year, via a $4 million roster or option bonus. Then, if the Chiefs had opted not to keep him, Law would have been on the free-agent market early (at which time his agents would have demanded too much money, no one would have been interested, and he would have signed another deal like this one in late July).

Still, it's not as if Law and his agents had much leverage to force the decision day into March. We're told that they made a last-ditch effort to shop the deal in search of something better, but generated no interest.



Don't think this was posted.......These numbers don;t add up. It is a 5 yr deal for 30M. According to this he gets 5M for the first year. 5M for the second year.
That adds up to 10M. Last time I was in math class 30M - 10M was 20M.

[ct]

These numbers don;t add up. It is a 5 yr deal for 30M. According to this he gets 5M for the first year. 5M for the second year.
That adds up to 10M. Last time I was in math class 30M - 10M was 20M.

Did you read the whole thing?

[EDIT] DOH! I see it now.

[jspchief]

Cutting him before March '07 would hit the cap for 3.2 million. Cutting him after March '07 would be a 4.2 mil hit. Keeping him in '07 would be a 5.8 mil hit.

I'd say if he doesn't perform, he'll be gone next February.

[penguinz]

Did you read the whole thing?
Yes. Did you?

[jspchief]

Did you read the whole thing?The math is wrong. It says he'll cost us 25 mil for the last three years, but it would actually be 20 mil over the last 3 years.

Still expensive, but there is a 5 mil difference.

[Eleazar]

Cutting him before March '07 would hit the cap for 3.2 million. Cutting him after March '07 would be a 4.2 mil hit. Keeping him in '07 would be a 5.8 mil hit.

I'd say if he doesn't perform, he'll be gone next February.

Who is to say they wouldn't just decide to restructure him again after the season?

[Mr. Laz]

These numbers don;t add up. It is a 5 yr deal for 30M. According to this he gets 5M for the first year. 5M for the second year.
That adds up to 10M. Last time I was in math class 30M - 10M was 20M.
true ...

but 2 yrs / 10 million with 3 million of it in roster bonus, as a safety net ,is a good deal for the chiefs imo.

[ct]

Cutting him before March '07 would hit the cap for 3.2 million. Cutting him after March '07 would be a 4.2 mil hit. Keeping him in '07 would be a 5.8 mil hit.

I'd say if he doesn't perform, he'll be gone next February.

And if he does perform, he'll get a brand new deal. I can live with a 3.2M hit if it don't work, the risk/reward side of this is 2 Pro Bowl CBs before Shields/Roaf retire.

[ct]

Yes. Did you?

see edit

[htismaqe]

Who is to say they wouldn't just decide to restructure him again after the season?

That's what they did with Bell.

[DaKCMan AP]

the 4mil bonus should be spread over 5 years

so for 2006: 1mil + 0.8 = 1.8mil
for 2007: 1mil in march + 3mil + 1mil +0.8 = 5.8

so total if he's kept for 2yrs = 7.6mil

That would leave 22.4mil for the final 3yrs if my numbers are right.

[Eleazar]

That's what they did with Bell.

Right... I don't understand the "this is a 1 year deal" sentiment. They will find a cap friendly way to keep him if they want to.

[ct]

Right... I don't understand the "this is a 1 year deal" sentiment. They will find a cap friendly way to keep him if they want to.

It's a 1 year deal because he won't see the 2nd year of this deal. He'll either get cut or get a new deal. This is a 1 year $1.8M cap, $5M cash deal for Law. Outstanding!!

[jspchief]

Who is to say they wouldn't just decide to restructure him again after the season?It takes two to tango. He didn't for the Jets, maybe he would for us.

Overall, I think it's a great contract for both Law and the Chiefs. If he plays well, he'll be paid accordingly. If he doesn't, it's not unbearable for the team to dump him.

[Mr. Laz]

It's a 1 year deal because he won't see the 2nd year of this deal. He'll either get cut or get a new deal. This is a 1 year $1.8M cap, $5M cash deal for Law. Outstanding!!

I don't necessarily agree with that...


i could easily see the deal being a 2yr/10 million type deal with a very manageable 2.6 million cap hit for cutting him in year 3.

even less if they chose 50/50 1.3/1.3

[ct]

I don't necessarily agree with that...


i could easily see the deal being a 2yr/10 million type deal with a very manageable 2.6 million cap hit for cutting him in year 3.

even less if they chose 50/50 1.3/1.3

Year 2 he'll count $5.8M vs the cap. I just don't see us absorbing that.

[jspchief]

Year 2 he'll count $5.8M vs the cap. I just don't see us absorbing that.We have to absorb it at some point, or Law will have to take a pay cut.

I don't see Law taking another pay cut next year.

[htismaqe]

We have to absorb it at some point, or Law will have to take a pay cut.

I don't see Law taking another pay cut next year.

He may not have a choice. If this is the best deal he could get after leading the league in INT's, he's not gonna have as much leverage when he's 1 year older.

Unless he helps the Chiefs win the Super Bowl.

[the Talking Can]

if it's anything close to the structure suggested then CP did a GREAT job...

[chagrin]

the 4mil bonus should be spread over 5 years

so for 2006: 1mil + 0.8 = 1.8mil
for 2007: 1mil in march + 3mil + 1mil +0.8 = 5.8

so total if he's kept for 2yrs = 7.6mil

That would leave 22.4mil for the final 3yrs if my numbers are right.

So, ummm - what's the name of the bus driver?

[Mr. Laz]

Year 2 he'll count $5.8M vs the cap. I just don't see us absorbing that.
5.8 million for a starting cornerback isn't that great a number.

especially considering the league cap number will go up again next year.


if Ty Law plays like "Ty Law" then i don't see why we wouldn't keep him for the 2nd year.

bottomline money is still 2 yrs/10 million

[DaKCMan AP]

So, ummm - what's the name of the bus driver?

Otto.

[Chiefnj]

Speaking of restructure, I believe Surtain is set to make around 4.6 in base salary next year.

[Shamrock]

the 4mil bonus should be spread over 5 years

so for 2006: 1mil + 0.8 = 1.8mil
for 2007: 1mil in march + 3mil + 1mil +0.8 = 5.8

so total if he's kept for 2yrs = 7.6mil

That would leave 22.4mil for the final 3yrs if my numbers are right.
If .... it's a one year deal and KC cuts him before they pay the offseason 2007 bonus, then the Chiefs will have $3.2 million in "dead space" to amortize against their 2007 salary cap.

If they keep him just two years, they will amortize another $800,000 off the initial signing bonus, leaving $2.4 mill + the remaining non-amortized option bonus (which is $750,000) for a total of $3.15 mill in "dead space" against their 2008 salary cap.

If these numbers from pft.com are correct, then Ty Law's cap hits are:

2006: $1.8 million

2007: $5.05 million

Here's how I figure those:

2006 he receives $4 mill signing bonus, which is spread over 5 years. That amortizes to $800,000 per year. $1 mill base in 2006, makes a combined salary cap hit of $1.8 million for this season.

In 2007, he receives an option bonus of $1 million. That is amortized at $250,000 per year over the remaining 4 years of his contract. Roster bonus of $1 mill figures directly into that year's cap (option bonuses can be prorated, roster bonuses are current year cap hits). Plus, his base of $3 mill.

Dollars in Mill - 2007 hit

3.0 base
0.8 proration of signing bonus
1.0 roster bonus
0.25 proration of option bonus
____

$ 5.05 mill cap hit in 2007

Sound right???

[CupidStunt]

Signing bonuses are typically pro-rated over the life of the contract, but I thought that you could be charged for it up front in the first season of the deal if you so wished.

I may be wrong.

Edit: and if that's an option, I believe Peterson will exercise it. Better to use the space while we have it than to risk having it in the future.

[jspchief]

If .... it's a one year deal and KC cuts him before they pay the offseason 2007 bonus, then the Chiefs will have $3.2 million in "dead space" to amortize against their 2007 salary cap.

If they keep him just two years, they will amortize another $800,000 off the initial signing bonus, leaving $2.4 mill + the remaining non-amortized option bonus (which is $750,000) for a total of $3.15 mill in "dead space" against their 2008 salary cap.

If these numbers from pft.com are correct, then Ty Law's cap hits are:

2006: $1.8 million

2007: $5.05 million

Here's how I figure those:

2006 he receives $4 mill signing bonus, which is spread over 5 years. That amortizes to $800,000 per year. $1 mill base in 2006, makes a combined salary cap hit of $1.8 million for this season.

In 2007, he receives an option bonus of $1 million. That is amortized at $250,000 per year over the remaining 4 years of his contract. Roster bonus of $1 mill figures directly into that year's cap (option bonuses can be prorated, roster bonuses are current year cap hits). Plus, his base of $3 mill.

Dollars in Mill - 2007 hit

3.0 base
0.8 proration of signing bonus
1.0 roster bonus
0.25 proration of option bonus
____

$ 5.05 mill cap hit in 2007

Sound right???Are you sure that option bonuses can be amortized? I'm pretty sure the only thing that can be amortized is the signing bonus at the start of the contract.

[Shamrock]

Are you sure that option bonuses can be amortized? I'm pretty sure the only thing that can be amortized is the signing bonus at the start of the contract.
Yes, I'm sure.

Roster bonuses are a direct hit on that year's cap, but option bonuses are amortized over the remaining length of the contract from the cap year in which they are paid.

For some reason, the NFLPA.org CBA complete link won't currently work, but here is a discussion of bonuses as pertained to the CBA that nearly expired: (BTW: Ignore the 2007 changes discussion, because that only would have been pertinent if no CBA extension was reached). Link (http://www.footballoutsiders.com/print/3693/)
One of the most popular ways to squeeze more guaranteed money into a rookie’s contract is to give him a small signing bonus with a large option bonus. But once they are paid, option bonuses are treated as signing bonuses for salary cap purposes, so they too can only prorate through 2009. So the big option bonuses that the top picks got last year are showing up on the salary cap this year, and they are only prorated for four years. The good news for those teams is that the option bonuses don’t bear on this year’s rookie pool, but they do impact the salary cap as a whole.

Another popular way of crafting big deals despite the rookie pool is to use various roster and reporting bonuses coming due once the players are veterans. That works fine for deals signed last year, but one of the CBA provisions changing the rules for the final capped year makes it harder now. Off-season roster, reporting, and workout bonuses due in 2007 in contracts signed this year will be treated as signing bonuses. That means that 25 percent of their value (since these big deals will be at least four years long) will count against the cap this year.


Most teams treat "roster" bonuses as base salary, and include the full amount into that teams cap year. The above suggests that some of it can be prorated.

Option bonuses are treated the same as signing bonuses.

[CupidStunt]

As has already been covered, his option bonus in 2007 is so minimal that if the Chiefs were to cut him after that season, the accelerated cap hit as a result of cutting him would be just $750,000.

If it were a $4, 5, 6 million option bonus, I'd be worried, and would probably settle for the idea that it's a one-year deal, because the acceleration on a bonus like that could be as much as $4.5 million.

[Bill Lundberg]

The better deal for Ty would have been to require the Chiefs to fish or cut cheese on day one of the league year, via a $4 million roster or option bonus.

ROFL ROFL ROFL

Do you think he means fish or cut bait???