According to Chris Mortensen of ESPN, Peyton Manning has informed the Broncos that he intends to play football in 2015 and will not retire. While I would imagine that John Elway and the Broncos are pleased with the news there are some who feel that the new coaching staff is not as thrilled with the return of an aging Manning. So let’s take a quick look at what this means for Denver.
With Manning intending to return his roster status is now completely up to the Broncos front office. The Broncos will have about one month to determine if they want to keep Manning or relase him from his contract. Manning is due to make $19 million in salary, which is tied with Drew Brees for the most paid for any QB this season. His $21.5 million cap charge is third among QB’s, behind Tony Romo and Brees. Manning’s $19 million salary becomes fully guaranteed on March 9. If released the team would gain $16.5 million in cap room.
The Broncos have a large number of free agents including receiver Demaryius Thomas, guard/tackle Orlando Franklin, tight end Julius Thomas, and defensive tackle Terrance Knighton. The first three names will arguably be among the higher paid players at their respective positions. The team also has to consider that pass rusher Von Miller will also be looking for a new contract as he is set for free agency in 2016. If Manning is to return the question is how much of the team do they need to keep together and at what cost?
Our estimates have the Broncos somehwere between $24 and $26 million in cap space for the year, but if an agreement is not reached with Thomas and the franchise tag is applied that number will immediately drop in half. That would limit what the team can do with the rest of the roster.
Manning only has two years remaining on his contract so they could consider a simple restruture and spread his salary out over two seasons. Reducing his salary to the minimum and converting the rest to a bonus would free up around $9.1 million. That would increase his cap hit in 2016 to over $30 million, leaving them with over $11 milion in charges to account for when they release him or he retires.
The team could also opt for more cap relief by adding additional void years to his contract. In this contract mechanism you add three seasons to the existing contract that will automatically void on a given date. The bonus money would prorate into those seasons. That strategy could save the team $14 million this year and keep his cap charge at a more reasonable $25 million in 2016. However if he retires that would cost the team nearly $17 million against the cap. (You can create your own Manning scenarios with our calculators)
Either of those moves would probably save enough for the team to franchise Thomas and re-sign some other players. How that would be received by the team, since technically it would make it easier for them to avoid long term contracts and security for his teammates, would of course be open to debate.
I know I get a lot of questions on the Tom Brady type scenario, but I can’t picture that occuring. Technically Brady never took a paycut on that contract but he gave up the opportunity for future earnings. Manning would actually have to take a pure paycut, which doesnt see logical from his standpoint.
If you have any Manning questions or possible scenarios feel free to leave them in the comments.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.