Colts and Pro Sports and Sports Business

Colts build reputation for mastering salary cap

August 20, 2007

The Indianapolis Colts lost a slew of popular players in the off-season who were key to the team's Super Bowl run. The defections--though unusual for a championship team--were business as usual for a franchise that has gained a reputation around the league for its bold personnel moves.

But most agree the coming season will be the ultimate test of the Colts' system of keeping costs down while achieving lofty results. The job team President Bill Polian did this off-season will largely determine whether the defending Super Bowl champs are contenders or pretenders, sports business experts said.

"Bill Polian's decisions are often unpopular with fans, but he does what is necessary," said Ed Thompson, NFL writer for Scouts.com and publisher of Coltpower.com. "Polian makes the tough decisions, and no one manages a roster and player payroll better than he does."

Polian has made a career of making highly calculated personnel moves.

Colts fans were aghast when all-pro running back Marshall Faulk was traded during the 1999 off-season. It was the first sign the Colts were employing Polian's method of managing the salary cap.

"The key to Indianapolis' success is, they almost have their own farm system," Thompson said. "They draft very smart, they employ good coaches who can train young players, and they always have an eye toward the future. Other teams are starting to catch on to this system."

Some of Polian's more unpopular decisions include parting with players like Ken Dilger, Marcus Pollard and Edgerrin James.

James was drafted unexpectedly by the Colts as Faulk's replacement. Eight years later, when James became too expensive, Joseph Addai replaced him.

Though it's good business, Polian admits it's not always easy.

"I have to separate my personal feelings for those players from my professional responsibilities," Polian said.

This off-season, the Colts waved goodbye to a litany of players who contributed to their Super Bowl title, including defensive backs Nick Harper and Jason David, linebacker Cato June, defensive lineman Montae Reagor, wide receiver Brandon Stokley and running back Dominic Rhodes.

All had started games for the Colts, had solid playing years in front of them, and signed with other teams.

But they were all deemed too expensive.

"Part of the Colts' loss might have to do with the fact that they're in a smaller market and have revenue constraints, but most of what you see are salary cap issues," said Andrew Zimbalist, a noted sports economist and professor at Smith College in Northampton, Mass.

It's all part of a Colts system that deems few players irreplaceable.

"The Colts do what they have to do to keep their big playmakers, the guys who can really impact a game," Thompson said. "They look at the other positions as transient and develop their own talent to replace higher-priced veterans."

Looking deep

When the Colts draft players, team officials don't usually consider immediate need, but look to see which players will become free agents two or three years down the road, Thompson said.

"They have an uncanny knack for backfilling those lost position players through the draft," Thompson said.

For instance, they have third-year players Marlin Jackson and Kelvin Hayden to replace David and Harper and second-year player Freddie Keiaho to help replace June.

It is unusual for a reigning Super Bowl champ to lose so many key players, said Richard Sheehan, a University of Notre Dame economist and author of "Keeping Score: The Economics of Big-Time Sports," but that doesn't mean they won't have a shot at defending their title.

"The Colts have made this game a matter of finance as much as anything," Sheehan said. "They already have the players on the roster they think can replace the ones they lost. It remains to be seen how seamless the transition will be this year."

If the Colts' track record is any indication, they should be fine.

"Look around the league," Sheehan said. "Very few teams have been able to stay on top as long as the Colts. The salary cap is designed to breed parity."

The Colts entered the spring with one of the NFL's highest player payrolls, a mere $5.9 million below the $109 million salary cap, according to league sources.

Juggling act

Including bonuses and other money that doesn't count toward the cap, the Colts actually paid $131 million in player payroll last year, according to league sources. That's a significant chunk of the team's revenue, which is estimated at $175 million.

Other teams, such as the New England Patriots, which were $19.1 million under the cap, and the New Orleans Saints, which were $19.9 million under the cap, had much more flexibility to re-sign veterans and sign high-priced free agents.

Polian has never favored pursuing free agents. One of the few he pursued since joining the Colts in 1998 was defensive lineman Corey Simon, who saw limited action and was sidelined last year by an undisclosed medical condition. When Simon and the team parted ways this summer, he left with more than $10 million in Colts cash in his pocket.

"We don't believe there's a lot of value in the free agent market," Polian said. "Obviously, [not being active in the free agent market] is not very popular with the media in this town, but that's part of the system. Free agents in the NFL are highly overvalued."

The disappointing results with Simon only fortified Polian's feelings about pursuing free agents.

"The salary cap doesn't forgive and it doesn't forget, so you pay for your mistakes," Polian said.

Most teams, however, are willing to take high-priced roster risks to shoot for a short window at winning a Super Bowl. Tapping the free agency market is not standard practice for the Colts, but that doesn't mean it's never worked for the team. While Simon didn't pan out, defensive lineman Anthony "Booger" McFarland, who was acquired last season from Tampa Bay, played a big role in the championship run.

And the Colts aren't always willing to let their veterans go. By parting with some fan favorites, the Colts made room under the salary cap to sign all-pro defensive lineman Dwight Freeney to a six-year, $72 million contract.

"I was amazed they were able to do that," said Fox sports NFL television analyst Troy Aikman. "For a team with the sort of constraints they're dealing with to be able to sign him to a long-term deal like that ... I didn't think it was possible."

Paying for stars

Quarterback Peyton Manning and wide receivers Marvin Harrison and Reggie Wayne are chief among those constraints. That trio was paid a combined $37 million last year.

But Polian and his staff have become masterful at pro-rating bonuses and backloading contracts so less of a player's salary counts against the salary cap in any given season.

Harrison, for instance, was paid $12 million, according to league sources, but only had $6 million count against the salary cap due to a bonus that was paid up front but amortized over the life of his contract.

"With the tactics they employ, everybody thinks the day will come that the Colts will reach salary cap hell," Thompson said. "They keep saying it will come next year ... then next year. Because they have become masters at managing this system, next year has never come ... not yet."

To loosen their constraints, coach Tony Dungy, Polian and team owner Jim Irsay scan their roster each off-season for players they can most easily replace.

Rhodes and Reagor, who both made around $3 million last year, were easy targets. Reagor had serious health questions and Rhodes could be replaced by second-year running backs Joseph Addai and De De Dorsey.

The Colts paid the promising Dorsey only $275,000 last season, while Addai made $1.47 million. The two made less combined than Rhodes.

Harper's $1.4 million salary last year and June's $1.58 million made them targets. And Stokely's $3.46 million salary put a bull's-eye on his back.

All those players will be replaced by younger, less-expensive talent.

The Colts got another $4.5 million in cap room with the unexpected retirement of offensive lineman Tarik Glenn.

They might need it next year. Tight-end Dallas Clark and defensive back Bob Sanders--among others--are able to opt out of their contracts after this season. Both will likely be asking for considerable pay raises as incentive to stay.

"Every off-season poses its challenges," Polian said. "Next year will be no different."

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