Colts cuts not made on emotion

August 26, 2008
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peytonFirst and foremost Indianapolis Colts President Bill Polian is a businessman. And he’s one of the best in the National Football League. Don’t expect Polian to get too giddy over the extra bucks the new Lucas Oil Stadium will bring in. The team will still make roster cuts based to a large degree on the team’s player payroll status.

In 2006, the Colts had a league leading $131.2 million player payroll. Yes, the team won the Super Bowl, but owner Jim Irsay and Polian made note of the cost. In 2006, the Colts player payroll was $26 million more than the New England Patriots and a whopping $40 million more than the NFC champion Chicago Bears.

In 2007, the Colts payroll was chiseled to a more manageable $102.8 million. That was the league’s 12th highest payroll. New stadium or not, Polian realizes the Colts will never rival teams in Dallas, Washington D.C. and New York in revenue generation. It won’t even be close.

Polian has always believed that handling the seemingly little things goes a long way to keeping the player payroll under control. So when it comes time to choosing quarterbacks behind future Hall of Famer Peyton Manning, fans might as well start waving goodbye to Quinn Gray. His $1.3 million salary is far more than he can bring to the table for the Colts. Consider, second stringer Jim Sorgi is only a $760,000 hit to the team’s salary cap. Few could argue that Gray gives the Colts twice as much chance to win if Manning goes down. Jared Lorenzen has been less than stellar this pre-season. But the hefty lefty’s $440,000 salary is a far easier insurance policy for the Colts to digest. Given the uncertain status of Manning and Sorgi, Polian might opt to keep the Kentucky graduate. If Polian is confident in the long-term health of Manning and Sorgi, Lorenzen will likely share a cab ride to the airport with Gray.
  • Stadium revenue has virtually nothing to do with player payroll. There's a salary cap, and although there are differences between the cap number and the actual cash paid out (due to signing bonus proration, etc.), all the new stadium money means is that the team will be more profitable. If there was a direct link, then Dallas, NY, and Washington would be able to spend 2 or 3 x as minch as Indy and win every year.

    Polian's excellence is not just picking the right guys but managing hte cap better than most other GMs.
  • Having more stadium revenue is also important since most of the incremental revenue is not shared with other teams. So although they can't pay players more in the long run than other teams, they can afford to pay for the best coaches, GMs, scouts, training facilities, etc. etc.
  • Few could argue that Gray gives the Colts twice as much chance to win if Manning goes down.

    Seriously?? Which games have you been watching? Sorgi will never be confused with Manning, but he's no worse than Gray.

    Back on topic.....It is true that the Colts don't get sentimental. See Edge, Pollard, Stokley and Booger.
  • To Brian - You misunderstood the quote: “Few could argue that Gray gives the Colts twice as much chance to win if Manning goes down.”

    The writer is comparing Gray's salary of $1,300,000 to Sorgi's $760,000 and says that no one would say Gray is twice as good as Sorgi. I agree with that assessment.
  • Indyguy-

    You're correct. My bad.
  • Stadium revenue does have something to do with player payroll. The salary cap is figured on the average income of all NFL teams. While stadium revenue is non-shared, it counts towards that average. So if teams like Dallas or Washington increase their revenue dramatcally, it raises the salary cap for ALL teams. Small market teams are forced to try to keep up, or be left behind. While Dallas, Washington and New England have little difficulty paying to the cap teams in Cincy and Indy certainly do.
  • Matt -

    You're only partially correct. It's true that big reveneue teams move the salary cap up a little, but my point was that the big markets can't use all their extra money to buy players endlessly. The net effect of a bigger salary cap on a small market team in less bottom line profit, not an inability to field a star-studded team. Most teams that overspend on big name stars pay the piper eventually when they get to dead-money contracts. Several examples of this.

    The salary cap is figured based on some stadium revenue, but not all. It's called Defined Gross Revenue, DGR. For example, the portion of the club seat ticket price that is considered a premium over the regular price (presumably that amount owing to the lunge etc.) is NOT part of DRG and so is not used when calculating DGR. I am not absolutely sure about what other parts of stadium are not DGR (maybe the suite premium, some signage, naming rights, etc).

    Furthermore, let's say the Colts get an extra $30M a year in new revenue and let's assume all of it is DGR (which it's not). Divided by 32 teams and you move the cap by a whopping $937,500. Compared to a cap of $100M plus, and it's not a big deal. The bulk of the money in shared revenue and the cap is in the TV contracts and gate.
  • Indyguy: You are assuming everyone pays to the cap every year, which they don't. Take a look at the listing of the teams' player payroll. There is some disparity. Also, you have to consider signing bonuses into this equation. A team like the Cowboys or Redskins can afford to pay huge signing bonuses which are paid immediately but amortorized over the course of a contract. This lessens the hit to the salary cap, but requires the team to come up with the cash immediately. So a team with more expendable cash is able to lure players in the near-term with signing bonuses while teams with less overall revenue stuggle in that regard.
  • Jack - There's not much of a disparaity since there's a minimum on the salary too - it's about 88% of the cap, so teams are forced to spend at least $105M instead of the cap amount of $120M. Note that Indy usually pays right up to the cap even though they are small market. Irsay wants to win.

    The cap doesn't forgive and it doesn't forget - Bill Polian

    Paying giant bonuses all in one year to get over the hump kills you donw the road in dead money. Research it.

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

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  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. Finance Images&ARG2=/Brainard, Jim