Wednesday, March 11, 2009

Ray Lewis' contract

Numbers taken from the Baltimore Sun piece on Ray's signing, and formatted for easy reference:

Ray Lewis' contract
2009$1.00 m$6.25 m$2.75 m
2010$4.25 m0$1.25 m
2011$4.50 m0$2.00 m
2012$4.95 m00
2013$5.40 m00
2014$5.85 m00
2015$6.30 m00

What you notice about this is that it's not a freakishly backloaded contract. There are no weird years where there's a sudden $7 m bonus in 2012, or a monster salary in 2013, where you can tell just by looking at the numbers that the team is going to cut him before that payment is due..

Ray of course is not going to play thru this entire contract. A 40yo linebacker! But it looks like his ability (/desire) is going to be the determining factor for when he's done, not some twisted numbers in the contract.

Having said that, year 3 might be the beak-even point. What gets accelerated under the cap when a player is cut? Just the signing bonus, or roster bonuses too? Assuming it's just the signing bonus, then I get this:

Cap acceleration
cut afteraccelerationnext yr's number

After two seasons, it's cheaper to cut him than to keep him: the base salary in year 3 is a wash against the cap hit, but there's the $2m roster bonus. But that number is not forbiddingly high if he's still Ray Lewis. You might keep him for that much delta. After three seasons, the difference between keeping him and cutting him is only $1.38m: again a small number, you'd keep him if he were still Ray Lewis. At that point we're talking about a 37yo linebacker, so the likelihood that he's still great is – well, it's not high. But only a $1.38m roster savings, so it's conceivable he would take a victory lap. There's not a huge incentive to cut him, if he can still contribute.

After that, it's noticeably more expensive under the cap to keep him than to cut him. No way he plays years 5-6-7 of this contract. My guesstimate is he plays three more seasons plus/minus one: that is, 2-4 more seasons.

Of course Ray won't be "cut". He'll retire, at some mutually agreed-upon time. Are the cap acceleration rules for retirement the same as for cuts?

Anyway: what I like about this contract is that it's not deceptive. It's not one of those contracts where they say "seven years for a hundred mil," but then you look at it and the player will never see 3/4s of it. There's no hidden incentive to cut Ray after season x. It's a "reasonable" contract for both parties. If Ray plays two more seasons he's $15.5m richer; 3 more, $22m richer. It's good money for a great player nearing the end of his career.

(And if by some miracle he's still a great linebacker at age 37, keeping him would be affordable at around $5 m.)


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