How Much Cap Room Does Indy Have?

Are the Colts over the cap or under the cap? That's what plenty of Colts fans want to know as the league gets ready to roll out free agency. We'll tell you why it's hard to nail it exactly, but will share the figure we believe to be accurate.

The rules regarding what counts against the cap and what doesn't are mind-boggling at times. Is it any wonder that teams have their own cap experts to help them as they meander through potential minefields as they structure player contracts?

Over the past week or so, the Colts were rumored to be roughly $10 million to $12 million over the cap following an NFL special master's ruling that Marvin Harrison and Peyton Manning's bonuses would have to count against this season's cap. Undaunted, the Colts continued to agree to new deals with players and offer contract tenders to restricted free agents.

Then the Harrison and Manning deals were restructured in a manner that helped undo much of the damage inflicted by the special master's ruling. And now, with the Collective Bargaining Agreement extension, the cap's been raised another $7.5 million to $102 million.

So where does that leave the Colts? According to a report at NFL.com by Adam Schefter on Thursday, he believes they are $5 million over the cap. But most sources are saying the Colts are under the cap and may have enough room to pursue unrestricted free agent Edgerrin James. During analysis over the past couple of days we've estimated between $7 million under to as high as $12 million under the cap. John Oehser at Colts.com is saying the Colts are "about $8 million" under the cap.

Why the discrepancy? Well, it depends on how you look at the snapshot of the cap.

During the offseason, only the top 51 base salaries of the players on the team count against the cap while bonus money for the entire roster counts. Then you have to add "dead" bonus money already paid out to players who are no longer with the team. This would include last year's rookies, like Rob Hunt, who received a $66,000 bonus and recently released veterans like Josh Williams – who will hit the 2006 cap for $2.4 million.

As players are added or dropped during the offseason, the top 51 salaries result in a sliding number based on the mix of the players at any given time. Player number 51 may only be making $250,000. But then let's say a player is added to the roster with a base salary of $400,000. He slots in higher, bumping the current number 51 guy out of the salary cap computation. So in this example, the team didn't use up $400,000 in cap room when they signed the new player. They only added $150,000 against the cap since he bumped the $250,000 player down to the 52 slot where he doesn't count anymore.

As the team made contract tenders to their restricted free agents, those dollars hit the cap as base salary, even if the player didn't sign the tender yet. If the player ends up leaving for another team, or if he signs a long-term deal, the proper adjustments are made. But until then, the amount of the one-year tender eats up the appropriate cap space. So while Robert Mathis is currently consuming $2.069 million of the Colts' cap, if they eventually sign him to a long-term contract they could conceivably lower – or increase – his cap hit depending on how they structure that new deal.

To mix things up just a bit more, up until the league and the union agreed to the CBA extension, all recent new contracts weren't officially approved. So in projecting the cap hit for signing bonuses under the "without a CBA extension" rules over the past two weeks, bonuses could only be spread out over four years – in effect, accelerating the annual hits for bonus money faster than the team was proposing in the actual contract. Under the extension, teams can spread those bonuses out over five years. That's significant for a deal like Reggie Wayne's because when his deal gets approved and signed, his cap hit will be spread out over an extra year, gaining the Colts another half a million to play with this year.

As the Colts were making all of these moves over the past two weeks, our cap expert, David Whiteley, has been tracking the changes closely. His projections show that once the current pending contracts are approved by the league, and with the current mix of players in the top 51 slots, the Colts will be between $10.5 to $11 million under the cap.

But just remember; with every move the Colts make going forward, the hit of the new player gets offset a bit by whatever player he pushes off the chart who was occupying the 51 slot at the time. Currently, based on David's numbers, the Colts three lowest salaries in the 49 –51 slots are making a base salary of $235,000. So the next three players the Colts add with a base salary higher than that, you can deduct $235,000 from the new player's salary (plus 2006 bonus figure) to figure out how much of the cap he's really eating up.

With David's help, we'll do our best to keep you informed of the Colts cap situation with as much precision as possible. It appears right now that the Colts have put themselves in a decent position to be competitive during the offseason with the $10.5 to $11 million cushion. But remember, $7.5 million of that money was also provided to every other team in the league. So a team like the Cardinals, who were projected by one source to be roughly $23 million under the cap is now $30.5 million under.

It's going to be an interesting few weeks ahead since teams and players have less time to make free agency decisions prior to the NFL Draft. And with all of the teams getting another $7.5 million this week, that's going to add yet another twist to what teams will be able to do in their pursuit of keeping or attracting talent.


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