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The truth behind the Denver Broncos Salary Cap "Scandal"

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  • one_bad_55
    replied
    I think this has to be what they are referencing since Elway retired after the 1998 season. The more I research this more cloudy it gets. Since Elway retired after the 98 season the deferred payment agreements had to have been made prior to 98. He signed new contracts in 1993 (4 yr 18Mil) and in 1996 (5 yr 29.5Mil) and then he restructured in 1997. With this many contracts in the 90's it is hard to say when they deferred payments but one would have to assume it was when he restructured his contract in 1997.

    The Stadium didn't get tax payer approval until November 1998 and construction didn't begin until mid 1999 with the ground breaking in August 1999. Unless Bowlen had to put money in escrow prior to this going to vote or something along those lines there should not have been a reason for him to deffer payments.

    Either way, Elway restructuring his contract BY LEAGUE RULES and APPROVAL gave the Broncos the money under the salary cap to sign Neil Smith. The team was already on the hook for that salary cap money amount so restructuring Elway's contract made it legal for the team to sign Neil Smith.

    By my estimations the Broncos probably got hit for deferring Elway's bonus money because the league said it did not want teams to owe players money. They reported that they paid Elway the 2.26Mil bonus but they really didn't so according to the NFL that was not reported properly.

    I don't know. I guess the only ones that will really know are the NFL & The Denver Broncos.
    Last edited by one_bad_55; 05-12-2015, 09:38 PM.

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  • Hadez
    replied
    Originally posted by one_bad_55 View Post
    Actually Elway did not take a pay cut. The Broncos actually restructured his contract.

    Here is how it worked from an article from 1997 according to Adam Schefter:

    Broncos quarterback John Elway restructured his deal.

    To save $3.1 million against this season's (1997) salary cap, the Broncos gave Elway a $2.26 million signing , bonus and extended his contract one year until 2001. According to the NFL Management Council, Elway's salary-cap figure for the 1997 season now will be adjusted down from $5.3 million to $2.2 million.

    Elway's base salary this season will be just under $600,000, which should make him the league's lowest-paid starting quarterback.


    He obviously created more cap room to be able to sign Neil Smith. Since Elway never completed his entire contract through 2001 I do not know if he was paid any additional money.

    Did the Broncos actually pay Elway the bonus, or defer it I cannot say. From an outsiders perspective it certainly could look fishy.
    I am starting to wonder if what the Broncos got hit for in the first article I linked and what you are talking about are two different things.

    I guess it could have been the same thing as they could have then defered the signing bonus to be paid later with interest.

    Leave a comment:


  • one_bad_55
    replied
    Actually Elway did not take a pay cut. The Broncos actually restructured his contract.

    Here is how it worked from an article from 1997 according to Adam Schefter:

    Broncos quarterback John Elway restructured his deal.

    To save $3.1 million against this season's (1997) salary cap, the Broncos gave Elway a $2.26 million signing , bonus and extended his contract one year until 2001. According to the NFL Management Council, Elway's salary-cap figure for the 1997 season now will be adjusted down from $5.3 million to $2.2 million.

    Elway's base salary this season will be just under $600,000, which should make him the league's lowest-paid starting quarterback.


    He obviously created more cap room to be able to sign Neil Smith. Since Elway never completed his entire contract through 2001 I do not know if he was paid any additional money.

    Did the Broncos actually pay Elway the bonus, or defer it I cannot say. From an outsiders perspective it certainly could look fishy.

    Leave a comment:


  • The truth behind the Denver Broncos Salary Cap "Scandal"

    http://www.milehighreport.com/2015/5...ry-cap-scandal

    By Bronco Mike  @Bronco_Mike251 on May 9, 2015, 8:03a

    heir ammunition? A weak connection to a late 90's accounting snafu that led the NFL to find the Broncos guilty of Salary Cap infractions and deferred payments to John Elway and Terrell Davis. The punishment? A 950K fine and the loss of a 3rd round draft pick in 2002 and 2005.

    So what really happened?

    The Denver Broncos were on the hook for approximately 100 million of the 401 million dollar cost for the construction of Sports Authority Field (at that time the new stadium or Invesco Field). This was a financial struggle for the team at the time so individuals on the back end of the financial operations made agreements with "Broncos players" (John Elway and Terrell Davis) to defer payments on their contracts to the future and in return promised to pay interest on the deferred amounts. Another player was promised that they wouldn't be waived prior to a certain date.

    According to the league, both agreements triggered salary cap accounting issues. In regards to the player who was promised that he wouldn't be waived prior to a certain date, "That commitment had the effect of converting the player's roster bonus into a guarantee, which affected the timing of the salary cap treatment of a portion of the bonus. The NFL's Executive VP of labor relations at the time Harold Henderson confirmed that "the individual's responsible for the violations are no longer with the team" and that the Broncos "have been cooperative throughout the investigation."

    Henderson also stated that "The investigation resulted in the discovery of undisclosed agreements between the club and Broncos players during the same period [1996-1998] pursuant to which various players agreed to defer certain compensation in exchange for a commitment to pay interest on the deferred amounts...These agreements were plainly designed to help the club cope with seasonal cash flow problems exacerbated by the Broncos' need to fund front-end expenditures associated with development of the new stadium in Denver."

    Pat Bowlen released a statement when the punishments were handed down to a similar effect:

    "The non-disclosures brought to my attention by the National Football League took place in the mid-1990s. We cooperated with the NFL throughout their examination of the situation. While I regret that the circumstances took place, it is important to note that there was no competitive advantage gained by our organization, nor was there any involvement or responsibility by anyone who is currently with the Broncos in any capacity. We accept our penalty, will pay our fine as directed and from this point on put the issue behind us. Our entire organization is working toward a great season in 2004."

    In other words, these were isolated infractions created by bean-counters in accounting. The team was not able to create more cap space illegally, the team was not able to sign star players because of the actions. Other than receiving immediate relief on cashflow issues directly related to the financing of the new stadium, nothing was gained---certainly not a competitive advantage gained via videotaping another team's signals or practices....nor was there a blatant breach of any NFL rule having to do with the competitive nature of the game like we see in "DeflateGate."

    In fact, our very own Kyle Montgomery said it best when he wrote about this subject years ago:


    So were the Broncos cheaters? No. Did they break league rules regarding player payment? Yes, members of the organization did, unbeknownst to Pat Bowlen and Mike Shanahan. And then those employees got canned. Connecting Spygate to the Broncos cap issues is as ridiculous as it comes.

    Major props to Kyle and Bronco Talk for dealing with this subject years ago

    Quotes were taken from this Washington Post story linked to by Bronco Talk:

    http://www.washingtonpost.com/wp-dyn...2004Sep17.html

    Now go away haters, wallow in your own team's deflated ego
    The question I have about this....they do not mention Elway taking pay cuts...just essentially borrowing money from players (not paying them now but paying them later with interest) to fund a stadium

    I thought we got in trouble for him taking pay cuts...or was it just the deferment of payments.

    Also the not cutting a guy until a certain date, before or after a triggered event...imo a team should be able to cut a guy when ever they want. Yea most teams cut a guy just before his bonus triggers but if a team wanted to let a benefit kick in and then release him that should be their right to do so.
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