Adam Thielen Restructures Contract

[Rhodes Closed]

https://twitter.com/CourtneyRCronin/sta ... 05030?s=20

That's actually a lot of money restructured for the Vikings. Good stuff.

[Maelstrom88]

Nice!

[Spot & Stalk Vike]

Well done and thank you to the home town guy!

[RandyMoss84]

Adam has always been a class act so I am not surprised he restructed his contract, thank you Adam!

[S197]

You guys realize Thielen didn't give up anything right? I love AT but he was getting paid either way, this is just a change in accounting to get under the cap (and kick it down the road).

[J. Kapp 11]

You guys realize Thielen didn't give up anything right? I love AT but he was getting paid either way, this is just a change in accounting to get under the cap (and kick it down the road).

Yeah, it’s news but it’s not big news.

I know every team does it, but this constant restructuring worries me. As you said, he’s getting paid. As a matter of fact, he’s getting paid this year. Converting his salary to bonus is just a way of amortizing his money over a few years, rather than having his entire salary count against the cap this year. It’s an accounting maneuver. The problem is that all these bonuses are eventually going to count against the cap in the future. What then?

It’s like taking out a new credit card to pay off one that’s maxed out. At some point, nobody is going to give you a new credit card.

[CharVike]

You guys realize Thielen didn't give up anything right? I love AT but he was getting paid either way, this is just a change in accounting to get under the cap (and kick it down the road).

Yeah, it’s news but it’s not big news.

I know every team does it, but this constant restructuring worries me. As you said, he’s getting paid. As a matter of fact, he’s getting paid this year. Converting his salary to bonus is just a way of amortizing his money over a few years, rather than having his entire salary count against the cap this year. It’s an accounting maneuver. The problem is that all these bonuses are eventually going to count against the cap in the future. What then?

It’s like taking out a new credit card to pay off one that’s maxed out. At some point, nobody is going to give you a new credit card.

Didn't the Saints do something when they were way over the CAP at one point in history. It looked like half the team would need to be cut. Maybe I'm wrong. I'm no accountant but how far down the road can it be kicked? Within the current agreement with the players association? A hundred years or a million years or 2 years?

[J. Kapp 11]

Yeah, it’s news but it’s not big news.

I know every team does it, but this constant restructuring worries me. As you said, he’s getting paid. As a matter of fact, he’s getting paid this year. Converting his salary to bonus is just a way of amortizing his money over a few years, rather than having his entire salary count against the cap this year. It’s an accounting maneuver. The problem is that all these bonuses are eventually going to count against the cap in the future. What then?

It’s like taking out a new credit card to pay off one that’s maxed out. At some point, nobody is going to give you a new credit card.

Didn't the Saints do something when they were way over the CAP at one point in history. It looked like half the team would need to be cut. Maybe I'm wrong. I'm no accountant but how far down the road can it be kicked? Within the current agreement with the players association? A hundred years or a million years or 2 years?

Just for the duration of the contract. So in Adam's case, through 2024, unless they extend him at some point. But that's unlikely because in 2024, he'll be 34.

So Adam's paychecks in 2021 will be exactly as they were scheduled to be when he signed his extension a couple years ago. But the bonuses can be spread out for accounting purposes. He gets paid the same, but it doesn't count against the team right away. By converting $8 million of this year's salary to bonus, they push the cap hit out equally over the next three years. Reduces this year's cap hit, but INCREASES his cap hit over the next three years. It's literally like a credit card. Buy Thielen now, pay for him later.

The Saints have been notorious for this, which is why they started this offseason nearly $67 million over the cap. At some point, all that money you kick down the road is going to count against your cap. Now they're scrambling to restructure OTHER players to try and get back under the cap.

For a lot of teams, this is a strategy. When you have cap space, you sign guys to contracts that are front-loaded with salary, with the intent of converting it to bonus later on if/when you're up against the cap. It's exactly what the Vikings did with Cousins. His first two years with the Vikings were almost all "salary," which meant the money counted against the cap that year. But last year, when they were up against the cap, they signed him to an extension. About $20 million was converted to bonus, which was then spread out for accounting purposes over the life of the contract. So his "salary" was $9.5 million, but he got paid a lot more. His cap hit was $21 million ... $9.5 million salary and $11.5 million in prorated bonus (one-third of the total bonus counted that year). His hit would have been $28 million, so by converting to bonus, the Vikings saved $7 million in cap space. But that money comes due against the cap at some point.

The risk of converting salary to bonus, of course, is that if the player busts, grows old, flames out, etc., you're counting him against the cap after he's gone. Or your cap hit is enormous in the player's later years, and you're stuck with him. Again, I give you one Kirk D. Cousins.

Contrast that to New England. All those Super Bowls, and they rarely have to restructure anybody. Of course, it helps when the wife of your first-ballot HOF QB is worth half a billion dollars. Makes it little easier to take all those hometown discounts.

[VikingPaul73]

Kapp - I think they did the same with Rudolph's contract, even though he's no longer on the team. And if I read it correctly, they spread Tomlinson's cap hit over 3 years while the contract is only 2. Not sure on all of the specifics, but they are definitely getting tricky with the cap right now.

They definitely appear to be in a "Win now at all costs, future be damned" mode. I wonder if Zygi had a conversation with Rick and Zim - "make the playoffs this year, or else..."

The sad thing is, they are kicking the can down the road and going "ALL IN" this year, and they probably won't even win the division this year. (Then again, the Bucs didn't with the South in 2020 )

Unless there is a massive cap increase coming soon, they will have a mess on their hands in 2022. Rick has to hit on a lot of picks this year.....

[J. Kapp 11]

Kapp - I think they did the same with Rudolph's contract, even though he's no longer on the team. And if I read it correctly, they spread Tomlinson's cap hit over 3 years while the contract is only 2. Not sure on all of the specifics, but they are definitely getting tricky with the cap right now.

They definitely appear to be in a "Win now at all costs, future be damned" mode. I wonder if Zygi had a conversation with Rick and Zim - "make the playoffs this year, or else..."

The sad thing is, they are kicking the can down the road and going "ALL IN" this year, and they probably won't even win the division this year. (Then again, the Bucs didn't with the South in 2020 )

Unless there is a massive cap increase coming soon, they will have a mess on their hands in 2022. Rick has to hit on a lot of picks this year.....

Great points.

Like I said, with some teams, doing gymnastics with the cap is a thing. The Vikings are a classic example.

Your point about the Wilfs — from everything I read, MARK Wilf is the one who is adamantly against a rebuild. He wants the Vikings in the playoffs every year. I believe he's the ownership's driving force behind everything the organization does from a personnel and cap standpoint.

Don't know if you heard, but the NFL just signed new media rights agreements with CBS, NBC, Fox, ABC, ESPN and Amazon collectively worth about $110 billion over 11 years. That's nearly double the value of its previous contracts. I mean, $10 billion per year in TV rights. Holy crap, that's a bucket of money. Amazon is going to be the carrier of Thursday night football. Sunday Ticket is moving to ESPN+. They're looking at new initiatives to bring sports betting into the NFL. It's a whole new world out there.

So ... massive cap increase? Yeah, that's coming.

[VikingPaul73]

Great info, thanks Kapp!!!!
I had heard about amazon Thursday night, but none of the details you provided. Wow! That makes me feel a little better about pushing out some of these cap hits.

So $10B per year in TV contracts. that's $312M per team TV revenue. I wonder how that compares to ticket sales, merchandising, etc?

[J. Kapp 11]

Great info, thanks Kapp!!!!
I had heard about amazon Thursday night, but none of the details you provided. Wow! That makes me feel a little better about pushing out some of these cap hits.

So $10B per year in TV contracts. that's $312M per team TV revenue. I wonder how that compares to ticket sales, merchandising, etc?

You're lucky ... I'm married to an accountant. A CFO, actually. So I've learned a thing or two about finding numbers.

The last year we can figure reliable revenue for the Vikings was 2019, of course, because fans didn't attend in 2020.

According to Forbes, the Vikings made $448 million in total revenue in 2019.

Each NFL team received $296 million from the league in TV revenue.

Quick math says the Vikings made $152 million from everything else. According to Forbes, $76 million of that came from gate receipts. I'm assuming the rest is merchandise, concessions, etc. Not sure how else they make money. Maybe monetizing stuff on the web, things like that.

Not sure what the gross or net profit is, but it must be pretty solid. Their total player expenses, including bonuses, health care, etc., were $246 million. If the rest of the operation cost, say, $100 million, that leaves around $100 million in gross profit. Federal, state and local taxes probably take half of that. So maybe $50 million in net profit.

Here's the real kicker. The Wilfs paid $600 million for the Vikings in 2005. The franchise is now worth $2.95 billion. That's a capital gain of $2.3 billion in 16 years, or roughly 500%.

Wow.

[VikingPaul73]

thanks Kapp!!! Outstanding information, I really appreciate your posts!!!

if every team got 296M is tv revenue, that comes to ~$9.5B which is similar to the $10B you mentioned on the new deal. Is that just part of it that doesn't include local deals or something? I'm missing something but not sure what

thanks again!!

[S197]

You guys realize Thielen didn't give up anything right? I love AT but he was getting paid either way, this is just a change in accounting to get under the cap (and kick it down the road).

Yeah, it’s news but it’s not big news.

I know every team does it, but this constant restructuring worries me. As you said, he’s getting paid. As a matter of fact, he’s getting paid this year. Converting his salary to bonus is just a way of amortizing his money over a few years, rather than having his entire salary count against the cap this year. It’s an accounting maneuver. The problem is that all these bonuses are eventually going to count against the cap in the future. What then?

It’s like taking out a new credit card to pay off one that’s maxed out. At some point, nobody is going to give you a new credit card.

This is a good analogy. You eventually pay the piper. The Saints are feeling it right now.

The Vikings used to be one of the more fiscally responsible teams that actually rolled some of their cap space to future years. But now we have a front office and coaching staff with their jobs on the line so desperation has set in. If this doesn't work, it will be the new management who will have to deal with the mess.

[CharVike]

Yeah, it’s news but it’s not big news.

I know every team does it, but this constant restructuring worries me. As you said, he’s getting paid. As a matter of fact, he’s getting paid this year. Converting his salary to bonus is just a way of amortizing his money over a few years, rather than having his entire salary count against the cap this year. It’s an accounting maneuver. The problem is that all these bonuses are eventually going to count against the cap in the future. What then?

It’s like taking out a new credit card to pay off one that’s maxed out. At some point, nobody is going to give you a new credit card.

This is a good analogy. You eventually pay the piper. The Saints are feeling it right now.

The Vikings used to be one of the more fiscally responsible teams that actually rolled some of their cap space to future years. But now we have a front office and coaching staff with their jobs on the line so desperation has set in. If this doesn't work, it will be the new management who will have to deal with the mess.

What makes you think their jobs are on the line? Of course every job is always on the line. But IMO as long as the value of the team goes up and the Wilf family is getting coin in their pocket I would think it looks good to them. The Wilf's are a business and they have people helping with how the business is run. If those people tell them the product is no good and your losing money say goodbye to Spielman. If a crap season like last year didn't get him booted what will? Signing a loser QB to a joke contract didn't do it. At that point the whole board should have been wiped clean. I want to hear division tittle or your out. We won't hear that because it comes down to did we make money or not. If money is made I'm sure Speilman will be given his credit. He puts the product together.