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Signing Bonuses Could Help Kings Meet $49 Million Minimum Payroll

By | 0 Comments | Feb 18, 2019

The answer is yes.

But the league confirmed to me at the time that the Kings would have been fine without taking on Daniels, because the team was on pace to pay out just more than the $43.5 million minimum payroll. How could that happen if the Kings' cap figure before the Daniels trade was $42.4 million?

***

So how does the signing bonus figure into this?

Remember: the signing bonus boosts a player's first-year salary and drops subsequent annual payouts proportionally. But it has no effect on the cap. Since the payroll floor looks at actual cash paid out but not the cap figure, a signing bonus can get a team like the Kings closer to the minimum payroll.

How do signing bonuses work? In the old collective bargaining agreement — which should be the same or similar as the new CBA when all is said and done — teams could offer as much as 20 percent of a multi-year contract in a signing bonus.

Let's put this into practice. Say the Kings and Marcus Thornton agree to a five-year, $34.5 million deal. Suppose Geoff Petrie wants to get closer to the minimum payroll because he doesn't feel like signing crummy players. (This is an assumption, not a rumor or report or anything.)

In a totally normal deal of those terms, Thornton's first-year salary paid out would be $6 million, and the cap hit would be $6 million.

In a deal frontloaded to the max, the first-year salary paid out would be $7.8 million, and the cap hit would be $7.8 million.

In a normal escalating deal with a maximum signing bonus, the first-year salary paid out would be $11.5 million ($4.6 million in base salary plus the $6.9 million signing bonus) and the cap hit would be $6 million.

In a frontloaded deal with a maximum signing bonus, the first-year salary paid out would be $13.3 million ($6.4 million in base salary plus the $6.9 million signing bonus) and the cap hit would be $7.8 million.

Here's what that deal would look out in terms of actual salary paid out:

$13.3M | $6M | $5.5M | $5M | $4.6M

And on the salary cap sheet:

$7.8M | $7.35M | $6.9M | $6.45M | $6M

Remember: the Kings need to spend about $17 million to hit the salary floor. By frontloading a five-year, $34.5 million deal with a maximum signing bonus, the Kings could get $13.3 million of the way there. That's a huge potential impact.

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