The Brett Favre contract technically is a two-year, $25 million deal. Though it’s unlikely that he’ll receive any of the money that he’s due to earn in 2010, he actually will be receiving large chunks of the money he’ll earn over the next several months in both 2010 and 2011.
Per a league source, Favre’s $12 million base salary for the 2009 season will be paid out in three ways. He’ll receive $4 million in the form of periodic paychecks during the upcoming season. He’ll also receive lump sums of $4 million in March 2010 and another $4 million in 2011.
The move suggests that the Vikings are low on cash in 2009, and that they are already tapping into future years to pay for Favre’s services.
And it marks a dramatic departure from the games that teams used to play in order to spend maximum money in the current year, charging the cash to future years’ salary cap calculations.
Simply put, teams previously were cash rich and cap poor. Now, more and more teams are cap rich and cash poor.
The Vikings, for example, still have a little more than $6 million in 2009 cap space, even after counting the full amount of Favre’s 2009 salary against it. But the cash to pay Favre isn’t there; otherwise, he’d have all of the money before the end of the regular season.
As a practical matter, it makes Favre’s deal worth less than $12 million, given the time value of money. (Then again, with interest rates as low as they’ve ever been, the present value of Favre’s 2009 salary won’t be significantly lower.)
Regarding 2010, the Vikings already have committed $4 million of their player budget for services rendered in 2009. If there’s no salary cap (and thus no salary floor) next season, that’s $4 million less the Vikings will spend on player costs.