How the Colts Are Manipulating the Salary Cap to Stay Competitive

To put things simply, the Indianapolis Colts have spent the early part of the offseason managing the salary cap. Heading into free agency last week, the Colts were $4 million over the cap after placing the transition tag on Daniel Jones.

After signing Jones to a two-year extension worth up to $100 million, the Colts somehow had more cap space. How, you may ask? The magic of the signing bonus.

Jones and the Colts agreed to a $44 million signing bonus, which is prorated over five years. That means for 2026, Jones is on the books for just $14.68 million ($8.8 million of which is from the signing bonus), saving the Colts over $20 million by removing him from the fully guaranteed one-year transition tag.

Dec 7, 2025; Jacksonville, Florida, USA; Indianapolis Colts quarterback Daniel Jones (17) looks to throw downfield against the Jacksonville Jaguars during the first half at EverBank Stadium. Mandatory Credit: Travis Register-Imagn Images | Travis Register-Imagn Images

The issue with this sort of contract is that, at some point in the future, there's a chance Jones is on the Colts' payroll without being on the roster. For 2028, Jones' cap hit is $26.4 million. This means that if Jones leaves after his deal expires in 2027, the Colts will still owe all of that money, regardless of what team he plays for.

Still, committing to a massive long-term quarterback deal could have restricted the front office’s ability to build around Jones. Instead, this arrangement gives Indianapolis time to evaluate whether Jones can be a long-term solution without tying up cap space deep into the future.

Alec Pierce's Miniscule Cap Hit

On the first day of free agency, the Colts re-signed wide receiver Alec Pierce to a massive four-year deal worth $114 million. Pierce was the Colts' only 1,000-yard receiver in 2025, and he cashed in his performances with a top-tier payday.

Similar to Jones, Pierce has a very small cap hit for 2026. According to Over The Cap, Pierce is on the books for only $9.2 million this season. That means Jones and Pierce combined will cost the Colts just $23.8 million in 2026.

Barring any restructured contracts, Pierce will be on the books for over $30 million in 2027, 2028, and 2029. The Colts are putting off his massive cap hits for a later date.

Wide receiver contracts across the league have skyrocketed in recent years, so locking in a player before he reaches his peak market value can provide long-term savings. If Pierce continues to improve and produces like a top-tier receiver, the team will likely be paying average or below market rates compared to similar players who hit free agency in the coming years.

A Key Restructure on the Offensive Line

The Colts converted about half of Bernhard Raimann's salary into a signing bonus, which freed up about $8 million in cap space for 2026. $8 million doesn't sound like much, but it will give the Colts a chance to address other positions of need in free agency, like defensive end or linebacker.

That being said, the Colts haven't used any of their extra space on starting defenders. Indy has lost defensive ends Samson Ebukam and Kwity Paye, linebackers Zaire Franklin and Segun Olubi, and safety Nick Cross.

The Colts have enough cap space to make moves, but they're sitting on their hands. With no first-round pick, it'll be tough for Indy to find players who can start immediately in this year's draft. One would imagine the Colts sign at least one or two more impact players in the coming weeks.

Pittman's Salary Dump

The Colts traded Michael Pittman Jr. and a seventh-round pick to the Pittsburgh Steelers in exchange for a sixth-round pick. The Colts had zero leverage in trade talks because Pittman was due $29 million, and Indy simply couldn't afford that.

Instead of cutting the six-year veteran, Indy opted to move up 16 picks in the later rounds of the draft. Their savings are the same, but they got some sort of draft capital in return.

Current Status

The contract details haven't been revealed for some of Indy's signings, including defensive end Arden Key, tight end Drew Ogletree, defensive tackle Derrick Nnadi, and wide receiver Laquon Treadwell.

Without those four factored in, the Colts have just over $40 million in cap space. Realistically, that number is probably around $30 million.

We'll see if Ballard wants to make any more cost-cutting measures with the draft waiting around the corner.

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