INDIANAPOLIS -- Running up the white flag of surrender, at least for now, the Indianapolis Colts designated quarterback Peyton Manning a franchise player Monday.
Colts' general manager Bill Polian acknowledged Sunday the move, which will pay Manning $18. 4 million this season unless he agrees to a long-term deal, would be necessary before Tuesday's deadline for tagging players.
"I never expected [negotiations] would go any other way," Polian said Sunday. "I'm certain ... we'll continue to negotiate. The tag is a pro forma situation at this point. This is going exactly as I expected it would."
Polian said Monday the Colts had filed the paperwork to the league, meaning the co-MVP will not become a free agent on March 3.
Manning will become the fourth veteran leaguewide to be designated as a "franchise" player, joining cornerbacks Champ Bailey of Washington and Charles Woodson of Oakland, and St. Louis offensive tackle Orlando Pace.
Polian met with Manning's agent, Tom Condon here during the annual draft combine sessions, but Manning's agent returned home on the weekend, and there was very little progress to report.
Because the Colts will apply the "franchise" tag, there is no immediate urgency to complete a long-term deal, although some practical deadlines will loom early next month.
Polian said he intends to meet with Condon this week in hopes of completing a deal before March 17, at which point the Colts could remove the tag and lower Manning's salary cap number for the 2004 season.
All teams must also be in compliance with the NFL spending limit of about $80.5 million by March 3 and, with Manning set to count $18.3 million against the cap because of the "franchise" tag, Indianapolis might have to release some veterans to get under the ceiling. Polian said that there are no more existing contracts that can be restructured in order to carve out more cap space. In addition, if the Colts don't reach a long-term contract with Manning by mid-March, there essentially can't be any negotiations until mid-July.
Polian said there is no doubt, "none whatsoever," that Manning will be with the Colts for the 2004 season.
"The only question is what's going to be lining up with him," Polian said. "We can build the team [if Manning has the tag]. But what are we going to have next year if we have to 'franchise' him is another question. The squad is going to need some revisions if that comes to pass."
According to NFL rules, teams must pay a "franchise" player the average salary of the top five players at the position or 120 percent of the player's salary cap number from the previous season, whichever is higher.
Teams are still able to sign Manning to an offer sheet, but Indianapolis would have the opportunity to match any offers. If the Colts chose not to match it, they would receive two first-round draft picks as compensation.
Len Pasquarelli is a senior writer for ESPN.com.
Information from The Associated Press was used in this report.