But he believes a salary cap of roughly $120 million in the first year of the new labor accord, smaller than the last cap in 2009, will complicate things.
"To me this isn't about how much money I have to spend, because the money is going to be spent," Irsay said in a conference call with media who cover the Colts. "We're already up against the cap, we already have to do something to make adjustments."
New England's Tom Brady signed a four-year extension in 2010 worth $72 million with guarantees of $48.5 million. That deal is the one against which Manning's will be measured.
"We know when we look at our team we need people to surround him and to have a chance to win the Super Bowl. And with the cap actually going down some this year, Brady's contract is actually something that would be reduced, so to speak, in a pro-rata situation," Irsay said. "It makes it even more difficult and there is only so much you can pay one player."
Before the lockout, the Colts put the franchise tag on Manning, a move that could cost Irsay about $23 million if Manning signs the tender.
"Whatever the [annual] number [of the contract] is, $20 million, you're topping off there where it becomes very, very difficult to be competitive and to field a team," Irsay said. "It's really important that we get the deal done so we can plan going forward not only cap-wise but competitively-wise. It's something I hope gets done very quickly and quite frankly it should get done very quickly because he is going to be the highest-paid player, he is going to make more than Brady.
"But under this system you cannot pay a player $25 million. It's just not going to work, you're not going to be able to compete."
As for Manning's neck injury which required surgery in May and kept him from participating in drills in his recent quarterback camp, Irsay said he's optimistic the quarterback will be ready for the regular season.
"I think he's progressing, these things vary on how quickly they progress," he said. "Our hope is that he will be ready for Houston [Sept. 11 season opener], our hope is that he's going to keep trending in that direction."
"... I think it's going to go day to day, week to week. There hasn't been any sort of setback, there isn't anything ominous out there about it. The surgery went very well ... He's been a fast healer, he's found a way to get on the field. So I really am hopeful that he will keep progressing and be ready to go when the season opens, meaning that he had plenty of time to prepare and have played football before the opening game."
Although Manning is not expected to be ready for the start of camp, a source close to Manning told ESPN senior NFL analyst Chris Mortensen that the quarterback has been pleased with his progress during the past two weeks. However, the source did not define a specific target date for Manning's full participation in camp.
Paul Kuharsky covers the AFC South for ESPN.com. Information from The Associated Press was used in this report.