They can cut him right now for free. The $28 Million is a roster bonus for being on the roster on the first day of the 2012 season (April-ish?).Don't the Colts have to pay Peyton $28 million next year if they don't trade him or cut him?
They have to pay the $28 million in order to trade him. No trades until the 2012 season begins.
Peyton can agree to restructure his contract and take less guaranteed money, but he doesn't have to.