I know what you're thinking! If they have Luck, why have Manning? Well...you're in luck (no pun intended)! I am going to explain why the Colts need a little Manning AND a little Luck (oh dear...).
Peyton Manning has 14 years of experience in the NFL. He has been running the Colts spread offense system for as long as he has been in the league. Nobody knows this offense better than he does. Nobody knows the players in this offense better than he does.
With Manning's personnel knowledge and offense knowledge, he will be able to tutor Luck on how to run the offense. He can teach Luck the tricks of the trade. In a sense, Manning will be the Jedi Master and Luck will be his Apprentice.
The only curveball to that plan is that the Colts have hired a new offensive coordinator, Bruce Arians. Arians was formerly the offensive coordinator of the Pittsburgh Steelers. The Steelers, however, ran a more run emphasized offense than the Colts. Basically, Arians needs to just subtract a few run plays and add a few pass plays.
Let's look towards the personnel. Manning has been playing with the same players for upwards of 12-14 years for a few of them. The bond that he and his teammates have built is unbreakable. With Manning around and tutoring Luck, he will help Luck to learn the tendencies of each and every player.
We can take that same principle and flip it.
The rest of the team looks up to Manning and regard him as high as, if not higher than, the head coach. His opinion carries a great amount of weight in that locker room. We all saw how absolutely crushed that team was without him on the field. Manning would be able to convince the rest of the guys in that locker room that they can trust in Luck.
Now, in order for the Colts to keep Manning, they have to pay him $28 million on March 8th. That is quite a sum to pay for a mentor.