FanPost

Clearing up contracts. Extensions, Restructures and Cap Implications.


This time of year is full of news headlines and fanposts about contract negotiations, released players and cap implications. It can be an extremely confusing time for a lot of fans. I am by no means a cap expert, but I believe I have a pretty good understanding. The process is not really that complicated, but the terminology can be confusing and seems to be causing a lot of discussion back and forth regarding terms like "restructure" and "extension".

First, the basic cap implication of contracts can very depending on the way the contracts are worded. Annual salary and roster bonuses are charged against the cap in the year they are paid. Signing bonus can be spread out over the life of the contract equally. The problem with doing this is that it if the player is traded, retires, is released or dies, all of the cap charge for the signing bonus has to be paid. This is why we see "dead money" in some contracts.

Example:

Player signs a 5 year contract as follows:

Salary: 5 million/year with a 10 million signing bonus.

The annual cap charge is 5 million + 2 million (siging bonus)= 7 million

If they cut or trade this player after 3 years, the remaining bonus money (4 million) will be charged against the cap that year.

Now teams that are way under the cap (especially now with a salary floor can structure this much differently). If they pay the 10 million as a roster bonus in year 1, and they have room to use, they can have a 15 million cap charge in year one and only the salary against the cap in other years. More importantly, you can now release this player any time after year one and he will be off the books.

Now the the "restructuring". Part of the the confusion surrounding this is just semantics. Typically, when they talk about "restructuring" in NFL terms what they are talking about is a player turning salary into bonus. It is usually done with expensive players you know are going to live out their contracts.

QB is due to make 14 million in salary this year. He has 3 years remaining on his deal. The team asks him to restructure. He they change his salary to 1 million and give him a 13 million dollar bonus. As a result the 13 million is spread out. The new cap charge this year is now 1 million +4.3 million (5.3 million) instead of 14 million. The player is more than happy to do it. It is the same as your boss coming and say he would like to pay you your entire years salary in one instalment. The problem with this is you are only postponing the cap problems. Assuming the QB has the same salary the next year, now his cap charge in year 2 is 14 million+4.3 million (17.3 million).

A lot of the confusion around TJax is that the "restructuring" vs "renegotiation" vs "extension". TJax is in the last year of the deal, so the "renegotiation" above does not work" because there are no years on the deal to spread out the contract. You can ask him to take a pay cut, but he has to agree. It works in situations where the agent has questions about what kind of deal you can get on the open market. If They think TJax can get 4 million/year deal on the open market, to get him to reduce his salary for one year (with no extension) it will have to be significantly more. They could probably reduce it to 8 or 9 million this year and have him agree (but that doesn't really help salary cap wise a lot). The other option is the sign him to an extension. The salary in his last year will be voided. It leaves us with the following options for TJax :

The number I found show he has a salary of 14 million and 2.75 million in bonus charges. Therefore his cap charge is currently 16.75 million. (http://www.spotrac.com/nfl/kansas-city-chiefs/tyson-jackson/)

Pay him 14 million. Cap charge 16.75 million

Release him. Cap charge 2.75 million

Ask him to reduce his salary. Guessing would need to be at least 8 million for him to agree (basically taking risk of injury). I expect a team would sign him to a 4-5 million multi year deal if he was cut. Cap charge 10.75 million.

Sign him to a new deal say 5 million/year Cap charge 7.5 million (this can vary depending on structure).

I really think that Tjax will either be released or signed to a new multi year contract.

I hope this helped to clear things up. Maybe everybody already understands this stuff and I wasted a bunch of time, but it did seem to me there was a lot of confusion. If I have made any mistakes let me know.

This is a FanPost and does not necessarily reflect the views of Arrowhead Pride's writers or editors. It does reflect the views of this particular fan though, which is as important as the views of Arrowhead Pride writers or editors.

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