I’m trying to understand nfl contracts. You read about players restructuring contracts to clear up cap space. Doesn’t a signing bonus count as cap space.
Edit. Thanks everyone for your answers, I get it now
In: 10
It’s a game where if you are in a salary cap pinch in a given year, you can convert some of that into a signing bonus that spreads out the cap over the total length of the contract.
So like simple terms, if a team had a 5 year, $10M per year contract for Player X, they could convert the current year salary to a $10M signing bonus so the cap hit is $2M in Year 1 and $12M/yr for years 2-5. Same total money and the player sees the same amount of cash, but it is booked later.
It *usually* works out OK because the salary cap increases every year, so you’d rather absorb the $x cap hit in 5 years than today.
However, if you cut/release a player before their contract is up, that signing bonus you’ve already paid out but hasn’t counted against your salary cap (plus any remaining guaranteed money) becomes “dead money”. Depending on when you do the cut, it may hit immediately in the next season or be spread out over the next two seasons (that’s the June 1st designation).
This can backfire if the salary cap ever goes down, like it did during the COVID pandemic. It can also be an issue if you have to cut a player, since it increases the amount of dead money. Sometimes players essentially have negative grade value because they are guaranteed more money than they are actually worth, so they teams will ‘pay’ to get rid of them in the form of draft picks.
Sometimes they do a “kick the can” approach where they backload a player’s contract. You get crazy stuff where a player might be on a $35-40M/yr contract but have a $60M+ cap hit in the last year of the deal because the GM converted some of the salary to signing bonus a couple times. The team would be over the cap so they need to sign an extension that spreads it out even further.
Finally, there are “void years” that are essentially pretend years added to the end of a contract, to speed out the cap. This is usually with older players that might retire. So let’s say your star player wants to go for 3 more seasons, you sign what’s actually a $15M/year, 3 year contract but on paper it’s technically a 5 year contract so you can have a $9M/year cap hit (for the same $45M). Then they convert money to signing bonus, the player gets the full $45M in 3 years and retires, then for 2 years there’s dead money on the books against the cap. That’s how you have teams still taking a cap hit for a player that retired a year or two back.
It’s all kind of a game that GMs know how to exploit
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