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
In the most blunt financial terms, a football player is a depreciating asset for the majority of his career past his rookie contract in the eyes of many a GM, with a few exceptions for some absolute legends in the game.
In that light, most teams want players more in the moment than they might even a year or two later, but they also have to contend with the cap.
If I’m looking to sign a star quarterback who I think will be the face of my franchise over the next 10 years but think has his best years in the first few years of his contract (and the last I’m either hoping I’m getting a league-MVP quarterback for fairly cheap, or I’m willing to trade and his contract looks more favorable in a trade if the remaining cap hit isn’t abysmal), I might want to make his pay scale look something like this:
Y1: $50,000,000
Y2: $35,000,000
Y3: $30,000,000
Y4: $25,000,000
Y5: $20,000,000
Y6: $15,000,000
Y7: $10,000,000
Y8-10: $5,000,000
For a grand total of $200 million. But $50 million is a *ton* of cap hit for one year. So I might structure the first 3 years to be a $20m salary with a $55m bonus (paid over those 3 years) but applying that $55m to the cap as $5.5m on each year. So now my later years are closer to $10.5m per year on paper, and that first year is now cut in half on the cap, at about 25.5m, which gives me spare cap to get some more players in free agency or the draft to really make a run at the superbowl this year (in this example).
There are more intricacies in this (for instance, I *believe* that you retain any cap hit for bonuses already paid, even if you trade that player before his contract is up, which is where “dead cap” comes in) but that’s the basic idea of restructuring – making sure players get paid while allowing the office the wiggle-room to get (some of) the players they want on the team.
ETA: Messed up in that the bonus would only apply to the cap out to year 5, so that’s not quite as good (bringing $50m to $31m) but it’s also just an overly-simple example I pulled out of a sleepy brain.
Latest Answers