Contract restructurings are standard operating procedure in the NFL. Teams with tight salary cap situations use restructures to create cap room to get under the cap, which all teams must be for the beginning of the 2015 league year on March 10. Restructures are important for some other teams because cap space can be freed up to target players in free agency.
A contract restructuring is different from a pay cut. In a typical restructuring, a player will convert some portion of his base salary or roster bonus (without reducing salary) into signing bonus because it can be prorated or spread out evenly over the life of a contract (most other salary components usually can’t be prorated) for a maximum of five years.
The team gets a lower cap number in the current season while the player gains more short-term security and potentially a better payment schedule for the current year of his contract. The player’s cap numbers in the remaining contract years also increase, which can make him more susceptible to becoming a cap casualty in the future.
A relatively new phenomenon is for teams to take away the player’s option to refuse restructuring his contract. Cap flexibility has started being built into contracts, especially the most lucrative ones, with teams having the ability to automatically create cap room at any time during a deal with a discretionary right to convert a portion of a player’s base salary or roster bonus into signing bonus. The Chicago Bears exercised this right with Jay Cutler in 2014, which was necessary to sign Jared Allen. Cutler had the NFL’s highest 2014 salary cap number at $22.5 million before $5 million of his base salary was converted into signing bonus to lower his cap number to $18.5 million.
Players can restructure their contracts at any time, including multiple times in the same season. Chris Snee restructured his contract with the New York Giants twice in 2013. There isn’t a limitation on how many consecutive years a player can restructure his contract. Ben Roethlisberger’s 2015 cap number has increased from $12.1 million to $18.395 million because he restructured his deal for three straight years (2011-2013) to help the Pittsburgh Steelers with cap problems.
Here’s a look at several players, with their 2015 cap numbers, that could be candidates to restructure their contracts. New Orleans Saints players were treated collectively because of the team’s salary cap situation. References to the 2015 salary cap room a team has assume the 2015 salary cap will be set at $142 million.
New Orleans Saints
The Saints are approximately $23.3 million over the 2015 salary cap. Restructuring the contracts of safety Jairus Byrd ($10.3 million 2015 cap number), outside linebacker Junior Galette ($15.45 million cap number), tight end Jimmy Graham ($11 million cap number) and inside linebacker Curtis Lofton ($9.25 million cap number) could wipe out the overage. $23,426,666 of cap room can be gained by converting a significant portion of their salaries into signing bonus.
Byrd has the NFL’s highest 2015 cap number for a safety. The Saints can free up $5.6 million of cap room by turning $1 million of Byrd’s $2 million 2015 base salary and his entire fully guaranteed $6 million third day of the 2015 league year roster bonus (March 12) into signing bonus. $10 million of cap room will be created by converting Galette’s fully guaranteed $12.5 million third day of the 2015 league year roster bonus (March 12) into signing bonus.
Graham has the NFL’s only 2015 cap number for a tight end over $10 million. A maximum of $4,826,666 of cap room can be gained through a salary conversion with Graham’s four-year, $40 million contract, which makes him the NFL’s highest paid tight end, if his $100,000 workout bonus is left intact. Lofton’s cap number would drop to $6.25 million by turning his $4.5 million first day of the league year roster bonus (March 10) into signing bonus.
Tony Romo (QB)-Dallas Cowboys: $27.773 Million
It’s hard to believe Jerry Jones will practice the fiscal restraint he’s preaching now that he has a legitimate chance to finally win a Super Bowl without Jimmy Johnson’s fingerprints on it. History suggests that Jones will create $12.8 million of cap room can by converting $16 million of Romo’s $17 million base salary into signing bonus in order to keep the team largely intact since there may not be an extended championship window with him as quarterback. Although Romo, whose contract runs through the 2019 season, arguably had the best season of his career in 2014, he will be 35 years old in April and has had back surgery in each of the last two seasons. Romo’s league high cap number would drop to $14.973 million through such a salary conversion.
J.J. Watt (WR)-Houston Texans: $21.969 Million
The Texans would have plenty of salary cap flexibility by turning $9.2 million of Watt’s $9.969 million 2015 base salary and his entire fully guaranteed $10 million 15th day of the 2015 league year roster bonus (March 24) into signing bonus. $15.36 million of cap space would be freed up, which would put the Texans almost $26 million under the cap. Watt’s would still have manageable 2016 and 2017 cap numbers of $16.34 million for those years considering he signed a six-year, $100 million contract extension last September.
Peyton Manning (QB)-Denver Broncos: $21.5 Million
Although the Broncos have $26 million in cap space, it will be difficult for the Broncos to keep most of their five offensive and three defensive starters set to become unrestricted free agents on March 10 while upgrading the offensive line, especially if nearly half of this room is allocated to a franchise tag on All-Pro wide receiver Demaryius Thomas.
General manager and executive vice-president of football operations John Elway would probably prefer for Manning to cut his scheduled $19 million salary now that he has informed the team he is physically and mentally prepared to play the 2015 season. The Broncos don’t have the leverage for a salary reduction. Manning should be amendable to restructuring his contract considering he did it twice while with the Colts. This would be a departure from Denver’s recent practices. The Broncos haven’t done any simple contract restructures for cap purposes during Manning’s three years with the team.
Denver can create $9.015 million in 2015 cap space if Manning’s entire 2015 salary except for his $970,000 league minimum is converted into signing bonus. Manning’s 2015 cap number would drop to $12.485 million but his 2016 cap number would balloon to $30.515 million.
The Broncos might prefer a less extreme restructure. $5 million of cap room could be created by converting $10 million of Manning’s $19 million base salary to signing bonus. His 2015 cap number would drop to $16.5 million and his 2016 cap number would become $26.5 million. The Broncos would have $10 million of dead money, which is a cap charge for a player no longer on the roster, in 2016 under this scenario if Manning called it quits after the 2015 season.
Calvin Johnson (WR)-Detroit Lions: $20.558 Million
Restructuring Johnson’s contract could be likely if the Lions franchise defensive tackle Ndamukong Suh. His franchise tag number is $26.87 million, which is based off of 120 percent of his $22,412,500 2014 cap number. The Lions can’t currently accommodate such a large cap figure with slightly under $17 million of cap space. Most of the deficit can be wiped out by turning all of Johnson’s $12.5 million 2015 salary except for his $870,000 league minimum into signing bonus. $9.304 million of cap room would be created. Another season with nagging injuries in 2015 could lead to Johnson’s departure next year because his 2016 cap number would go from $24.008 million to $26.334 million with this maneuver.
Charles Johnson (DE)-Carolina Panthers: $20.02 Million
Being almost $13 million under the cap puts the Panthers in their best position financially since Dave Gettleman became general manager in January 2013. The Panthers won’t be “shopping at the dollar store” in free agency but restructuring the six-year, $76 million contract Johnson signed in 2011 for a third straight year may be necessary to buy at Nordstrom. Because more than half of Johnson’s cap number is bonus proration, a maximum of $4.44 million in cap space can be gained unless Gettleman is willing to add up to three voidable years to help with the bonus proration and create additional cap room. He has put voidable years in contracts before when doing restructures.
Alex Smith (QB)-Kansas City Chiefs: $15.6 Million
There’s a faction of Chiefs fans that would love to see the team part ways with Alex Smith. He isn’t going anywhere for awhile. $11 million of his $11.9 million 2015 base salary was fully guaranteed when he signed his four-year, $68 million contract extension last August. The remaining $900,000 of his 2015 base salary and his entire $14.1 million 2016 base salary are fully guaranteed on the third day of the upcoming league year (March 12).
The Chiefs have right around $4.1 million of cap space after releasing wide receivers Donnie Avery and A.J. Jenkins. More work needs to be done to accommodate restricted free agent tenders and Justin Houston’s expected franchise tag (approximately $13 million). $8.175 million of cap room can be created by converting $10.9 million of Smith’s $11.9 million 2015 base salary into signing bonus.
Colin Kaepernick (QB)-San Francisco 49ers: $15,265,753
The 49ers have slightly over $3.3 million of cap space. The 49ers will need more cap room if keeping a majority of the team’s 15 impending unrestricted free agent is a part of the plan. Kaepernick has the highest 2015 cap number on the team. The 49ers can create $7.724 million in 2015 cap space if Kaepernick’s entire 2015 salary except for his $745,000 league minimum is converted into signing bonus. Kaepernick’s 2015 cap number would drop to $7,541,753. His 2016, 2017, 2018 and 2019 cap numbers would each increase by $1.931 million under this scenario.
Richard Sherman (CB)-Seattle Seahawks: $12.2 Million
Extensions for quarterback Russell Wilson and middle linebacker Bobby Wagner shouldn’t take up a majority of Seattle’s almost $19 million of cap space, which factors in restricted free agent tenders. A cushion can be created by lowering Sherman’s $10 million 2015 base salary to $750,000 through a salary conversion. $6,937,500 of cap room can be generated by this move.
LeSean McCoy (RB)-Philadelphia Eagles: $11.95 Million
McCoy is willing to restructure his contract if approached by the Eagles but isn’t interested in cutting his $10.25 million 2015 salary. His numbers are large for a running back. Adrian Peterson is the only other ball carrier with a double digit salary or cap number in 2015. The Minnesota Vikings running back has a $15.4 million cap number and is scheduled to make $13 million. Since the Eagles have almost $19 million in cap space and have other options for additional cap room, like Trent Cole, it may not be necessary to adjust McCoy’s contract. $6 million of cap room can be created by converting $9 million of McCoy’s $9.75 million base salary into signing bonus. His 2016 cap number would go from $8.85 million to $11.85 million.
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Joel Corry is a former sports agent who helped found Premier Sports & Entertainment, a sports management firm that represents professional athletes and coaches. Prior to his tenure at Premier, Joel worked for Management Plus Enterprises, which represented Shaquille O’Neal, Hakeem Olajuwon and Ronnie Lott.