We’re looking at what moves the Redskins might make to get under the salary cap far enough so that they can conduct some offseason business. We’ve looked at the possibility that some players could get released and that others could be asked to take a pay cut. Today, we’re looking at some contracts that could be restructured.
A simple restructure usually involves taking a player’s salary, roster bonus, and workout bonus and converting it into signing bonus. You can’t quite convert all of the salary because you have to leave enough so that the player gets the minimum annual salary for his experience.
A player’s salary, roster bonus, and workout bonus all count in full to that year’s salary cap. By converting that money to a signing bonus, the cap hit is spread over the remaining years of the contract. Restructuring a contract this year lowers the cap hit of the player’s contract this year but it increases it in the remaining years of his deal. We’ll look at the second part of that in a minute.
From the player’s perspective, a restructure is usually a win. Instead of getting his salary in 17 weekly installments during the season he gets most of it up front as soon as the restructure is executed. So if Trent Williams restructures, instead of getting his $5 million salary $294,117 per week starting in September, he would get immediately get a check for $4.285 million (his salary minus the $715,000 minimum for a fourth-year player). He would then get that minimum salary during the season at $42,058 per week.
So, when you hear that a player is “taking one for the team” by restructuring, that’s usually not the case (rare exceptions do exist like Tom Brady). They are usually getting their salary for the year up front and that rarely could be considered to be a hardship.
While restructuring is a win for the player, for the team it is a matter of trading short-term gain for some long-term pain. That money goes into later years. If the Redskins restructure Williams and include his $1 million roster bonus into the deal they will save about $3.6 million on this year’s cap.
That money doesn’t go away. His cap charge will go up by $1.32 million for each of the three remaining years of the contract. That is a little more than one percent of the cap so one such restructure won’t hurt all that much.
But when a team makes a habit out of restructuring year after year eat up a lot of future cap in an era where the cap isn’t growing very much year after year sets itself up for problems down the road. A team can also get into trouble by restructuring players who are getting up in years. If a team is in a spot where you need to release an aging, ineffective player before his contract is up it will not only have to take the cap hit for whatever prorated bonus may be left on his deal but will also have to eat all of the restructured money. This can lead to a cap hit that is so large that the underperforming veteran might have to be kept on the team simply because the team can’t afford to cut him. The Redskins found themselves in this situation more than once in the last decade.
Under Mike Shanahan and Bruce Allen, the Redskins generally don’t like to restructure, preferring to pay as they go. But they may have to make an exception this year in order to deal with the $18 million cap penalty the NFL has saddled them with.
The problem the Redskins have in looking at restructures is that you don’t have very many candidates. There aren’t very many high base salaries and many of those are for players who are in the last years of their contracts so they can’t be restructured (no future years to send the money to). And they can’t restructure the contracts of Ryan Kerrigan and Robert Griffin III since according to the CBA players drafted in 2011 and 2012 (and in all future drafts) will have to play under their current contracts for a minimum of three seasons.
The Redskins are left with six contracts that they can restructure that can create some significant cap savings—Williams, Pierre Garçon, Barry Cofield, Stephen Bowen, Chris Chester, and Will Montgomery. I won’t clutter up the post here with the specifics of each deal, you can find those in the table below.
To go straight to the bottom line, a full, traditional restructure of each of those six players’ contracts would create about $15.15 million of cap space in 2013. The price would be an extra $5.29 million against the cap in 2014 and 2015 and about $2.54 million in 2016.
That may not be ideal but essentially they can spread most of the impact of the $18 million cap penalty over the next 3-4 years. They’d rather the NFL rescind the hit altogether but since that seems unlikely the restructures can help them make the best of a bad situation.
If they combine that with giving DeAngelo Hall a $5 million pay cut like we discussed here yesterday, that would give the Redskins about $20 million in cap relief. Since they eventually need to cut about $17 million just to pay their draft picks, tender restricted free agents, and have enough of a cushion to pay their practice squad and players on injured reserve, $20 million in savings doesn’t mean that they can go on a free agency spending spree. But it does get them out of their immediate hole.
There is no indication that the Redskins plan on doing this; they are keeping their plans close to the vest. But they are not in a state of salary cap hell with no way out. They can clear enough money to do business without needing to release any players.