James Harrison Contract: Pay Cut Versus Restructure
I was asked via email what a restructure would look like for Pittsburgh Steelers linebacker James Harrison if another year was added onto his contract this week.
Harrison's agent, Bill Parise, said initially that his client wasn't open to taking a pay cut, but that they were open to doing a restructure. The two sides were reportedly talking again on Tuesday, but word has yet to surface as to which way the talks are heading as far as a possible pay cut or restructure goes.
Harrison is set to earn a base salary in 2013 of $6.57 million. His cap number, mind you, is scheduled to be $10.035 million. Should the Steelers turn all but $1 million of his 2013 base salary into a signing bonus, and add another year onto his contract, that would lower his cap hit in 2013 down to $6,321,666.67, which would create a cap savings of $3,713,333.33.
The downside of doing a restructure like that would be that it would add another $3,713,333.33 in potential dead money to 2014. When added to the other $1,465,000 million in bonus proration that already exist in 2014, Harrison could potentially cost the Steelers $5,178,333.33 in dead money against the cap in 2014.
So what if the Steelers were to make Harrison a post June 1st cap hit next offseason using the scenario above? Assuming his 2014 base salary of $7.575 million remained the same in the restructure, the Steelers would have to carry his full new cap hit of $10,896,666.67 cap hit until June 2nd next offseason before being able to recognize the extra little cap savings of a post June 1st cut.
So what if the Steelers didn't add on another year in a restructure this offseason? Turning that same $5.57 million used in the first example into a signing bonus, without an extra year added, saves the Steelers $2.785 million in cap space in 2013, but the potential dead money charge in 2014 would be $4.25 million.
Unless I am missing an alternative here, neither of the two plans laid out above are acceptable as far as 2014 goes, especially being that in 2014 the salary cap is expected to remain somewhat flat.
The Steelers chose not to restructure Harrison last year. It's hard to imagine that they would want to do so this year as well. The only solution here, in my opinion, is for Harrison to take a straight salary cut in 2013 of $3 million or more, as I have already talked about several times before. If he doesn't, he would have his contract terminated, which would clear $5,105,000 in cap space in 2013 even with the $4.93 million dead money charge.
The two sides are talking right now and obviously that means that Harrison has to have his 2013 cap number lowered. We now have less than a week to go before we will know the outcome.
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