NFL Salary Cap 101: Contract Restructures


With the start of the 2016 league year now just a little more than three weeks away, we’re likely to see the Pittsburgh Steelers restructure a few contracts in the very near future in order to clear some salary cap space. With us knowing that at least one restructure will be done, now is the perfect opportunity to recap exactly what a restructure is and how it is done.

For starters, several people still seem to think that a traditional restructure generally means that a player is taking a cut in pay. That, however, is not the case. A traditional restructure includes money scheduled to be earned by a player in a current year being turned into a signing bonus in order to lower his cap charge.

There are important rules to remember about restructures. First, when turning portions of a player’s base salary into a signing bonus, that final base amount cannot be lower than the minimum salary for a player with his accrued seasons. Second, just like a traditional signing bonus, restructured signing bonus money can only be prorated for a max of five years.

Being as quarterback Ben Roethlisberger and defensive end Cameron Heyward are the two players who will most likely have their contracts restructured in the coming weeks, I have provided visible examples below of what both might look like before and after.

Look at Roethlisberger’s before example below and notice that he’s scheduled to earn a base salary of $17,750,000 in 2016. Additionally, if you look at the signing bonus column in that example, you will see $6,200,000 in each of the four years as that is the leftover proration from the $31 million signing bonus he was given last year when he signed his extension. That prorated money MUST stay accounted for in each of those years as long as he remains under contract.


Now, let’s say the Steelers took $12 million of Roethlisberger’s $17,750,000 base salary he is due and turned it into a signing bonus. In doing so, the yearly proration of that amount would be $3 million for four years starting this year. If you will notice in Roethlisberger’s after example, his 2016 base salary has now been reduced by $12 million. Additionally, $3 million has been added in the signing bonus column for each of the four years. The restructure results in Roethlisberger’s 2016 cap charge dropping by $9 million. However, his cap charge in each of the final three years has now increased by $3 million.

Now, let’s take a look at a possible restructure for Heyward.

First, notice that he’s scheduled to earn a $3 million base salary in 2016 in addition to a $5 million roster bonus. Being as that roster bonus is due to be guaranteed by the third day of the new league year, you can bet the Steelers will want to turn that full amount into a signing bonus prior to that date. So, in our after example below, the Steelers have turned all $5 million of Heyward’s roster bonus into a signing bonus in addition to $2 million of the $3 million base salary he’s scheduled to earn in 2016. That all adds up to a $7 million signing bonus that can prorated out for five years starting this year. As you can see in Heyward’s after contract, his bonus column in each of the first four years has increased by $1.4 million. Additionally, there is now a $1.4 million proration charge in 2020. The restructure results in Heyward’s 2016 cap charge dropping $5.6 million.

As you can see, with just two restructures the Steelers have cleared $14.6 million in 2016 salary cap space. If you have any questions about how restructures work let me know in the comments below.

RESTRUCTURE EXAMPLES
Roethlisberger’s Contract Before Restructure
YearBase SalarySigning BonusRoster BonusCap Charge
2016$17,750,000$6,200,000$0$23,950,000
2017$12,000,000$6,200,000$0$18,200,000
2018$12,000,000$6,200,000$5,000,000$23,200,000
2019$12,000,000$6,200,000$5,000,000$23,200,000
Roethlisberger’s Contract After Restructure
YearBase SalarySigning BonusRoster BonusCap Charge
2016$5,750,000$9,200,000$0$14,950,000
2017$12,000,000$9,200,000$0$21,200,000
2018$12,000,000$9,200,000$5,000,000$26,200,000
2019$12,000,000$9,200,000$5,000,000$26,200,000
Heyward’s Contract Before Restructure
YearBase SalarySigning BonusRoster BonusCap Charge
2016$3,000,000$2,400,000$5,000,000$10,400,000
2017$5,000,000$2,400,000$3,000,000$10,400,000
2018$9,000,000$2,400,000$0$11,400,000
2019$8,750,000$2,400,000$0$11,150,000
2020$9,500,000$0$0$9,500,000
Heyward’s Contract After Restructure
YearBase SalarySigning BonusRoster BonusCap Charge
2016$1,000,000$3,800,000$0$4,800,000
2017$5,000,000$3,800,000$3,000,000$11,800,000
2018$9,000,000$3,800,000$0$12,800,000
2019$8,750,000$3,800,000$0$12,550,000
2020$9,500,000$1,400,000$0$10,900,000

  • walter mason

    I’m gonna suggest this to my boss today. He can pay me now for future work I have not yet performed. He can call it a signing bonus, restructuring or whatever. If he has to lay me off or I fail to perform, I will have already been paid and he would be stuck with dead money.

  • SteelersDepot

    Not being paid ahead for future years. Just having money due this year turned into signing bonus. Bonuses are also paid out over 17 weeks just like base salaries.

  • David Paul

    Just creative accounting to push cap problems down the road, and one of the reasons the Steelwrs are maxed out every year after signing draft picks. Just got done counting Woodley’s cap hit for crying out loud.

  • PittsburghSports

    As long as you understand that being maxed out is not a bad thing, but rather an organization willing to spend every cent their allowed to, in their quest to win a Super Bowl.

  • walter mason

    I understand we need restructuring because we think we have a Superbowl team and we need to keep it together but it will come back and hurt us in the future. But I agree let’s restructure a few contracts like Ben and Heyward to free up some cap space and go for it all now.

  • walter mason

    OK I didn’t know. I thought a signing bonus was paid in one lump check.

  • thomas hmmmm

    Woodley earned his contract.. Part of a contract is based on past performance.. Of course the expectation is that you will continue playing at that level or beyond that level.
    Also your boss does pay money up front just in case you get injured or fired from your job.. It’s called unemployment insurance and disability/social security…

  • Edward Hunt

    You have to think after restructuring Ben, Heyward and Gilbert/Mitchell you could afford to resign Gay, McClendon, Foster and Golden. Plus Decastro and Timmon’s cap number could come down after extensions

  • thomas hmmmm

    My list of priority restructures would be…
    1 Timmons
    2 Ben
    3 Pouncey
    4 Heath
    5 Heyward
    Steelers
    will have somewhere around 70 million in cap space for next
    offseason..At least at this point without any resignings or FA signings
    yet.. So there is plenty of room for restructuring in the next couple of
    seasons.

  • David Paul

    Allocating $9M to Woodley the last two years was part of their quest to win the Super Bowl? Also, there’s a big difference in cap room and cash outlay per season. Big.

    But your Rooney propaganda is duly noted. Do they email or fax your talking points?

  • walter mason

    Obviously the woodley restructure backfired. It appears that restructuring doesn’t work if the player stops producing.

  • walter mason

    You don’t want to restructure a player that may not continue to perform. I can’t see how you could say woodley earned it. He earned a big contract yes but the restructure backfired on us. It was obviously a mistake to restructure woodley.

  • PittsburghSports

    My response to you mentioned nothing of Woodley. That was on purpose. It’s really never a good idea to look at the most extreme end of any situation when trying to form an opinion, and I think most fans feel Woodley’s contract was the worst move the front office had taken recently, although Tez’s contract is a close 2nd. That’s typical for a yinzer such as yourself though. I’m sure the Jags, Titans and Browns, who had tons of cap space last year, are looking for fans if you were thinking of switching things up.

  • TroymanianDevil

    I really hope Ben’s contract is not restructured that much. I realize that is an example ( and btw a big thank you for that b/c no other website gets into the cap details like this ) but 2 years of 26 mil cap hits will kill us. Just look at Flacco’s contract structure. Heyward’s restructure would be perfect that way its done in the example.

  • SteelersDepot

    Timmons and Heath are in their final contract year so you cant call that a restructure. Pouncey’s contract will likely be left alone

  • SteelersDepot

    Cap is going up $10 million a year and might even be $180 million by 2018

  • Louis Goetz

    They weren’t maxed out at all last year, nor will they be this year. Even after having to sign an amazing 17 players to replace guys who went on IR last season (all of whom counted against the cap), the Steelers were still $3M under the cap, which gets rolled over and can be used this year. Contracts are intentionally structured so that they will be restructured in future years so bonuses can be spread out, and as salary caps increase and other players’ salaries come off the books. The deals for guys like Heyward and Pouncey are just two examples. They couldn’t prorate Heyward’s bonus for six years, so they broke it up with part being a signing bonus last year and the rest being a roster bonus (that will be converted to signing) this year. That’s all. By restructuring just Heyward and Pouncey to convert their roster bonuses into signing bonuses (and without giving either an extra penny) the Steelers will recover $7.2M in cap space. Redoing Timmons’ last year in the same way they handled Polamalu’s, plus re-working Ben’s deal, as suggested above, would free up another $15.25M of cap space. Without batting an eye, and without having to give a player anything more than he was ever promised, the Steelers will free up in excess of $23M in cap space. You should check out the site OverTheCap (dotcom). There’s a ton you could learn about the Steelers’ cap and how their contracts work.

  • Louis Goetz

    You make no sense what-so-ever. From ’07 through the end of ’10, Woodley amassed 50 sacks (counting post-season), including the strip sack that ended SB XLIII. So, he was rewarded with a 6-year $61.5M contract before the ’11 season. Unfortunately, his body broke down and he missed 14 games over the three years following. Realizing that he was never going to be the same, the Steelers cut him after ’13. When they did, they had two choices: (a) take the hit in 2014 for the remaining proration of his signing bonus all at once ($17.16M); or (b) cut him after June 1, and spread the hit out over the ’14 and ’15 seasons ($8.58M each). The Steelers chose the latter, which reduced their salary cap by $8M even after the hit, and helped them sign, re-sign and keep players both seasons. What nonsensical purpose do you contend they could have possibly had for doing that?

  • Louis Goetz

    Curious, why don’t you think they’ll restructure Pouncey’ s deal to covert his $3.5M roster bonus and possibly part of his $3.5M salary into a signing bonus? If they converted the roster bonus and $2M of his salary into a signing bonus, his $10.551M cap number this year would decrease by $4.6M, while his cap hit in ’17, ’18 and ’19 would only go up $1.375M.

  • Craig M

    My question has always been tax structure to the team. Are players contract values depreciated over a 5 year or less time for tax purposes? And are payments made over a longer time period from earned % on deposited monies. Meaning that in a regular business a forklift cost can be written off over a certain amount of time to take advantage of tax shelters/ loopholes, so is this practice done w/ individuals worth contracts? May be none of my business but it sure would go to better understanding available money for players safety etc.. The Eagles owner, some time back, said he was losing money from his Franchise yet when he was forced to open just a small portion of his books it was shown he was being paid $100,000 a year as a consultant?

  • Craig M

    You should always look at the extremes when trying to focus upon parameters for if you have no sidelines you have chaos.

  • Craig M

    I have to list cutting Cam Thomas as number one priority, and sadly he was the one I was all hyped about originally. 🙁

  • Craig M

    So lets remember Wallace and his contract wants when there was going to be a jump in the salary cap from TV monies- when AB asks for the big bucks guys.

  • LucasY59

    Do it and sign some FA DBs!!!

  • LucasY59

    The Future = when Ben is no longer on the team and they will have to rebuild through the Draft. It will hurt for a couple yrs, but most likely without the franchise QB they arent going to be very good anyway (best case scenario would be the yrs where they had Kordell at QB) I would rather take 2 or 3 yrs where they really have a shot to rebuild (which unfortunately means not winning more than a couple games) than have some mediocre team that will do no better than .500 most seasons for the Future (and then eventually end up at the bottom for even longer until they can get a good QB and rebuild again)

  • LucasY59

    does your Boss have a salary cap that he has to work with?

  • LucasY59

    That is the risk, but Woodley had produced to earn his contract, Injuries caught up to him and the deal looks bad looking back at it, but at the time he looked like the guy who deserved the payday the most, when comparing him and Timmons (both got similar new contracts the same yr)

    The team was in somewhat of a Superbowl hangover (after going to 2 in 3 yrs) and so restructuring the young guy seemed like the best business move to try and keep the older vets and stay under the cap, they thought they could get to another one with the core of that team, but didnt know that the window had closed (not many teams are going to look at it as closed, until after the fact. in the moment, all they could remember was that those were the guys that had made them a contender)

  • ATL96STEELER

    You’re…not every player is restructure candidate. But in this day of $100 mil QBs and rising CH from players coming off rookie contracts…this is par for the course….you just hope you don’t run into a Woodley type deal too often.

    To offset that dead money…you have to continue to draft well.

  • David Paul

    What is this “Yinzer” thing you keep babbling about? Woodley earned his new contract, the problem was restructuring it after his play fell off because of injury.

    And playing the “why don’t you find a new team” card is something butthurt children do when they lose an argument. It’s not a good look, son.

  • David Paul

    They should have cut him BEFORE 2013, but they foolishly restructured his deal, which lead to the bigger cap charges the last two years.

    Extend, restructure, restructure, cut is not a sound cap strategy.

  • David Paul

    Yes, they’ll free up cap space this year to extend their own then throw up their hands when ti comes to signing a top outside free agent because of the cap, all the while making the cap problems worse in future years because of all of the restructures.

    They need a lot of help on defense, more than just the same old guys and Senquez Golson.

  • David Paul

    Most companies have budgets, payroll being a large part of them. This would be like a salary advance, and would cut into future years’ payroll budgets. It’s a risky move.

  • SteelersDepot

    can they? sure, but what I am saying is that they might not need to. we’ll see soon.

  • PittsburghSports

    I think it was Woodley’s 2nd restructure of that contract in 2013 that most had a problem with, if you want to get specific, and I don’t think there’s winning or losing this argument. I just have my opinion on how the front office does business, and I base that on their overall work. I don’t like the Woodley restructure, but 95% of the time the front office is on point. You don’t like their MO and point out the most negative move to further your case.

    If you don’t like playing at a children’s level, then maybe you should think about not bringing it there in the first place with name calling. Of course why would a yinzer have the clairvoyance to see his hypocrisy.

  • David Paul

    You have no idea what “yinzer” means, do you?

    The front office’s MO has cap strapped this team during Ben’s prime years, and now threatens to waste the remaining years of his career. Shame if 2010 was his last Super Bowl appearance.

  • SteelerFanInMD

    The Steelers seem to use restructuring to clear some cap room every year. I was wondering how often other teams do this.

  • PittsburghSports

    Conversations with you have turned pathetic. You really add nothing but negativity.

  • PittsburghSports

    lol very well articulated, but as you can see, he’ll just continue to argue his nonsense.

  • PittsburghSports

    Well you can happily cross that off your list, because he’s a free agent.

  • Bill

    We must understand that the Steelers are in the Big Ben window and time is running out. Therefore they are likely going to us restructures as way to keep and/or acquire good players. This is the puzzle the Denver Broncos managed to solve last year and the Patriots the previous year. Pro football teams must conduct themselves as a business, the business of consistent performance. They must be careful when ” rewarding past performance” at the expense of future performance. The Woodley case is one that no one could have predicted because it really looked like he would perform for years. But it really hurt them. To me there are several keys: 1. Use great caution when “rewarding past performance” (This is likely to be an issue with Antonio Brown’s contract); 2. Develop young players to replace those who are too expensive to keep. Steelers have done a great job with this on offense but not so much on defense; 3. Find lower level free agents who can really contribute such as D. Williams. 4. Find some diamonds in the ruff like the Patriots seem to do year after year.

  • TroymanianDevil

    That’s a good point but I’m aware of that. And every team will be getting that bump and they’ll get a much bigger percentage of spending money compared to us if we keep pushing significant chunks of money down the road. I’m sure the Ravens structured Flacco’s contract with similar reasoning and look how it’s killing them now, they can’t resign anyone. And obviously we’ll reach a point where the cap stabilizes so pushing too much money down the road can definitely lead to a big problem in the future.
    I’ve messed with the cap calculator quite a bit on overthecap and they have the projected caps at 170m(2018) and 180m(2019). Using that I put in extensions for Bell, DeCastro, Tuitt, AB at market value. And I even gave us very team friendly extensions for Timmons, Gay, Foster, McLendon and Bryant (let Beachum walk). It’s essentially where our available cap space money will go for the next few years imo. It just paints of picture that we need to be careful with how we spend our money. We’re not in a “cap crunch” like ESPN says ( and your article highlights that) but we’re not swimming in all this available space like the current 67mil next year might suggest. I just think we should be smart about restructuring. While I think Ben will be able to play at 38, I wouldn’t want his cap number over 26 mil in case he can’t in 2019. I’d restructure maybe 6-8mil of Ben’s number not 12. I think Gilbert, Heyward, and Pouncey are all safe bets to restructure so all our eggs are not in 1 basket like with Woodley.

  • Craig M

    🙂

  • thomas hmmmm

    His contract expired, so he is no longer with the team..

  • thomas hmmmm

    Oh yea, so they would be extended…

  • Louis Goetz

    They should have cut him before 2013? Exactly when should they have cut him? They signed him to the most lucrative contract for a defensive player in club history because he performed at that level to that point. He certainly continued to show that after the re-signing, recording 9 sacks in only 10 games during 2011. in hind-sight, the 2012 season is when his body started to break down and had they cut him then his cap hit would’ve been $22.6M for the 2013 season. They held out, as anyone would’ve, in 2013 to see if he would bounce back, and when he didn’t, they released him and spread his cap hit out over two seasons. Taking a two-year hit of $8.5M was certainly better than a 1-year hit of $17M in ’14, or a $22.6M hit in ’13, as you suggest. But hey, why let facts get in the way of a nonsensical argument, right?

  • Richard Edlin

    The restructure for Ben this year is doable, but the cap hits that this leaves for 2018 and 2019 are pretty eye-watering at $26m for these years. I wonder if the Steelers only really have one chance to restructure his contract (as $30m per year does seem unsustainable with any future restructure.

    With this lack of flexibility going forwards, are we moving from “competitive year to year” to “win now”?

  • David Paul

    Two injury plagued seasons in a row, steep decline in 2012. The Pats would have cut him. We restructured him again and have paid for it ever since.

    Why was his cap hit so high for 2013?

    It was piss poor cap management and I’m surprised that you’re defending it.