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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
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