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| Part Two (very long)
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Part two of the analysis of the Benefits and Repercussions of Restructuring Contracts. This is very long... if you can keep up and make conversation with me on this (and hopefully correct any errors i might have made), then you know your cap stuff. Others, like Andreas, will continue chest-pounding with little or no analysis (just like he did before the Tenn game). This isn't for those types... it's way too much. Next example is a Tony Brackens type. I'm not talking about Tony specifically with this example, but a player of his calibre, coming off of his rookie contract, looking for the big bucks. This is a younger guy, someone you can sign to a deal and then restructure for as many as 7-8 years without worrying about too much decline, as long as he's the real deal. Remember that this is a pretend scenario, and that a lot of factors could change any of this very easily. Maybe the team doesn't like this player's attitude later on down the line, despite his excellent on the field performance... like a Shannon Sharpe. Maybe this player has a career ending injury, and you have to swallow a HUGE cap hit. You never know what will happen. He's a hot commodity as a UFA, so regardless of whether you put the Franchise Tag on him or not, you're gonna have to pay him the big bucks. You sign him to a deal such as this: $8 mil signing bonus 2000 salary: $2.5 mil.... cap hit: $3.833 mil 2001: $3 mil 2002: $4.5 mil 2003: $6 mil 2004: $8 mil 2005: $12 mil this year's cap hit is taken on by the room you created by restructuring so many other deals. Basically, you've allowed yourself to keep this top notch player by restructuring 10 other players' contracts. It's a definite plus to the restructuring process, but there will be repercussions down the line. Now, in this particular situation, you may not want to restructure again after the 2000 season, even if you need to free up cap room. The cap hit on this player only increases by half a million in 2001, and that may be better left where it's at. But if you face dealing with a Mark Brunell, who has a $13 mil cap hit among other cap increases, then you still might need to, in order to get under the cap and retain other FA's. Assuming this is the route you have to go, this is the deal you work out: $3 mil signing bonus 2001 salary: $500,000 ... cap hit: $2.43 mil 2002: $4 mil 2003: $6 mil 2004: $8 mil 2005: $12 mil This restructuring is nice, because you actually have dramatically reduced his cap hit from LAST YEAR even, as well as seeing a potential $4.33 mil cap hit this year drop almost $2 mil. Other than that, you've pretty much left the rest of his contract exactly the same, while also giving the player $500,000 more this year than he had in the original deal. Now, again, you run into the problem that, if you haven't won the big one yet, you are setting yourself up for trouble. You decide to make one more push, despite how other contracts are catching up to you. but this is where it gets tricky. Do you want to give this player a $4 mil signing bonus and minimum salary for the 2002 season? If you do, you face a jump from that to $6 mil or more the following season. Can you take that kind of cap hit in 2003? You won't know until then. The other key factor is how well this player is playing. If he's been like some predict Brackens will be (injury prone and not well motivated after a big deal), then he might be willing to take a pay cut... and if not, he may not even be willing to restructure. You face a larger cap hit to cut him than to keep him (much like the Kordell Stewart problem right now in Pgh, as well as the Randall Cunningham deal in Minny). But if he has been going back to the Pro Bowl and playing exceptionally, he may not be willing to restructure and keep basically the same pay. He may only be willing to restructure if you give him a raise. So, i'm going to break off into two possibilities here. One, that your guy is a Pro Bowl player each year after signing his contract back in 2000, and Two, that your guy has been injury prone while not playing up to the level of his salary. if he's a Pro Bowler, what you do is leave him where he's at. You take the cap hit of $5.93 mil this year and you like it. If you were to attempt restructuring, he'd be looking for a signing bonus in the range of $12 mil or something out of line like that. You wouldn't be able to reduce this year's cap hit enough to make that worthwhile. if he's an underachiever and injury prone still, you restructure. you offer this deal: $4 mil signing bonus 2002 salary: $500,000.... cap hit: $3.43 mil 2003: $5 mil 2004: $7.5 mil 2005: $12 mil the cap hit here is still $1 mil more than the previous year, but it keeps it from rising to the $5.93 mil it would have if you didn't restructure. but you didn't win it all again. you don't have a ring, and your cap number is very high because of all the other stars on roster to keep this team a competitor. You are millions over the cap and have to restructure every player you can. So, looking onto your Pro Bowl player scenario (in which the second deal is still intact), you restructure like this: $12 mil signing bonus (a consecutive year Pro Bowler won't accept less) 2003 salary: $500,000.... cap hit: $4.83 mil 2004: $5 mil (you are giving him $14 mil in 2003, which is $8 more than he had coming, so he doesn't mind taking the lower salary in 2004) 2005: $10 mil (you tag this offseason as a restructuring year) 2006: $12.5 mil 2007: $16 mil The trouble with this deal is that you don't do much for yourself. You'd be better off sticking with your deal from back in 2001, even though that cap hit would have been $7.93 mil. However, you are saving more than $3 mil in cap hits that could have happened, but are facing very big cap hits over the next two seasons, minimum. The 2004 cap hit alone would be $9.33 mil, which is a whopping 4.5 mil jump from this year. But let's say you go ahead and restructure again in 2004 with this Pro Bowler, because you still need cap room. Here's a potential deal: $6 mil signing bonus 2004 salary: $500,000 .... cap hit: $6.33 mil 2005: $8.5 mil 2006: $12 mil 2007: $16 mil uh-oh. it's caught up with you. And 2005 is gonna be worse, because you still have the effect of the signing bonus from the first two signings, plus these last two. It's already 6.33 mil, which really ain't bad, but it's gonna get worse. Another restructuring in 2005 for your Pro Bowler? Surrre, why not? $10 mil signing bonus 2005 salary: $500,000 .... cap hit: $8.33 mil 2006: $10 mil 2007: $15 mil 2008: $17.5 mil 2009: $20 mil what a fat deal, eh? trust me, they'll be commonplace in five years. For those of you saying that this doesn't look so bad, the team would do just great with guys like this and cap hits like this, try multiplying the above cap hit by 10. We'll even lower the number, because not everyone is getting Superstar paychecks. Multiply say a cap hit of $6 mil by 10 players, and you're already at the cap for 2000. The cap won't raise THAT much by 2005 to make such hit any easier. 10 players on Jax that would be worth (or would be a cap hit cost of) $6 mill by 2005 or earlier: Smith, Brunell, Taylor, Boselli, Searcy, Beasley, Brackens, Hardy, Lake, and Darius. Not to mention: McCardell, Walker, Bryant, Weigert, Coleman (if he's kept), and whatever #1 draft pick you take this year. Now, you've put off large salaries till beyond 2005 for our above example, which gets you out from underneath those first two signing bonuses. But, the bonuses that you've handed out since are still large, and your Pro Bowler is expecting that $10 mil a year that he's entitled to. Have you won the Super Bowl? Probably not, but maybe. Are you going to keep this aging vet aboard and sign him into his 15th and 16th seasons (2009/2010)? Frankly, $8.33 mil won't be a bad hit by the 2005 season, although it will still be heavy enough that this player better be amongst your top five on the team. I didn't even continue the thread where his career starts to spin out and sputter (ala Bryce Paup), which would have resulted in a cap hit of $7.93 mil to keep him without restructuring in 2003 (do you really want to continue restructuring someone who is underachieving?). To cut him, you take a $2.93 mil hit right then. Is it worth it to have that much cap money for a non-entity on your roster? Your best bet is that this player stays at a level of excellence throughout the years. If he does, you can keep him with ease and keep his cap hits low. But you can't do this with everyone, because there's never gonna be enough cap room to pay all your starters this kind of money. The other thing that MUST be understood in this process is that only INCREDIBLY team friendly guys will do this for you each year. Most guys don't re-sign every year. Some know that staying with their current contract will actually be BETTER for them because they'll get those tall salaries until they are released to sign with some other team who will give them far more than you can. Look at Bruce Smith. He is the perfect example of this. Wouldn't restructure or take the pay cut at this point in his career, and had to be released. Didn't hurt him one bit... it actually helped him... he got a FAT contract. Quarterbacks do the kind of contract I've listed out here, along with some guys who just don't want to leave their teams. You won't always get that, even down the road with guys you'd never expect to leave ... like a Bruce Smith, or maybe a Jimmy Smith, Taylor, Searcy, or even Boselli. You can't guarantee that guys will always do what's best for the team first. ngruk
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