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Originally Posted by Mattyk72
What are the advantages of extending a contract vs. restructuring exactly?
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With the way the Redskins are doing things, they're nearly the same, but the extension creates a little bit more room this year than a simple restructure would.
In a restructure, you take the player's base salary and convert as much of it as possible to a signing bonus, paying him up front. This allows you to spread the cap hit of that money over the remainder of his contract, thereby reducing his 08 cap figure and increasing the cap figures on the remaining years.
But with an extension, you're adding years to the deal. In Moss's case, his old contract said he'd be a Skin till 2011, or four more seasons. Today the Skins gave him $3.25 million as a signing bonus. If we restructured him, that $3.25 million would get spread over the remaining four years. But since we extended him, he now has six years left, so the $3.25 million gets spread over 6 years instead of four, reducing the amount you carry each season.
$3.25 divided by four years is $810K per season. $3.25 divided by six years is $540 K per season. A difference of a little more than $200K per year.
So it creates more cap room now, reduces the cap hits over the next four years, and adds two more years on at the end where we have to carry the difference.