Cooley Restructures

[Schneed10]

Originally Posted by itvnetop

So if I understand this correctly, an owner has the option to slash salary cap by converting cap money into guaranteed up front? If this is the case, what's the point of a salary cap? Not that I'm complaining (since this helps us) but theoretically, the cap can be loopholed as deep as an owner's pockets go... correct? I wonder why more owners don't do this... I guess Danny boy is just too rich to even care about parting with guaranteed money.

There's definitely a point to the cap, it's just not a straightforward cap on the amount of money you're paying players in a given season.

You can pay your players $120 million one year, and the cap can be $100 million, and it still be perfectly legal.

Signing bonuses get spread over the life of the contract. So if I give you $10 million to sign for a five year deal (congrats, you're rich), even though I'm paying you all $10 million of your bonus this year, I can spread it over the life of your contract, meaning that signing bonus counts for $2 million in each of your five years.

If you play three years and then I decide you suck and I cut you, then I still have two years worth of signing bonus to recognize on my cap books. I already recognized the first 3 years, but I've got to carry your last two years as dead cap.

But even though I'm carrying your deadcap bonus money, I don't have to pay you the base salary for this season (base salaries aren't guaranteed), so that's where the cap savings come from. If the cap savings on the base salaries are greater than the cap hit from the dead bonus money, then I'll save cap money by cutting you (Phillip Daniels, Todd Wade). If the dead bonus money is greater than the savings on base salary, I eat a cap hit on you (Brandon Lloyd).

So there's a cost to handing out big bonuses. If the player ends up sucking (Lloyd), it's tough to get rid of him without crippling your cap. You usually need to let the guy play halfway through his contract or so before it becomes feasible to cut him.