Salary Cap Analysis

[Schneed10]

Originally Posted by #56fanatic

Another salary cap discussion, man this is dangerous territory. Everyone keeps going down the restructure road, thats fine for a year or two, but you still have to pay the original signing bonuses too. I know the skins have done a great job of circumventing this cap for a while, I just dont see how they are going to be able to keep doing things this way. They are eventually going to either have to start cutting really good players or bite the cap figures.They are just putting it off by restructuring, plus they keep having roster turnover because they have to cut 10 to 15 people every year. I found this about restructing deals.



If a player decides to renegotiate his contract, how does the bonus money he received in the original contract count against the cap? Answer:If a player renegotiates his contract and gets a new signing bonus, the new signing bonus is prorated over the remaining years of the original contract AND over the extension. The allocation of the original signing bonus remains unchanged.

For example, Player X is currently in the third year of a four-year deal (2000–2003) that paid him a $1 million signing bonus. In 2002, Player X renegotiates his deal extending his contract to the 2005 season while getting a $2 million signing bonus. The original $1 million signing bonus is allocated at $250,000 per year over 2002 and 2003 just as it would be if there were no renegotiations. However, the new $2 million signing bonus is allocated at $500,000 per year over the remaining two years of the original contract (2002–2003) and the extended two years (2004–2005).

You're right about how bonuses are allocating. It's just a matter of how much a team can afford to kick down the road. There's often a little more wiggle room than there appears to be, because the cap limit goes up every year. Last year the limit was $85 million. This year it will be $93 million. The next year it will be near $100 million. The key is not to kick too much of the bonus down the road.

For example, Portis originally signed for a bonus of $11.6 million over 8 years. This year, he's due a $3 million roster bonus. If you renegotiate that into a signing bonus, here's the bonus allocation:

2004: $1.45 million
2005: $1.45 million
2006: $1.45 million + $0.5 million = $1.95 million total
2007: $1.45 million + $0.5 million = $1.95 million total
2008: $1.45 million + $0.5 million = $1.95 million total
2009: $1.45 million + $0.5 million = $1.95 million total
2010: $1.45 million + $0.5 million = $1.95 million total
2011: $1.45 million + $0.5 million = $1.95 million total

That's adding half a million per year, very manageable. In 2007, he's due another roster bonus in the amount of $1 million. Renegotiating that would add another $0.2 million to each year from 2007 onwards. It's not an extraordinary amount.

You can keep a core group of players together in this manner. We can go through the next five years (assuming the CBA gets resigned) and not have to ditch any of our core 15-20 guys. The problem with running your cap in this manner is that if you try to add a high-priced free agent to the mix, you're talking about having the cap blow up in your face.