Restructuring could create more cap space for the Ravens

Salary Cap Restructuring could create more cap space for the Ravens

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One way that the Baltimore Ravens could create additional Salary Cap space is through restructuring the contracts of some of its more highly paid players.  The Ravens don’t have a lot of ideal candidates for restructures, but could look to restructure the contracts of LB Terrell Suggs, G Marshall Yanda or DT Haloti Ngata. 

First, though, a little explanation of what “restructuring” usually means. 

About 95% of the time that it is reported that a player has “restructured” his deal it does not mean that the player has taken a pay cut or given up any money.  Usually, this type of restructure is what is commonly referred to as a “simple” restructure, by which the player’s base salary is reduced down to the veteran minimum and the difference is given to him as a new “signing” bonus that, for Cap purposes, is prorated over the remaining years of the contract (to a maximum of 5 years). 

The last part of that explanation is very important – a contract restructure trades future Cap space for present Cap space and it inflates the future Cap numbers of the players who have restructured.  Done in moderation, restructures can be budgeted around in future years, but wholesale restructures can lead to “cap hell” or “cap purges”, as we saw with the 2002 Ravens. 

Using Terrell Suggs as an example, he is presently set to earn a base salary of $4.9M for 2012 and has 3 years remaining on his contract.  If the team were to do a simple restructure with Suggs, his $4.9M base salary would be reduced to $825K (the veteran minimum for a player with 9 years of service time) and the difference $4.075M would be given to him immediately as a bonus. 

For Cap purposes, the Suggs’ new bonus of $4.075M is prorated over the 3 remaining years of his contract, hitting the Cap in the amount of $1.358M a year in 2012, 2013 and 2014.  The net result of the restructure for Suggs would be a Cap savings of $2.717M for 2012, however – and this is a drawback of restructures – his Cap numbers for both 2013 and 2014 were just increased by $1.358M.

Again, in this scenario, Suggs would not be taking one for the team and sacrificing any money – he’s still getting a total of $4.9M and he’s actually getting most of it sooner.  So, anyone thinking that the “restructuring” being done by other teams around the league is some magnanimous gesture by the players is mistaken.  There is nothing altruistic about it – rarely are the players giving up a cent – it’s just a bookkeeping maneuver that most players are more than happy to agree to.

Restructures for Marshall Yanda and Haloti Ngata could create additional Cap space of $2.85M and $1.65M, respectively.  If the Ravens choose to pursue restructuring those 3 deals, they would create additional Cap space of $7.217M.

These are examples of good restructures because they are players that the team can reasonably expect to play out the remainders of their contracts, so that there will be no acceleration of the additional money added to the future Caps if the player retires or is released.

This is exactly the reason that the Ravens would not be wise to do a “simple restructure” with LB Ray Lewis.  Lewis is a marvel in that he is still playing at a high level at age 36, but the team cannot bank on that continuing for much longer.  Because of this, a restructure – even though it would create close to $3M in additional Cap space – does not make much sense because the team would just be adding onto the Cap hit that will occur when Lewis retires.

For this same reason, doing a restructure with WR Anquan Boldin (with his $6M base salary) also doesn’t make a lot of sense because of the possibility that he may not be around for the last year of his contract in 2013.  The team could save $2.58M in Cap space by restructuring Boldin’s deal this year, but that would add $2.58M onto his Cap number for next year and, if he’s not around anymore, would increase the dead money attributed to his release by that same amount.

Simply put, while teams aren’t adverse to carry some dead money from year to year, they only want to restructure deals when they need to, especially when it comes to older players.

So, while he Ravens do have some options to create Cap space through restructures, they will likely be judicious in the use of restructures so as to not cause long term pain, for short term gain.

 

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Brian McFarland

About Brian McFarland

Known on Ravens Message Boards as "B-more Ravor", Brian is a life-long Baltimorean and an avid fan of the Ravens and all Baltimore sports.  A PSL holder since 1998, Brian has garnered a reputation as a cap-guru because of his strange (actually warped) desire to wade through the intricacies of the NFL's salary cap and actually make sense of it for those of us who view it as inviting as IRS Tax Code.      Brian, who hails from Catonsville, MD and still resides there, is married and has two children. More from Brian McFarland

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