Re: Salary Cap Question
posted at 10/3/2013 9:51 AM EDT
In response to Not-A-Shot's comment:
Someone help me understand something. Why does extending a guy's contract affect this year's cap? I've seen it written here many times.
If a guy is signed through the end of 2013, and signs for three extra years from 2014 to 2016, why would that affect the cap number of 2013?
It all depends on the signing bonus of the extension. An extension can raise or lower a cap number for the year the extension is given but can't effect base salary or potentially earned bonuses for that given year unless the base salary is converted into guaranteed money and spread across the remainder of the deal. Examples:
In the case it could increase the cap number -
Player X makes $1mil base salary, no bonuses, and the cap hit for the remaining signing bonus comes in at $1mil so total cap hit that year would normally be $2mil. Now if he extends lets say 4 years with a signing bonus of $10mil then this year remaining signing bonus gets added to the extension making the entire signing bonus $11 over 5 years (roughly lets call it $2mil for simplicity). Since the base salary didn't decrease the adjusted cap hit is the $1mil base plus the new bonuses that was spread over the length of the contract of $2mil so the new cap hit is $3mil or an increase of $1mil.
In the case it could decrease the cap number -
Player X has a $1mil base again but from previous reworks or bonuses has $5mil in bonuses this year for a $6mil cap hit. They sign an extension for 2 years with a $2mil signing bonus so that $2mil gets added to the current $5ml for a total of $7mil that gets spread over 3 years (roughly $2mil a year). So the new cap hit is the $1mil base and $2mil bonus which comes to $3mil cap hit saving $3mil a year
In the case base salary gets converted decreasing cap hit -
So player X has a $10mil base and $4mil remaining bonus resulting in a $14mil cap hit. They extend him 3 years with $12mil normal signing bonus however, they convert $8mil of his current base salary to guaranteed bonus for a total of $20mil guaranteed at signing. His new base is $2mil for that year and the $20mil guaranteed + remaining $4mil gets added and divided over the 4 years of the new extension. The new $2mil base plus the $6mil bonus spread across results in a $8mil cap hit this year reducing the cap hit by $6mil.
The thing about reworking base is that you are just pushing the hit down to road (ala what the Jets did) so you are essentially passing the buck with interest which is a good way to either have larger amounts of dead money or if the player is declining be forced to pay for less performance