2022 RULES: Contract Restructure Options

[Goodell]

These days you're reading more and more about contract restructures with crazy competitive off-seasons. Lots of talk of converting salary to signing bonus to save against the cap or adding voidable years, etc.

Arguably we're a little out-dated with our existing simpler contract restructure which mostly just defers salary until later and adds some signing bonus to the player for doing that. I don't think you really hear about contract restructures much like that these days.

The most popular restructure currently I believe is to take a player's base salary (ex. 11M) and convert that into a guaranteed signing bonus -- so the money's the same for them, but the team can spread a signing bonus over multiple years unlike base salary. That 11M salary would go down to veteran minimum (just say 1M for simple math) and an extra 10M would be added to signing bonus left spread out over the remainder of their contract.

The maximum way to create even more savings through that in reality is to add voidable years to the contract. As I understand it, 5 years is the max for prorating signing bonus but if a player only has 3 years left on their deal you don't have to just prorate that over 3 years but you can add another 2 years (for 5 max) for prorating the signing bonus. That makes the annual SB/yr even smaller and maximizing your cap savings in that restructure of getting most of the player's salary this season into a signing bonus and then spreading it out as much as you can for cap accounting.

It's kind of tricky how we'd incorporate voidable years (if we wanted to) as those are years the player isn't really under contract. They have no base salary and aren't on the team. Don't know all the complexities with that, but perhaps we'd make a cap hit entry for the last few seasons that would be voidable to add cap hits of those prorated salary amounts and teams would just be charged that at those future seasons.

As we look at contract restructures here, we have a few questions:

- Do we update and change how we do those, adding in the popular convert salary to signing bonus option. If so, do we standardize how that's done or can we allow flexibility for team to say how much of the salary they're converting to SB based upon where they are.

- Do we keep both the current restructure way (deferring money until last season while cutting in half this year) and add the new option, giving teams more choices? Or simpler to just get rid of the old and make everything the new restructure.

- Is it overly confusing for players to allow teams to add voidable years if they want to maximize cap savings to spread the signing bonus over 5 years even if the player has less under contract? Is it overly complicated in how we have our teams setup technically?

- Currently we only allow one contract restructure per contract. Do we keep it at that, or do we allow player's contracts to be converted to signing bonuses every year if a team wanted to? With big annual salaries for top players, the SB could get monsterous if you could convert to SB every year and keep adding that up, but think maybe some players may have done that more than once on their deal in reality? If we allow multiple restructures for the same player on the same deal and allow voidable years, does that create situations with massive future year costs that teams could quit and get out of leaving big problems for new GMs?

- Do we keep our current limit on contract restructures (2 per off-season for each team, plus allowing one more during the season since more difficult to create cap space then), or do we allow teams to do more since that seems to line up with some teams doing more restructures than that? Maybe one extra one to start without getting too crazy.

There may be some other options to think about too, if you want to throw out some thoughts.

[tino38]

I don't believe our LTC's factor in the signing bonus / guaranteed portion of our contracts. If in your example the player gets his contract down to $1M base salary, will that be factored into the LTC equation or would the $11M like in your example above be what is factored into the LTC equation?

And also, would w be able to restructure/convert brand new contracts under this plan? For example I sign Tom Brady to a 2 year franchise tag. Can I convert the bulk of my cost savings into the first year of the contract full knowing that I may end up putting Brady on the retired list for 2023 and having to either take the remaining cap hit all in 2023 or split it over 2023 and 2024?

[Goodell]

I don't believe our LTC's factor in the signing bonus / guaranteed portion of our contracts. If in your example the player gets his contract down to $1M base salary, will that be factored into the LTC equation or would the $11M like in your example above be what is factored into the LTC equation?

And also, would w be able to restructure/convert brand new contracts under this plan? For example I sign Tom Brady to a 2 year franchise tag. Can I convert the bulk of my cost savings into the first year of the contract full knowing that I may end up putting Brady on the retired list for 2023 and having to either take the remaining cap hit all in 2023 or split it over 2023 and 2024?

We'd have to look at LTC impacts. I may fiddle around with what's possible on LTC calculations to minimize any restructure impacts. Currently we do have it through out the extremes and just focus on the middle range salaries within the range to minimize that, but might be able to see how we can adjust LTC to account for more of those things.

We currently don't allow new contracts to be restructured, as it's kind of unfair in the bidding process overall (know that's not your example) and to the sim player to sign them and then immediately pay less than agreed when other teams bidding willing to spend more now. Seems more realistic also that the sim player would play under the real deal just signed for at least a year before it gets changed around. But open to other discussions on how we best set everything up if tweakings things a bit.

[vikingfan]

I would like some flexibility in base salary other than backloaded. With some limitations of course otherwise some clowns will do 1m 1m 50m 3 hear deals. Some flexibility in salary each yer.
Just my 2 cents

[tino38]

I don't believe our LTC's factor in the signing bonus / guaranteed portion of our contracts. If in your example the player gets his contract down to $1M base salary, will that be factored into the LTC equation or would the $11M like in your example above be what is factored into the LTC equation?

And also, would w be able to restructure/convert brand new contracts under this plan? For example I sign Tom Brady to a 2 year franchise tag. Can I convert the bulk of my cost savings into the first year of the contract full knowing that I may end up putting Brady on the retired list for 2023 and having to either take the remaining cap hit all in 2023 or split it over 2023 and 2024?

We currently don't allow new contracts to be restructured, as it's kind of unfair in the bidding process overall (know that's not your example) and to the sim player to sign them and then immediately pay less than agreed when other teams bidding willing to spend more now. Seems more realistic also that the sim player would play under the real deal just signed for at least a year before it gets changed around. But open to other discussions on how we best set everything up if tweakings things a bit.

Nope this is fine, I just wanted to wrap my head around it as a whole for all potential changes. thanks!

[larry linke]

I see nothing but headaches and future problems with converting salaries to signing bonuses or having voidable years.

Larry
Minnesota AFFL
Tampa Bay BRFL

[robroach]

The potential problem here is that some GMs are going to absolutely abuse these new rules and then just give up the team when it finally comes time to pay the piper. I say keep things the way they are and add an extra re-structure. If not, things are probably going to get way out of hand.

[jerrydlux]

interesting spread of votes on all the options here. I think others have voiced it as well but I can see people taking advantage of the voidable years.

What if we put more limitations on that? Say we add the extra restructure, which seems to be a favorite option, but only allow one of our 3 restructures to use the voidable years...and maybe also limit that to 1 year past the current contract?

Just a thought, possible meeting in the middle?

[Knighty Knight]

The potential problem here is that some GMs are going to absolutely abuse these new rules and then just give up the team when it finally comes time to pay the piper.

This "problem" exists whether we reform construct restructuring or not. For example, GMs can give up their team after trading away all future assets.

The solution to that is addressing how we vet and assign new league members, not keeping contract restructuring in the stone age.

[Knighty Knight]

interesting spread of votes on all the options here. I think others have voiced it as well but I can see people taking advantage of the voidable years.

NFL teams take advantage of voidable years all the time. I guess I'm failing to see the difference implementing it here.