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Stafford9
If you give money in the form of a bonus does that count against the cap?
Yes it does, but converting salary to a signing bonus changes when it counts against the cap.
To illustrate, Joe Player has 4 years left on his contract and is due $9M in salary each year. Which leads to the obvious: he will get paid $36M and he has a $9M cap hit each year.
Suppose the team restructures his contract so he gets a salary of $1M the first year along with an $8M signing bonus ... while still getting $9M in salary the other 3 years. That would not change how much money the player gets - he still gets $9M each calendar year and he still collects $36M over the life of the contract. But that $8M bonus is counted against the cap differently than when it was salary. Specifically, it gets prorated over the 4 years of the contract @ $2M a year.
The cap hit for the first year would be reduced to $3M: $1M salary plus $2M prorated signing bonus.
The cap hit for each of the next three years would increase to $11M each year: $9M bonus plus $2M prorated signing bonus.
The total cap hit over the life of the contract is still $36M ($3M + $11M + $11M + $11M). But the team gets $6M in cap relief that first year at the expense of an increase in the cap hit the final three years.
And that's why the team would be interested.
What's the player's motivation? The signing bonus is paid the day he agrees to the deal so that's $8M in his pocket perhaps in February or March whereas his salary is paid out in 17 equal installments over the course of the season. It's pretty much like getting an advance on his salary. Additionally, if that salary was not guaranteed converting some of it to a signing bonus changes that: he gets paid $8M when he signs.
AlbaNY_Ram
Edited 1 time(s). Last edit at 02/10/2021 01:07PM by AlbaNY_Ram.
