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JYB
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AlbaNY_Ram
But a restructure doesn't mean taking less money - it means making the same money but having it paid out differently.
Is that actually true? Isn't the payment exactly the same, but the way it's recorded in the books is what is different? Or is there really a difference in the timing and/or amount of the payment?
In a restructure the amount the player gets paid is the same, but it is both paid out differently and recorded in the books differently.
In the case of converting $17M of a $19M salary to a signing bonus:
When the full $19M is salary all $19M goes against this year's cap and the player gets 18 paychecks of just over $1M each week across the regular season.
When $17M of that salary is converted to a signing bonus the player gets that $17M now and the remaining $2M salary gets paid out in 18 paychecks of about $111,111 each week across the regular season. The player still gets $19M this year, but it
is paid out differently.
As for the accounting: the $2M salary goes against this year's cap and the signing bonus is spread evenly across the rest of the contract. (But no more than 5 years out. If the guy has 6 years remaining the cap hit is only spread out over the next 5 years.)
Assuming this player has 5 years left on his deal, that signing bonus would count $3.4M against each of those 5 years. The cap hit this year would be a total of $5.4M ($2M salary plus the $3.4M). That's where the club realizes the $13.6M in cap relief ($5.4M instead of $19M). And then you add $3.4M to the guy's cap hit in each of the next 4 seasons. (Note that the caps hits for 'the next 4 seasons' adds up to $13.6M ...)
All $19M is paid to the player this year, but in a different manner than the original deal.
And all $19M still goes against the cap, it's just spread out over 5 years instead of having all of it hit this year. ($2M salary plus five cap hits of $3.4M each is $19M.)
AlbaNY_Ram
Edited 1 time(s). Last edit at 03/12/2022 05:49AM by AlbaNY_Ram.
