Danno

Here’s a crude example.
Studley signed a 60 million contract with 10 mill guaranteed.

He’s now supposed to make 10 million in salary and 2 million in bonus every year for 5 years, which is a 12 million cap hit.


BEFORE:
2013 10 million + 2 million = 12 million cap hit
2014 10 million + 2 million = 12 million cap hit
2015 10 million + 2 million = 12 million cap hit
2016 10 million + 2 million = 12 million cap hit
2017 10 million + 2 million = 12 million cap hit

We need cap room now so we convert 8 million of his 2013 base salary to bonus money, which you can spread out over the 5 years.

AFTER
2013 2 million + 3.6 million = 5.6 million cap hit (Cap savings 6.4 million)
2014 10 million + 3.6 million = 13.6 million
2015 10 million + 3.6 million = 13.6 million
2016 10 million + 3.6 million = 13.6 million
2017 10 million + 3.6 million = 13.6 million

You’re still paying the guy the same amount over 5 years, you’ve just giving him an advance because bonus money goes into his account the day he signs the contract. The downside being the cap hit for future years goes up.