Colston restructures his contract

westbankdaze · 03-01-2013, 07:02 PM

Originally Posted by 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.

Thanks but I'm even more confused. So he does make less money this year but he is promised more the next - as long as he doesn't get hurt? I don't see why if I was a player I would want to restructure. I thought it was all about getting paid now before the possibility of injury?

03-01-2013, 07:02 PM	#30
westbankdaze 500th Post Join Date: Jul 2011 Posts: 843	Originally Posted by 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. Thanks but I'm even more confused. So he does make less money this year but he is promised more the next - as long as he doesn't get hurt? I don't see why if I was a player I would want to restructure. I thought it was all about getting paid now before the possibility of injury?
westbankdaze 500th Post Join Date: Jul 2011 Posts: 843

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