NFL
Adjustments in cap can change the bill
By JOANNE KORTH, Times Staff Writer
Published February 29, 2004
As teams attempt to reduce their salary cap numbers for the start of free agency Wednesday, the most effective way to save money without sacrificing talent is to restructure the contracts of high-paid veterans.
There is incentive for both sides.
For the team, converting a big-money base salary into a signing bonus saves room under the cap because base pay counts 100 percent in the year it is paid, while a signing bonus can be prorated over several years.
For the player, the conversion is beneficial because base pay in the collision-based NFL is not guaranteed. By restructuring, players receive cash up front in the form of signing bonus money they might never have collected as future base pay.
"The players in this league understand the salary cap as well as any executive, as well as any league administrator," Bucs general manager Bruce Allen said. "You have a great environment here of some special type of players who are making a lot of money. If they want to stay here and they'll work with the team, then we're able to acquire new talent." For example, a player with four years left on his contract is due to make $2-million in base salary for 2004, all of which counts against the cap. By converting half of that to signing bonus, prorated over the life of the contract, the cap count is reduced to $1.25-million for 2004.
The player makes the same $2-million - cash flow does not change - but the team saves $750,000 against the current cap by pushing it into future years.
Other cost-saving measures include releasing a player or asking him to reduce his base salary - in essence, agree to a pay cut to remain with the team. Teams also can save money in the current cap year by waiting until June 1 to release a player, at which point any accelerated monies would count against next year's cap. This is often referred to as the second phase of free agency.
[Last modified February 29, 2004, 01:15:11]
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