Before we get into the details, it’s important to note that a restructuring is NOT a pay-cut, but rather base salary and other bonuses that are transferred into a signing bonus. That signing bonus is paid immediately and the amount of the signing bonus is then prorated over the remaining years of the contract. In short, more money right now for the player as well as a smaller cap hit for the team in the current year. It does, however, mean higher cap hits in future years.
Imagine this scenario
Imagine you can sign the following 5 free agents at market value or above market value on an annual yearly average cost basis:
- Allen Robinson
- Hunter Henry
- Carl Lawson
- William Jackson III
Only having to cut Jack Doyle, Ben Benago and saving around 6.3M between the two of them and also being able to re-sign (also to market value deals):
- Xavier Rhodes
- Denico Autry
- Zach Pascal
- Al Quadin Muhammed
- TJ Carrie
- Mo Alie-Cox
- Tavon Wilson
- A few other contributing backups
And even after all that, healthy contracts for them and all, the Colts are able to afford Carson Wentz’ contract via trade (4 years at 24.6M per year and 25.3M cap hit in year 1) and have 15M left over in salary cap (or around 9M-10M after signing the draft class).
That would be a crazy team.
How much cap space can they clear?
If the Colts were to take DeForest Buckner’s 16M roster bonus and turn it into a signing bonus, that would clear up around 12M in cap space for the Colts this season. If the salary cap is set at 180M, that means that 12M is about 6.66% of the salary cap. That’s quite a significant amount. By restructuring, it would add 12.1M (spread out evenly) over the last 3 years of his contract. Adding 4M to his contract over the next 3 years is worth it with large projected increases in the salary cap expected in the future.
Why clearing space is important this year
The salary cap is being squeezed extremely hard this year due to the loss of revenue because of Covid-19. Lots of teams are in salary cap trouble and are forced to cut, trade or renegotiate/restructure a ton of contracts just to get in the black and that doesn’t include their own key free agents. Many teams will not be thinking about signing free agents on the market. That means there will be less demand for high priced free agents and the law of supply and demand says that with a decrease in demand, the price decreases. The Colts can be in position to take down a lot of top dogs for a discounted price. The extra salary cap space could only help them in a strange offseason where they hold the cards.
Is this bad in any way for Buckner?
There’s a misconception that restructuring means that the player is taking a pay cut. In fact, it’s usually a good thing for the player since he gets a huge chunk-of-change up front. In the case of Buckner, it doesn’t make a huge difference since he’ll be receiving his cash via a roster bonus or a signing bonus; to the player, both bonuses are the same thing. They receive a lump sum of cash at a certain date. Buckner’s base salary is 1M, so the Colts will only be allowed to convert 10K of his base into the signing bonus (since his vet minimum amount is 990k). So in this case, nothing changes for Buckner.
This is a smart strategic move that the Colts should make and it could allow them to target elite free agents that could help the team immediately. The Colts have a lot of holes, with the most glaring ones being at quarterback, left tackle, receiver and cornerback. Ballard also values offensive and defensive linemen heavily. With the Colts in the high 60s in terms of cap space, the additional 12M can free them up to do a lot of things and make a lot of splash signings.
Chris Ballard doesn’t usually go hunting for high priced free agents, because usually those guys are overpaid (and he rarely overpays), but in a year with less suitors (less demand) and him having more money than just about anybody, he holds the cards and he can be the one dictating the market. This is an extremely unique offseason and the Colts are in prime position to take advantage of it.