NFL Contracts: How Does Restructuring a Deal Actually Work?

The 2024 NFL campaign, for example, the ceiling is $255.4 million, but we are seeing players restructure their deals left and right.

Restructuring an NFL player’s contract is a common strategy used by teams to create salary cap space in the short term, but do you know how it works? No NFL team wants to be stuck against the salary cap ceiling, unable to make a move. With that in mind, restructuring a contract is designed to create a bit more breathing room.

Here’s how it typically works:

Converting Base Salary into Signing Bonus

The most common method of restructuring involves converting a portion of a player’s base salary into a signing bonus. Signing bonuses are prorated over the life of the contract (up to a maximum of five years for accounting purposes), which allows the team to spread out the cap hit over multiple years rather than taking the full hit in the current year. This immediate reduction in the player’s base salary creates cap space for the team in the current year.

Adding Voidable Years

In some cases, teams may add voidable years to a player’s contract. Voidable years are years added onto the end of the contract that automatically void at a certain date. These years are used solely for the purpose of spreading out the cap hit of a signing bonus over a longer period. While the player technically remains under contract for those voidable years, they are often voided before they come into effect.

Salary Conversions

Additionally, a team may convert a portion of a player’s salary into a bonus, which can also be prorated over the remaining years of the contract. This method can help create immediate cap relief, but it can also increase future cap hits.

Restructuring Bonuses

In some cases, a team may restructure a player’s existing bonuses, such as roster bonuses or performance incentives, to provide more cap flexibility. This can involve converting a portion of these bonuses into a signing bonus, which, as mentioned earlier, can be prorated over the life of the contract.

Extension and Restructure

Sometimes, a team may extend a player’s contract while also restructuring it. This can involve renegotiating the terms of the contract to reduce the player’s cap hit in the current year while adding additional years onto the contract.

It’s important to note that while restructuring contracts can provide short-term cap relief, it often comes with long-term consequences. By pushing cap hits into future years, teams may find themselves dealing with significant dead money (money counting against the salary cap for players no longer on the team) in the future, which can limit their flexibility in subsequent seasons.