Should Brady restructure (again) to free up cap?

[mgteich]

I believe that a restructured contract is a new contract and needs to signed. For example, I don't think that bonuses and salary are treated the same for pension purposes. In any case, I don't see Brady, Wilfork, Mankins or Mayo refusing to restructure.

Not sure if converting to fully guaranteed signing bonus and paying it up front counts as a change in terms or merely an accounting function. Team couldn't incentivize salary or change roster bonus to salary without player consent because that has the potential to alter contractual earnings. If they do have to sign off on conversion to signing bonus it's a formality after the fact as the alternative is the team may cut your ass, same as in reductions in salary restructures that you do have to sign off on. Although now that I think about it they may as the rules for recouping signing bonus did change in the new CBA to allow some recovery to be persued in cases where the player screws up or becomes unavailable due to NFI related circumstances.

 

[ctpatsfan77]

Not sure if converting to fully guaranteed signing bonus and paying it up front counts as a change in terms or merely an accounting function. Team couldn't incentivize salary or change roster bonus to salary without player consent because that has the potential to alter contractual earnings. If they do have to sign off on conversion to signing bonus it's a formality after the fact as the alternative is the team may cut your ass, same as in reductions in salary restructures that you do have to sign off on. Although now that I think about it they may as the rules for recouping signing bonus did change in the new CBA to allow some recovery to be persued in cases where the player screws up or becomes unavailable due to NFI related circumstances.

"or the terms under which such Salary is earned or paid"

Going from salary spread out over the course of the season to a one-time check would, by any reasonable standard, count as a change in the terms under which salary is paid.

 

[Deus Irae]

It can't really be a restructure unless both sides are willing to go to war next offseason, because of the remaining length of the deal, so we're talking about an extension here. Because of that, there are many questions involved here, so this is not an easy answer. From rate of decline, to fair value, to anticipation of future cap numbers, there are a lot of variables that both sides need to guess on.

 

[MoLewisrocks]

There's a chance that's just the Patriots "leaking" that "info" to lower his market price though.

I read that mediots who know who giardi's usual sources tend to disagree that it was any kind of leak campaign. That leads me to believe at least one of his sources was another player. He likely heard it from more than one source, too, or he wouldn't have run with it. This team is seldom going to tell the truth publicly, but if it is the truth they don't lose sleep when it leaks out unless it's something that paints them in a poor light.

 

[mgteich]

Yes, a restructure seems counterproductive. The current cap hit is doable, with the same next year and a franchise tag the next year (worst case), and one more franchise tag for good measure. A restructure hurts the team's bargaining position.

There are many questions involved here, so this is not an easy answer. From rate of decline, to fair value, to anticipation of future cap numbers, there are a lot of variables that both sides need to guess on. It can't really be a restructure unless both sides are willing to go to war next offseason, because of the remaining length of the deal, so we're talking about an extension here.

 

[MoLewisrocks]

Yes, a restructure seems counterproductive. The current cap hit is doable, with the same next year and a franchise tag the next year (worst case), and one more franchise tag for good measure. A restructure hurts the team's bargaining position.

Those two tags would be at $25 and $30M so are not doable even without restructure because of what the last restructure did...

 

[ralmat55]

Why are we so concerned with the percentage of the cap Brady, Wilfork, and Mankins take. Other than these players, the Patriots are a very young football team, so it makes sense that 2 older all-pros and their all-time great QB take up a good chunk of their salary cap.

High cap figures don't hamstring a team; paying out large sums of money and not getting back adequate production for your payout does. I'd be very careful about pushing money out into the future especially for Brady and Wilfork because of their ages. Instead, I'd pay as I go with those players and work around their high cap figures by manipulating the numbers for the other 51+ players.

Yes, you run the risk of those players playing out their contracts and leaving, but, by assigning large chunks of cap space to them, you're going to have as much money (or cap space) to resign them as anyone else. Frankly, if a 38 yr old Tom Brady decides to reject your offer of $20 million for the 2015 season to accept a $25 million offer to QB the newly re-re-located LA Rams, well, he's earned that right imho.

The Patriots have enough cap space to improve this off-season. Sure, things would get very tight if they franchised someone, but they could also very easily add another $6-8 million of cap space by doing a simple restructure for Mankins, disposing of Brian Water's contract, and shaving the salary of their overrated and unreliable placekicker.

 

[DaBruinz]

Why would Mankins be restructured?
He'd want top dollar; and he's been injury prone -- I see no reason why the team would extend him at his current avg pay.

Brady restructuring also means paying him 18-20 million when he's 39/40 -- which wouldn't result in much cap room being pushed forward; unless he's willing to go team friendly on 5 or 10 mil per year on an extended 2 years

You don't understand what restructuring means. Restructuring is not giving the player an extension. It is changing how the accounting is handled. For instance, the most common restructure is to guarantee the player's salary for the year and spread it out like a signing bonus over the remainder of the contract.

Giving a player an extension isn't a restructuring in and of itself.

 

[DaBruinz]

brady wont restructure. he knows his salary affects more than just himself. out of respect for other qbs, if he changed his contract it would affect how much they would earn also. They wont reduce brady's contract, this is his last big payout. we all know it.

This makes no sense at all. None.

There is a difference between restructuring and being given a contract extension while restructuring. It's in Brady's best interest to get a contract extension so that his contract goes beyond 2014. Especially since he wants to play for at least 4 more years.

Brady wants to WIN. He doesn't care about other QBs in the league. And with the way the league changed the Franchise equation to being the average of the top 5 Cap hits, it will be negligible. Not to mention that it could easily be offset by whatever Joe Flacco signs.

 

[PatsFanSince74]

Should he restructure? That's up to him.

With interest rates at historic lows the "time value" of the deferral is not as great as it might once have been, but it's still not peanuts ($10,000--20,000 per year per million dollars deferred at a risk free rate of some sort, depending on the duration of the instrument). If he defers ten million, that's $100,000--$200,000 in risk free dollar loss for every year it's deferred. That is a small percent of what Brady and Ms. Bundchen are worth, but I am amused at how quickly folks here are ready to toss that money away on his behalf, when it's likely more than many of them earn in a year...or longer.

If one looks beyond the risk-free time value of the money in question and at the opportunity cost, however, and considers that people in the Brady/Bundchen investment league have access to Hedge Fund, Private Equity and other instruments that can return 10--20% a year, with the associated higher levels of risk of course, then we're pretty blithely tossing away millions of dollars for him.

That's why I say, it's up to him.

Only Brady and Bundchen can decide how to weigh what this might cost them financially vs. the benefits of TB's playing with a marginally stronger supporting cast. As a fan, I'd support whatever he/they decide.

 

[Sciz]

Contracts are heavily based on "what have you done for me lately", the rest is based on 'what will you do for me soon". If Mankins is frequently injured of late, and projects to continue that way, that's all that matters.

Why would Mankins project to continue to be injured? Every problem he had this past season was directly related to not having full strength in his surgically repaired knee. With that knee back to full strength, there's no reason to think that he's going to have any injury concerns.

 

[ctpatsfan77]

Should he restructure? That's up to him.

With interest rates at historic lows the "time value" of the deferral is not as great as it might once have been, but it's still not peanuts ($10,000--20,000 per year per million dollars deferred at a risk free rate of some sort, depending on the duration of the instrument). If he defers ten million, that's $100,000--$200,000 in risk free dollar loss for every year it's deferred. That is a small percent of what Brady and Ms. Bundchen are worth, but I am amused at how quickly folks here are ready to toss that money away on his behalf, when it's likely more than many of them earn in a year...or longer.

You're conflating two different issues here: when the money is paid, and when the money hits the salary cap.

Because the NFL allows hits for bonuses to be prorated for up to five years, paying Brady *sooner* means money hits the cap *later*. For example, the Patriots either guaranteed Brady's salary above the vet minimum or converted it to a bonus (I can't remember which they did, but it doesn't really matter). Either way, (A) Brady didn't get paid any later than he did before, but his 2012 cap hit went down while his 2013 and 2014 cap hits went up.

 

[MoLewisrocks]

Should he restructure? That's up to him.

With interest rates at historic lows the "time value" of the deferral is not as great as it might once have been, but it's still not peanuts ($10,000--20,000 per year per million dollars deferred at a risk free rate of some sort, depending on the duration of the instrument). If he defers ten million, that's $100,000--$200,000 in risk free dollar loss for every year it's deferred. That is a small percent of what Brady and Ms. Bundchen are worth, but I am amused at how quickly folks here are ready to toss that money away on his behalf, when it's likely more than many of them earn in a year...or longer.

If one looks beyond the risk-free time value of the money in question and at the opportunity cost, however, and considers that people in the Brady/Bundchen investment league have access to Hedge Fund, Private Equity and other instruments that can return 10--20% a year, with the associated higher levels of risk of course, then we're pretty blithely tossing away millions of dollars for him.

That's why I say, it's up to him.

Only Brady and Bundchen can decide how to weigh what this might cost them financially vs. the benefits of TB's playing with a marginally stronger supporting cast. As a fan, I'd support whatever he/they decide.

As ctpatsfan77 already noted, you are confusing what a simple restructure entails. There is no deferral in a simple restructure. It doesn't involve any delay in or reduction of payment to the player. In fact it pays him money he is owed in salary or roster bonus in advance of when it was due and that simply allows the team to reallocate how that money is treated for internal league cap accounting purposes. Rather than hitting the cap when due it then can be amortized over the remaining years of the deal. The organization actually loses out on the time value of money calculation in restructures...while the player gains a little something.

Although it should be noted that in his case Brady has actually deferred substantial portions of payment on most of his signing bonuses I assume to facilitate off season cash flow for Kraft. The league has rules on that, however, and any deferral beyond 12 months requires interest be paid to the player. And while the actual disbursement of that money is deferred, it still hits the cap as if already paid. Brady's deferrals generally occur within that 12 month window (for example his 2010 contract signing bonus of $16M was paid out as $6M on signing in March and $10M due in September). And even if the deferral stretches into another season, that money would be treated as if paid in the prior season (because it was at that time guaranteed as earned).

Something else to keep in mind. Any money that is amortized is not moveable in the future. Once allocated to the cap in a given season there it remains, and the only time it moves is if a player is cut or traded or otherwise no longer a member of the team. At that time all remaining amortized money (dead cap) accelerates to the current year (although if multiple years remain teams can elect to split the remaining amortization and absorb it over two years if the transaction occurs after June 1 or the team chooses to designate it as if it had (limit on that is 2 players).

 

[PatsFanSince74]

You're conflating two different issues here: when the money is paid, and when the money hits the salary cap.

Because the NFL allows hits for bonuses to be prorated for up to five years, paying Brady *sooner* means money hits the cap *later*. For example, the Patriots either guaranteed Brady's salary above the vet minimum or converted it to a bonus (I can't remember which they did, but it doesn't really matter). Either way, (A) Brady didn't get paid any later than he did before, but his 2012 cap hit went down while his 2013 and 2014 cap hits went up.

Thanks for the clarification. Guess I'll never be a Capologist!

So, to be sure I understand, the cash still passes hands at the same time, it's just the structure of the deal that changes? Sort of like the difference between "Cash" and "Accrual" accounting?

Thanks again.

 

[BTTA]

Why would Mankins project to continue to be injured? Every problem he had this past season was directly related to not having full strength in his surgically repaired knee. With that knee back to full strength, there's no reason to think that he's going to have any injury concerns.

That's the first I've heard that theory. Can you elaborate?

 

[MoLewisrocks]

Thanks for the clarification. Guess I'll never be a Capologist!

So, to be sure I understand, the cash still passes hands at the same time, it's just the structure of the deal that changes? Sort of like the difference between "Cash" and "Accrual" accounting?

Thanks again.

Almost. The cash passes hands immediately, which is sooner, at the time of the restructure. Brady got his $6M roster bonus that was due right around that time anyway plus he got $4.8M of his $5.75M 2012 salary in advance on the day the restructure was done instead of getting it over the course of the 17 week season. The roster bonus and salary were converted to signing bonus which then allowed the team to spread the cap accounting for that amount over the remaining 3 years of the deal. Lowered his 2012 cap number by $7.2M while adding $3.6M to each of the final two years cap figures.

 

[MoLewisrocks]

You're conflating two different issues here: when the money is paid, and when the money hits the salary cap.

Because the NFL allows hits for bonuses to be prorated for up to five years, paying Brady *sooner* means money hits the cap *later*. For example, the Patriots either guaranteed Brady's salary above the vet minimum or converted it to a bonus (I can't remember which they did, but it doesn't really matter). Either way, (A) Brady didn't get paid any later than he did before, but his 2012 cap hit went down while his 2013 and 2014 cap hits went up.

FWIW it's always converted to signing bonus as that is the only thing other than a guaranteed option bonus that is amortizable. (Option bonuses that aren't guaranteed don't get amortized until or unless they too get converted.) Guaranteeing salary would not change the fact that it hits the cap in the year paid.

 

[PatsFanSince74]

Almost. The cash passes hands immediately, which is sooner, at the time of the restructure. Brady got his $6M roster bonus that was due right around that time anyway plus he got $4.8M of his $5.75M 2012 salary in advance on the day the restructure was done instead of getting it over the course of the 17 week season. The roster bonus and salary were converted to signing bonus which then allowed the team to spread the cap accounting for that amount over the remaining 3 years of the deal. Lowered his 2012 cap number by $7.2M while adding $3.6M to each of the final two years cap figures.

Thanks to all who have gone to the trouble of understanding this and enlightening the rest of us.

So, given his loyalty to and expressed positive feelings for the Patriots organization, I take away from all of this that the only reason that Brady wouldn't restructure would be if he felt it affected his negotiating position regarding a new contract.

 

[ctpatsfan77]

Thanks to all who have gone to the trouble of understanding this and enlightening the rest of us.

So, given his loyalty to and expressed positive feelings for the Patriots organization, I take away from all of this that the only reason that Brady wouldn't restructure would be if he felt it affected his negotiating position regarding a new contract.

Essentially, yes. He and the missus have enough money, I would hope, that he doesn't need to worry about exactly when he's getting paid,* as long as he does get paid.

*Cf. Antonio "I've got more baby mamas than letters in my name" Cromartie

 

[Brady_to_Moss]

he won't reconstruct...he wants the $$ and i don't blame him..he is nearing the end of his career.