Per Brian McIntyre: Chargers Restructure Contract of Philip Rivers

According to the excellent Brian McIntyre, the Chargers restructured the contract of QB Philip Rivers, converting $5 million of his base salary into a signing bonus.

We updated our cap pages to reflect the move which should save the Chargers $3.33 million in cap room in 2013. The timing of the restructure seemed a bit odd, but the Chargers were a team that had limited cap space and likely needed more to function during the season. As our friend Ian pointed out on Twitter there were options to either add cap charges to other players expected to be with the team in future seasons or simply add a bit more dead money to a player few expect to be with the club in 2014. Rivers dead money charge in 2014 now jumps from just $1.2 million to $4.534 million, which is still a reasonable number if they were to trade Rivers.

Though cap carryover has always existed to some extent in the CBA, the new rules which carry over all unused dollars make restructures like this more or less meaningless in cap management unless followed by an accompanying move that compromises future cap years. Why is that the case?  We’ll use Rivers as the example.

Assuming that the Chargers have determined that there is a high probability of moving on from Rivers next season you have one of two scenarios. The first is that you let him play out his contract. If he did that he would count for $17.11 million in cap charges in 2013 and $1.2 million in dead money in 2014. There would be no additional carryover. Scenario two is restructuring Rivers to have an emergency fund of cap dollars to use in 2013 in the event of injuries. His new cap saves the team $3.334 million in cap in 2013. If none of that is used it is simply carried over to 2014 as an offset to the $4.534 million dead charge, bringing the real effect right back to $1.2 million. The net effect is zero, its just deferring when the team accounts for the $3.334 million.  The key is to earmark the 2013 savings only for emergency, rather than trades or un-needed extensions that do make the effects of the restructure hurt future cap years.

View Phillip Rivers Contract and Salary Cap Page

View Philip Rivers Financial Report


 

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