I already had plenty written on this possibility about a month ago over on Nyjetscap, but I thought it might be worth outlining here as well since Adam Schefter did confirm that the Jets are looking to restructure the contract of WR Santonio Holmes.
Holmes is set to earn $11.25 million in cash payments in 2013 under the terms of his current contract and count for a whopping $12.5 million against the teams salary cap. Since signing his $45 million dollar contract in 2011 Holmes has been ineffective and a perceived locker room cancer before suffering an injury in a loss against the San Francisco 49ers which led to one of the more bizarre outcomes ever in which Holmes just gave the ball up while going down in pain leading to an easy score for the 49ers. The injury cost Holmes the season and it has been a slow recovery process, with Holmes set to begin jogging in April.
Of Holmes’ salary there are $7.75 million in guarantees, which are comprised of fully guaranteed base salary of $7.5 million and a $250,000 injury guaranteed workout bonus which is probably functionally guaranteed now since Holmes’ injury will likely prevent him from working out for another team. Holmes guarantee, unlike those of many of his teammates, contains offset provisions which means he can not double dip on his salary, effectively capping off his compensation this year at $7.75 million whether it is with the Jets or another team. That leads me to believe that a restructure would simply be taking the difference of $3.5 million and turning it into either a roster bonus in 2014, guaranteeing his release from the team next year or into a set of not likely to be earned incentives that he can earn back if he plays well this season. Such a restructuring would reduce his cap number to a more manageable $9 million.
Though many would say Holmes will be hesitant to agree he has little options. The Jets are in a position where releasing him would actually give them cap room and in the long run remove their cash obligation to Holmes who would at some point in the coming months sign with another team. Any move to another team would take Holmes’ contract value out of the top tier, which is important to players, and into the bottom tier, quite a drop for a former Super Bowl MVP. The one benefit he would have by playing on another team is the ability to work with a better QB and perhaps pad his statistics, though the Jets would be the only team to give him a number 1 label. Other teams, such as the Cowboys, would view more as a compliment to a better Wide Receiver.
I do think it is worth noting that Holmes’ agent, Joel Segal, also represents the Eagles Michael Vick. Vick was in a similar situation to Holmes in that he had a bloated salary with offset containing guarantees. Early posturing by Vick indicated that he would not play for a penny less than his contract called for in Philadelphia, but at the end of the day he took a significant paycut with the option to earn a little back in incentives. In return the Eagles allowed him to void his contract and become a free agent next season. This renegotiation will clearly be a point of reference used by the Jets during their talks about Holmes.
If Holmes is agreeable to remaining with the Jets and working with them on the salary cap there are a large number of ways in which the Jets can use his injury as a way to build cap flexibility into their 2013 salary cap via the use of NLTBE incentives with low performance thresholds. Holmes was only active for 4 games which resulted in 20 receptions for 272 yards. Using per game roster bonuses or incentive payments for things like 25 receptions or 300 yards would avoid salary cap charges in 2013 and push them to 2014 when the Jets have more cap flexibility. In the event the injury worried Holmes the Jets could back these NLTBEs up with future guaranteed salary that would void if the incentives were earned, creating a win-win for both sides. Of course all these cap scenarios require a good relationship between the two sides and that may be a stretch as we sit here waiting for the new League Year to begin.