With the Titans recent trade for Julio Jones, the Saints ability to sign a draft class, and the Bears potentially signing a new right tackle the “cap is fake” takes are out once again. The basis of the cap is fake talk is that you can make moves to sign anyone you want. In the short term this is absolutely accurate- moving money from one year to the next is pretty simple. Does it work, though? That is a good question and one I want to explore a little today.
While there are a few ways to manufacture cap room such as void years on a free agent signing or extension I wanted to look strictly at restructures. Restructures are where you take an existing contract and convert salary to a prorated bonus. This is what the Titans did with Ryan Tannehill for example to make room for Jones. So I went back and looked at how much teams approximately spent on restructures (I included option bonuses in this because that is basically a contracted restructure) since 2013 and grouped teams into bins based on the amount of money restructured in a given season. To account for inflation in the cap every year’s number was adjusted to reflect the $182M cap this year.
How Many Teams Restructure Contracts?
About 55% of all teams will at least do a minor contract restructure while 45% of teams will stand pat. However only 37% of all teams do what I would consider a major cap manipulation of more than $6.5 million in restructures in a given year. About 20% of teams do more massive restructures at a level of $15M or more.
Who is Most Likely to Restructure?
I broke down all teams by their record the prior year to group the teams by how much they restructured their contracts.
|Restructure Max Level||10+ Wins||8-10 Wins||5-8 Wins||0-5 wins|
Successful teams clearly are the ones that cling the most to the restructure concept. About 60% of all teams that finished the prior year at least 8-8 restructured contracts. That number drops to around 50% for teams between 5 and 8 wins and 40% for the real duds. If we look at the higher level of restructures 42% of teams with over 8 wins are restructuring more than $6.5 million compared to between 25 and 32% for the under 8 win squads. Ultimately 60% of our big restructures come from teams over 0.500 while the other categories provide a more even split. It is worth noting that the bad teams that are restructuring high levels of salary are forced to do so due to the cap problems they created for themselves.
Does It Work?
Obviously the goal of the restructure is to maximize wins for the franchise. Let’s see how things broke down:
|Restructure Max Level||10+ Wins in Restructure Year||% Improved||Back to Back 10 Wins|
I thought this was interesting and kind of matches up a bit with a dead money study I worked on in the past. When looking at dead money my takeaway was that there is a really bad level of dead money but some dead money is good. Why? Because dead money means that you took some chances to maximize the value of your roster. The problem is when you get excessive.
Of teams that restructured up to $15 million about 53% improved year over year. 40% of those teams finished with at least 10 wins in the year they restructured. Compare that with the no restructure (40% improved and 31% made 10 wins) and massive restructure (just 33% improved and 31% at 10 wins) and I don’t think its hurting teams to restructure some.
The other thing was just looking at the teams that finished with 10 wins in the prior year. Those who had to move a ton of money to try to repeat only saw a 32% return to 10 wins. The other categories are all over 50%.
So to answer the original question, yes I think we can say that restructuring to a limited extent may work in the short term and that and doesn’t seem to be bad. However the excessive use of the restructure is likely going to leave teams disappointed in the outcome.
What about the long term ramifications?
The first thing I did was look at what occurred two years out from the initial restructure to see if there was any residual impact.
|Restructure Max Level||10+ Wins 2 Years After Restructure|
Obviously a lot goes into the evolution of a roster well beyond a few cap related moves so I wouldn’t read much into the totals here, but I think we can certainly say that the long term prospects of the team were not hurt because of one year of going crazy with the contracts for a team. While it may feel as if you are stuck the fact is you don’t have any harder of a path than anyone else.
What about if we take a look at the two year restructure patterns? To do that I added up the range totals for year N and N+1 and looked at how the teams performed in those two years. Here is the data:
|Max Two Year Range Total||Start 10+wins||Y1 Restructure 10+ Wins||Y2 Restructure 10+ Wins||Back to Back 10 Win Seasons|
The teams that do not touch their contracts stay pretty status quo across the two year period. The second group saw the most improvement (the main mover here was $0 restructured in year 1 followed by minor restructures in year 2) while the third saw a bump and then a fall. The teams that drove more of the fall were those who were more aggressive two years in a row. The final group didn’t see much repeat success but did not collapse either.
I think the bottom line is that we all, myself included, sometimes make too much out of the restructure. As long as a team does not make too many mistakes they can overcome and workaround the restructures. That said there is very limited benefit to massively restructuring the entire roster to add players. If teams are doing it for cap compliance they should look at other ways first before pushing more chips all in since the short term benefits simply arent there to defer the eventual purge of the roster. Similarly teams should not be fearful of touching a contract or two if it does mean adding/keeping one or two players. Basically, the sweet spot is limit yourself to no more than $15-$20 million in restructures over a two year period.
How do things look for 2021?
Looking at the 2021 numbers, this is a real unique season. We already have 17 teams over $15 million. Those teams are the Saints, Rams, Chiefs, Texans, Eagles, Packers, Ravens, Bears, Falcons, Lions, Browns. Cowboys, Bills, Titans, Steelers, Panthers and Cardinals. The Giants are just about to move up. The prior high was 11 teams and most seasons the number is between 6 and 8. The teams who haven’t touched a contract are the Chargers, Colts, Jets, Patriots, Bucs, Jaguars, and Seahawks. The teams in between are the Raiders, Vikings, 49ers, Broncos, Bengals, and Football Team. Given such an odd spread this year I would guess more teams than usual will make it from the high restructure group but a number of those teams probably put themselves in a worse situation by tinkering with so many contracts this year.