Falcons: Terry Fontenot can create more cap space than fans think this offseason

Ryan, Oct_11_2020

It is no secret the Falcons, among other teams, are in bad standing with the 2021 salary cap. Many fans think this will lead to a frugal spending offseason, but that isn’t necessarily the case. A combination of cuts and restructures could create enough cap space for the Falcons to sign a few starting-level free agents and possibly even one blue-chip free agent. Restructures for anyone other than a CPA can be confusing; this explanation from Russellstreetreport is insightful.

The classic restructure is what is known as a “simple restructure”, in which the player’s Base Salary (P5) is reduced down to the applicable league minimum and the difference is immediately paid to the player as a Signing Bonus, which is then prorated over the remaining years of the contract.  So, again, the player is receiving nothing less than he was original supposed to.  In fact, he’s receiving the bulk of the money sooner as a Bonus, instead of spread out over the 17 weeks of the season.

Using the above contract example, if the team restructured the player’s contract in the 3rd year of the deal, the player’s 3rd year base salary of $5M would be reduced to the veteran minimum for a player of his service time (for example, $800K) and would give the player the difference of $4.2M as a Signing Bonus.

The new Bonus would then be prorated over the remaining 3 years of the contract and would count $1.4M in each of the 3 remaining years of the contract.   So, the remaining years of the contract would then look like this:

sample-restruct

So, the restructure reduced the 3rd year Cap Number for the player from $8M to $5.2M, thereby creating $2.8M in immediate Cap space for the team.  However, it comes at the cost of an additional $1.4M against the Cap in each of the final two (2) years of the contract.

There is no reason to believe Falcons players would be unwilling to restructure their current deals. Matt Ryan, Jake Matthews, and Allen Bailey all restructured their contracts ahead of the 2020 season. Ricardo Allen and Grady Jarrett also had their contracts restructured, all in hopes of extending Julio Jones. Now, those same players must restructure their contracts again.

If the Falcons restructured their top six contracts for the 2021 season, the team would be around $15,000,000 under the projected $175,000,000 league salary cap. This isn’t considering any cap casualties in terms of cuts. Ricardo Allen, Allen Bailey, James Carpenter, and Tyeler Davison could find themselves making up the bulk of this group. This restructuring method of pushing off the cap hit to future years isn’t a new practice. In fact, it’s used quite often.

Among all NFL franchises, the Saints use the restructuring practice most frequently. It is evident in their 2021 salary cap as they are $100,000,000 over the projected league salary cap. They got in this situation by pushing off contract after contract, and guess what they’ll do to get out of it… restructures. Obviously, they’ll have to cut certain contracts like Kwon Alexander and Jared Cook, but Mickey Loomis will have New Orleans under the salary cap while putting a competitive team on the field for Sean Payton — make no mistake about it.

Loomis is an absolute wiz of a general manager. He finds talent through the draft and free agency and can navigate the salary cap like no other executive. Terry Fontenot was essentially groomed by Loomis, expect much of the same. Fontenot will not sacrifice the team’s future to win in 2021 as Loomis did with the Saints these past few seasons, but he will certainly apply strategies learned in New Orleans to get the Falcons under the salary cap while improving the roster.

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