LA Rams restructuring contracts slides them under salary cap ceiling

With the news Wednesday that the NFL has informed teams that the 2021 salary cap will be officially set at $182.5 million, this places the LA Rams at an official $32+ million deficit before the upcoming season begins. That’s just to break even.

The cap news does bring a bit of certainty, a dash of closure to what is truly an unprecedented scenario in the NFL with a salary cap haircut in place such as this. Every team must begin the new season at (or under) that cap figure.

It also informs teams of where the monetary finish line is and allows them to plan accordingly. And the Rams current fiscal reality is none too rosy. Because that $33 million deficit cannot be ignored.

It’s today’s elephant in the room, a giant brick wall comprised of 33 million bricks that stands between the Rams and 2021 which needs to be demolished. There is no detour. It must be whittled down, reduced to rubble. Blown up completely and entirely.

Release today, pay tomorrow

The easiest way to do that is to trade or release players, thereby freeing up cap space, as we have witnessed taking place across the league in recent weeks as veteran players have been given their walking papers by many teams. It creates a roster hole that must be filled later. Beyond that, it’s just not how LA Rams GM Les Snead wants to do it.  And there are other strategies for sure.

Another strategy, another relief valve for a team is to restructure a few key (read: pricey) contracts. A team asks a player to make a sacrifice in some instances or adjust their contract in others to help the team get under the cap. Sometimes it’s just how the money is handled on the books and has no impact on cashflow or taxes.  Restructuring is what teams do to change the timing of a player’s salary expense.

In this approach, a team converts a player’s base salary to signing bonuses as a mechanism to create cap space. (A signing bonus is prorated over the length of a player’s contract for cap purposes, while base salary counts against the cap only in the year it is earned.)

Show me the money

There are no guaranteed contracts in the NFL, so players go after guaranteed money whenever negotiating contracts.  It just so happens that a signing bonus is almost the same thing because it’s guaranteed money and players like that. Nothing changes about the player’s cash flow. And the team gets a degree of flexibility it didn’t have before.

Think of NFL salaries like eating a large meal, a feast, or a banquet. Converting the salary to bonus means several smaller meals over a longer period of time.

Yes, but isn’t that just kicking the can down the road? Absolutely. It’s just part of the game, the off-season game. Keep in mind that this is a sharp dip in the NFL salary cap. For teams, it’s betting on the come or betting on what’s to come. (as in better times, flusher times, more moolah next season). From the Rams perspective, it’s also kinda like a step up in the pocket by a QB to buy more time to throw.

How do we know this is the LA Rams strategy? Well don’t believe me, this one came straight from LA Rams General Manager Les Snead himself

In this press conference, Snead discusses at great length how the Rams have already held discussions with key veteran players, key pillars about how the two sides can cooperate to create cap space for the team.

Without having to release players

One particular quote really stood out to me when Snead said:

"“The vision right now is to get to the finish line without having to release players.”-Les Snead"

In other words? All ahead full with restructuring contracts!

Here’s an interesting little factoid: If the Rams were to restructure the contracts of their Top 3 players under contract – Aaron Donald, Jalen Ramsey, and Matthew Stafford – that would shave $45 million off the salary cap, according to Overthecap.com. Problem solved.

It certainly doesn’t have to be just the top players, but some other combination to achieve $33 million in savings. For example, Cooper Kupp, Robert Woods, and Andrew Whitworth would trim $30 million, also per Overthecap.com. Just as long as $33 million is pruned, the team is good to go.

It does seem like this contract restructuring gambit could be a full employment act for players’ agents and accountants. And it does require mutual trust to exist between players and management, with both sides agreeing to give a little to get a little. To compromise.