In a recent press conference, Rich McKay told reporters that he was not the least bit worried about the Falcons cap space for 2020. Given that the team was underwater for the projected 2020 cap, this seemed like a strange comment. For those that follow the NFL closely, there was little doubt that McKay wasn’t just being optimistic.
Well, those statements have already come to fruition. The Falcons have restructured the contracts for Matt Ryan and Grady Jarrett to free up at last 12M in 2020 cap space.
The Falcons restructured the contracts of QB Matt Ryan and DT Grady Jarrett, converting 2020 base salary and bonuses into bonuses paid out yesterday.— Field Yates (@FieldYates) December 28, 2019
The moves allow those bonuses to prorate and created north of $12M in 2020 cap space. Planning ahead by Atlanta.
Before this deal, Atlanta was set to be about 4M over the 2020 cap, if you go off of the numbers provided by OverTheCap. They were set to carry over about the same amount of unused 2019 cap space, which would have put the team going into 2020 with no cap room.
After this deal, the Falcons will likely have about 12M in cap space to work with for 2020 without cutting anybody currently on the roster. Let’s take a look at what this means.
What the restructure does
Put simply, a contract restructure takes a contractual salary for a season and converts it to a bonus instead. By converting the salary to a bonus, the team can spread the cap hit of that bonus across the remaining years of the deal. By contrast, a salary within a given year is fully attributable to the cap in that year.
As an example, if Matt Ryan had a 15M salary due in 2020 and the team converted 10M of it to a bonus, with 4 years left on the deal, the new cap hit would be 5M salary + 2.5M prorated bonus = 7.5M cap hit in 2020. That’s a savings of 7.5M on the cap just by converting the salary.
In the NFL, this is an extremely common occurrence and most big contracts have built-in clauses that allow GMs to automatically convert salaries to bonuses whenever needed. For the player, there’s no financial impact as they get the same amount of cash as they would have before.
The downside is that it pushes more of the cap hit to future years, which in turn makes it harder to cut that player in the first several years of their deal. So, you have to be selective about which players you do this with. Most teams will only do this with the guys they know will be here for several years to come. Ryan and Jarrett clearly fit in that category.
The 2020 cap
As for the 2020 cap, the team will now have somewhere between 12 to 14 million to use in 2020. The rookie class will cost somewhere between 5 to 7M in cap space, which leaves about 7M in cap space for free agents and a buffer during the season for performance incentives and additional signings.
This is just the start of freeing up cap space, though. The team will likely move on from several veterans (Ty Sambrailo as a perfect example) and free up more space in the process. Make no mistake: Atlanta will not be a major player in free agency. They have cap space now, but it’s not significant enough to sign a bunch of high-dollar guys this off-season. That said, there could be some imminent moves coming as a result of this restructure.
The most obvious move for the Falcons - now that they have the cap room to do it - is to get Austin Hooper signed to a long-term contract. There are other guys the team may look to keep around - Adrian Clayborn, Tyeler Davison are two potential names - but none seem to be as important as Hooper. With the highest tight end contracts averaging about 10M per year, you can expect Hooper to get something in that range. Don’t be surprised if a new deal is announced for him in the coming weeks.
Your thoughts on the Falcons newly freed up cap space?