We got a bit of news early on Wednesday morning, as the Falcons have conducted some cap wizardry using the contracts of LT Jake Matthews and FS Ricardo Allen.
As a way of creating cap room, the #Falcons converted base salary to signing bonus on the contracts for Jake Matthews and Ricardo Allen, source says, adding they’re now “just barely into positive space.” Preparing for... pic.twitter.com/8BYQLGfFSS— Mike Garafolo (@MikeGarafolo) September 4, 2019
The Falcons restructured the contracts of Matthews and Allen, reportedly converting base salary to signing bonus for the two veterans. According to reports, Atlanta created approximately $5M in additional cap space by making the moves.
The cap moves are presumably to create space for the impending Julio Jones extension, which is supposedly going to happen at any moment. With the Falcons now possessing a little bit of breathing room, I’d expect a deal with Julio to get done in short order.
For those unaware of how the salary cap works, here’s a little primer:
Base salary is what the player is paid over the course of the season, usually split into 16 game checks. The entire base salary counts towards the cap for the given season. It may or may not be guaranteed, however, depending on the contract.
Signing bonus is paid out to players immediately when they sign the contract—or in this case, when they agree to the restructure. Unlike base salary, however, signing bonus is “prorated” over the remaining length of the contract. So a $10M signing bonus on a 5-year contract would mean that $2M counts against the cap during each year of the deal. This is good for spreading out cap hits, but can make players more difficult to cut in the later years of their contract. Signing bonus is always guaranteed—it’s paid out immediately upon signing.
By converting portions of Matthews’ and Allen’s base salary into signing bonus, both will have reduced cap hits in 2019—but increased cap hits in the future years of their deals. This may have the side effect of eliminating any cap savings that may have occurred from moving on from Allen in 2020. That wasn’t exactly a likely outcome, but it was a possibility with the Falcons have a difficult financial situation next season.
What are your thoughts on these moves, Falcons fans?