In a move that surprised many fans, the Falcons opted to do a max restructure of veteran QB Matt Ryan’s contract on Tuesday March 16th. It was a move that ultimately got the team under the salary cap ahead of the league year but it has implications for 2021 and beyond. Let’s take a look at what they did, what it means for this year and what it means for the future.
So, let’s get this out of the way first: Matt Ryan didn’t change his contract and he’s not going to make one penny less in 2021. The move that was made is purely an accounting move and most GMs have it baked in to all of their big contracts. Simply put, by converting a portion of a player’s salary to a bonus, you can offset when that bonus is counted towards your salary cap. This is what people refer to as “kicking the can down the street.”
For this restructure, the Falcons converted 21 million of his salary into a bonus, leaving him with a 2 million salary for the season. That 21 million is then divided against his remaining years of the contract (2021 - 2023) - effectively pushing 7 million to 2022 and another 7 million to 2023 for a net savings of 14 million on the cap in 2021. That savings means the team is now under the salary cap ahead of the league year.
The money now
For the 2021 season, the Falcons are now in compliance with league rules, which is critically important. The last team to go over the cap was the Dallas Cowboys, who lost their 1st round pick as punishment. The NFL is very serious about enforcing compliance. For 2021, Ryan carries a 26.9 million cap hit compared to what would have been a 40.9 million cap hit if the deal wasn’t touched.
The money later
This what most fans are concerned about and for good reason. Kicking the can does have consequences, but it may not be as bad as some think. Matt Ryan’s cap hit in 2022 was set to be 41.6 million. After the restructure, it’s going up to 48.6 million, which is ... a lot. His cap hit in 2023 also increases by 7 million to 43.6 million.
Does this mean the team can’t move on from him in 2022? Well, it’s not that simple. Cutting him or trading him outright would mean 40.5 million in dead money in 2022, but it would ultimately free up about 8 million in cap space. That is a lot of dead money for one player, though and teams generally try to avoid carrying that large of an amount in one year. However, if Ryan were traded or cut with a June 1st designation, they could spread the dead money hit across the 2022 and 2023 seasons. In this scenario, his 2022 dead money would be roughly 25 million and the Falcons would regain just under 24 million in cap space. However, he would then have a 15.6 million dead money hit in 2023.
What are your thoughts on the cap implications of restructuring Matt Ryan’s contract?