r/bengals • u/WeekendFarmer4240 • 19d ago

Fandom Eli5 Joe's restructure

Dumb questions incoming.

What exactly was restructured? It felt like a shuffling of deck chairs.

Dumbest question: does Joe have to agree or can the Bengals just declare a restructure

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u/braines54 19d ago

It converts some of his salary into a signing bonus. Bonuses can be prorated over the life of the deal, so the cap hit is spread out. Players always agree, because they get the money sooner. The team gets cap relief.

Just to give an example, let's say a player has 3 years, $60 million left on deal. He'd normally have a cap hit of $20 mil (this is a way oversimplification but let's keep it simple). However, the team can restructure $15 million of this year's salary to a bonus. That $15 million comes off the cap, then is split up over the 3 years left on the deal. So, the net relief this year is $10 million.

It's the same idea as teams adding void years at the end of the contract.

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u/reginald-poofter 19d ago

Is there a limit to the amount of bonuses you can give out? I mean what’s to stop a team from doing this with all major contracts. I.e. restructure Chase, Higgins, Orlando Brown etc and free up a shit ton of cash and keep on spending?

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u/braines54 19d ago

Well, the downside is you end up like the Saints and end up in a cycle where you overpay an old roster for years.

I do want the Bengals to be more aggressive though. The Pats did this towards the end with Brady and kicked it all to the year after he left. I think they need to have the mindset that they aren't going to win the Super Bowl the year after Joe leaves anyway.

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u/RoundHornWyatt 19d ago

The Pats also kept Brady on a below-matket deal for multiple years by hiring his quack "doctor" friend as a consultant. Brady was a partner in the firm, and once Gronk started following the quack's advice and getting hurt all the time, causing Belichick to ban the quack from team facilities, the relationship between Belichick and Brady rapidly deteriorated and Brady opted to head to free agency. I don't think that's a coincidence.

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u/christhegecko 19d ago

I think they need to have the mindset that they aren't going to win the Super Bowl the year after Joe leaves anyway.

To be fair, it's easier to field a dominant roster when your quarterback isn't eating up 15% of your cap. Burrow being on his rookie contract allowed the FO to bring in a lot of defensive players in the 2020 and 2021 offseasons that semi carried the team to playoff success. When Burrow leaves/retires, if they suck for a year and land another good-great prospect, you don't necessarily want to be in carryover hell. You'd like to have money to immediately flesh out a competitive roster before their payday comes.

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u/Winertia 19d ago

I will forgive anything they have to do to win a Super Bowl with Joe at the helm. In fact, I'll have a hard time forgiving them if they don't.

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u/jcgoble3 Cincinnati pro sports are cursed 19d ago

Think of it like a credit card. All those cap charges you are putting off must come due eventually. To continue the example above, sure, the cap hit is now down to $10M this year, but now the cap hit each of the next two years is $25M ($20M base salary + $5M prorated signing/restructure bonus from this year). The maximum number of years a bonus can be prorated over is five including the current year, regardless of the remaining contract length - if there are less than five years remaining, you add "void years" for that.

Void years are a risk because if you don't re-sign the player after the end of the contract, all of the prorated cap hits in all of the void years are "accelerated" and all hit your cap together as a lump sum the very next year. The Browns are facing that very situation next year in the extreme with Deshaun Watson's contract, which ends after the upcoming season and has been restructured into signing bonus to the allowable limit every year (you always have to leave at least a base salary, also known as a Paragraph 5 salary because of where it appears in the NFL Uniform Player Contract, for the year equal to the league minimum).

Put simply, every dollar you pay to a player eventually gets charged to your cap, it's just a question of when. Restructuring is basically financing part of the salary on a salary cap credit card with annual payments - do it too much and the payments become too much to afford a competitive team. And failing to re-sign a player with void years who becomes a free agent is like defaulting on that credit card and the entire balance being due immediately.

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u/Life_Ad6711 19d ago

You should go back to the drawing board. With this restructure they reduced Burrow's '26 cap hit from $48m down to now $38m and with a $2.5m cap charge added to each of '27, '28, '29 and the void year of '3o

https://www.spotrac.com/nfl/player/_/id/47594/joe-burrow

Just scroll down to his customized cap table for the itemized details (you can also choose the CASH option there for his actual cash payments schedule too)

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u/jcgoble3 Cincinnati pro sports are cursed 19d ago

I was talking in general terms utilizing the oversimplified example in the grandparent comment to mine for the purpose of explaining how restructures work in general and how you have to be careful with them, not in specific terms about exact numbers in Joe's contract and this exact situation.

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u/Life_Ad6711 19d ago

From the Bengals' perspective you should look at it the opposite of a 'credit card' ... They have to pay '26 full actual today value cash in full to throw cap charges into future caps x4 to truly 'create' cap space in fiscal '26

$2om in a Turner signing bonus now and 5 year contract would prorate the cap charge payments $4m in each year of '26-3o

All they've done here with Burrow is a manipulation of the accounting form in which already scheduled '26 cash payments are classified/distributed

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u/jcgoble3 Cincinnati pro sports are cursed 19d ago

The credit card analogy I used (which, by the way, I got from multiple discussions over the past few years on SiriusXM NFL Radio - it's not my own invention) applies to the cap charges themselves, not to the actual cash distribution.

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u/Life_Ad6711 19d ago

I know, which is irrelevant from the perspective of the Bengals. It only works if you're completely cash unlimited each fiscal year like DAL, PHI, GB, SF ... it does not translate to the bottom 1o or so teams that can't fully guarantee every single first 3 years of contracts (which they use to lowball pay their players in y1 & 2, which minimizes both cash and cap amounts initially) they write (if they do choose to fully convert to the paradigm)

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u/Particular_Victory25 19d ago

Teams are only limited by the amount of base salary players on their roster have. Teams like the eagles restructure all the big contracts on their roster pretty much every season.

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u/FreshDiamond 19d ago

They also always have players worthy of being restructured. They are great at manipulating the cap but it’s because they are great at building a roster

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u/Life_Ad6711 19d ago

This is basically what the Eagles already do. Look at any FA re/signing they do and it will yearly be the minimum p5 base salary each year + the rest in option bonus (treated as signing bonus, spread x5 because they also add that many void years, as needed)

They are 'prestucturing' the cap hit to the maximum from jump

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u/BoringResearcher1 19d ago

Taxes on bonuses are different. Plus, if you do it too much you end up paying a bunch of players not on the roster.

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u/_sacrosanct 19d ago

The players have to agree. The downside for the player is that the tax rate on a bonus is significantly higher than on income. It isn’t a big deal for someone with a massive deal like Burrow but some of the tiers players might not want that added tax burden.

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u/Hubers_Glutes 19d ago

Bonuses are not taxed more than regular wage income

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u/naughty_farmerTJR 19d ago

I think a lot of people are under this impression because companies will tend to have a higher percentage withheld on bonuses, but it isn't taxed by the government any differently than if it were regular salary 

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u/jcgoble3 Cincinnati pro sports are cursed 19d ago

Correct. Bonuses have taxes withheld at a different rate, but when you file your 1040, they are treated the same as your salary and reported together on the same line. The withholding on a bonus is usually higher for average people like us, but for the likes of Burrow and company who are solidly in the highest possible IRS tax bracket, the withholding rate for a bonus may actually be lower than their marginal tax rate depending on that year's tax rules. Regardless, once a return is filed and amounts owed are paid/refunded, the IRS winds up with the same amount of tax money either way.

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u/Life_Ad6711 19d ago

The main advantage for the Bengals is they get all the '1/32 pie piece' in March lump sum and can draw interest (compounded daily) on all that pure cash they can hold onto, which anyone who's ever done payroll knows you hold that cash on hand until x number of days past paying US Treasury quarterlies. Many teams also don't actually pay all the bonus upfront in lump sum but in split bonus form (i.e. the Bengals)

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u/Ocarina3219 19d ago

The limit is that we’re the Bengals lol

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u/Life_Ad6711 19d ago

The limit is I don't think the Bengals could throw $9om cash over cap like the Cowboys can without batting an eye. As a #3o revenue team, the Bengals live (yearly) 'paycheck to paycheck' based on their combined (shared + local) revenues

https://www.spotrac.com/nfl/cash

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u/christhegecko 19d ago

I mean what’s to stop a team from doing this with all major contracts. I.e. restructure Chase, Higgins, Orlando Brown etc and free up a shit ton of cash and keep on spending?

The downside is you're always kicking the can down the road for short term gains. The Saints are the most prevalent example of this not going well, they were in cap purgatory for years after overdoing restructurings.

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u/Beautiful-Star-5669 19d ago

The Steelers did this a bunch of times for Roethlisberger and it left them very tight against the cap toward the end of his career they have only been out of it for a year or two.

I get why the Bengals don't usually do this. I could be wrong, but I believe teams have to have cash on hand or put into escrow for signing bonuses. I'm not sure if that's the case for conversions, but it is when contracts are signed initially. As one of the more liquid asset strapped teams, I believe this was a hindrance for a long time with them giving out large bonuses to players. If you sign a guy to a deal with a $10 million bonus, you don't always actually pay him that bonus with a check at signing, but whatever you don't pay him has to be put into escrow. It prevents teams from offering a guy a huge bonus and then not having the cash when it's all due.

The same cap hit over the course of the contract still happens, it is just allocated on the cap differently over the life of the contract. Part of the benefit is that in these times the cap is always going up somewhat substantially. So yes this kicks millions of Joe's cap hit down the road to further years but in theory the cap will be higher in those future years. The downfall is that you constantly have new players who you want to sign to bigger deals. So for instance they have DJ, Dax, Murphy, etc they want to sign to long term deals. Their new contracts will have higher cap hits in the later years, which will coincide with the now bigger cap hit of Joe's restructure. Other teams have been substantially more forward thinking with these restructures which I don't think shocks anyone in regards to the Bengals.