RC Passes Contract Restructuring (Effective Immediately)

[Colby]

The RC approved 5-1 to enable GMs to restructure contracts for overpaid players.  The rules are listed below with an example.  Basically, all of the extra money over their market value can be rolled into a signing bonus (remember, this stays with your team).  This restructuring is valid until the trade deadline.  GMs, you now have another option to consider when dealing with dead weights.

Restructuring Contracts

• Annual salary after such restructuring must be $4m+
• Restructuring allows annual salary to be reduced if player's market value (extension price) is less than or equal to half that of what he is paid.
• Total reduction in salary is converted into a guaranteed signing bonus during the current (or upcoming for off-season) year.
• Restructuring of contracts is not allowed during the period after the trade deadline and before the off-season.

Here is an example using hypothetical rankings and market values with a real contract.

Derek Lowe, $15.5m (2012)

Let's say his market value is $5.5m, and the team owning him at the time has plenty of cap space.  The restructuring says that his new annual say is $5.5m.  However, the leftover money now front-loaded to him in the form of a bonus (100% guaranteed).  The signing bonus is then a whopping $30m.

Now, let's say the team doesn't have that cap room, but they want to restructure the contract a little bit.  Well, that example is the extreme... the team can play the middle ground and reduce the annual salary to $10.5m per say for a signing bonus of $15m.

Such restructuring of contracts is not allowed from August 1st to the end of the playoffs to prevent teams from abusing the restructuring to make it count for an additional season.

[BHows]

How is "market value" determined? I'll assume it's the extension chart?

[Colby]

How is "market value" determined? I'll assume it's the extension chart?

Correct... I should put that in parenthesis.

[bridgestone]

Would this be legitimate?

Before
SP Meche, Gil, $11m (2011)

Ranked 160th SP in 2010, 96th SP in 2009 warrants $1.5m annual salary.  Salary can be reduced to that with the remainder as a bonus in 2010.

After
SP Meche, Gil, $4m (2011) + $14m bonus in 2010

Since I only have $4m in cap room, the best I could do would be:

SP Meche, Gil, $7m (2011) + $8m bonus in 2010

[MOLI643]

I still not sure about were to see the market value

[Mr.TradeKing]

its the "extension chart." League Rules>>>Contracts

~MTK

[jcoombs16]

Are we allowed to restructure the same deal more than once?  It seems that this could be an administrative nightmare.  Also, many of the contract extension values will be lower next year because of this.  It gives teams the ability to cheat and throw money under the cap for this year to change the entire market landscape in the future.  I think the losing vote had something right when they voted against this.

Just me $0.02 but the RC should reconsider this and realize how destructive this could be for the league's future.

[Canada8999]

Are we allowed to restructure the same deal more than once?  It seems that this could be an administrative nightmare.  Also, many of the contract extension values will be lower next year because of this.  It gives teams the ability to cheat and throw money under the cap for this year to change the entire market landscape in the future.  I think the losing vote had something right when they voted against this.

Just me $0.02 but the RC should reconsider this and realize how destructive this could be for the league's future.

Yes and no...

First of all, I don't believe there will be enough cases to significantly affect the market prices - many teams are close to the cap and will not be able to re-structure any contracts, let alone many.

Secondly, if teams are able to spend money now to drop the market prices, reduce extension prices and save money on their extensions, then they will have more money for FA... if they have more money for FA, they will add bigger contracts into the market price grid and raise the prices back up. 

There may be a bit of a bump in the first year, but in the long run I don't think this will have a significant impact on market pricing...