Orioles Contract Restructuring

[shooter47]

Orioles are restructuring the contract for

CI Morneau, Justin, $13.5m (2013)

2011 Rank #101 CI
2012 Rank #34 CI

2011 Value $1m
2012 Value $6m

Orioles will restructure the contract to

CI Morneau, Justin, $6m (2013)
X-CI Morneau, Justin, Signing Bonus 2013, $7.5m in 2013

[Daniel]

I don't think it works that way. There a 70% rule for salary decreases if  I am not mistaking, and I am not even sure this league allows for contract restructuring of players that have not been dropped.

[shooter47]

I don't think it works that way. There a 70% rule for salary decreases if  I am not mistaking, and I am not even sure this league allows for contract restructuring of players that have not been dropped.

The 70% rule is for Contract extensions. The following is under the rules for contracts which shows that contract restructuring is legal if the resign value is less then 50% of the current contract amount.

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.

<div id=example>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.</div>

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.

[Paul S.]

It is not reflected in the rules now but I believe at one time contracts could not be restructured in the final year of the contract.   This loophole may need to be reviewed by the rules committee.

[shooter47]

It is not reflected in the rules now but I believe at one time contracts could not be restructured in the final year of the contract.   This loophole may need to be reviewed by the rules committee.

Didn't see that contracts could not be restructured in the final year when reading through the rules.

[Dan Wood]

Colby would be the one to chime in on this as this rule predates pretty much everyone in the league.

I know the general purpose of it was to make a large contract more palatable over the duration by giving a player a large sum of money up front (signing bonus).

When that rule was written it was 2010 and as you can see the numbers were meant to run through 2012. That may be where some of the confusion is coming from as it isn't stated in the example.

[Daniel]

If this is allowed in final year of contract it will allow some teams to extend players without following the 70% rule of contract extensions...

[Colby]

Colby would be the one to chime in on this as this rule predates pretty much everyone in the league.

I know the general purpose of it was to make a large contract more palatable over the duration by giving a player a large sum of money up front (signing bonus).

When that rule was written it was 2010 and as you can see the numbers were meant to run through 2012. That may be where some of the confusion is coming from as it isn't stated in the example.

At first I was wondering why he would do this, but it does give an advantage for contract extensions.  It appears to be a legal move, but goes against the intention of the buy-out clause and allows for abuse of manipulating contract extension mandates.  shooter47 uncovered a gap in the rules and should be applauded for this.  The RC needs to vote on an amendment to the buy-out rules.  Perhaps buy-outs should not be allowed in the final year of a contract?  This still allows teams to change contract values in the year prior, but they will need to eat salary cap space to do so which mimics real-life restructuring.

[rcankosy]

I am not against restructuring contracts in the final year, but it should not affect the resign value.  The resign value should be based on average annual overall cap value (salary + signing bonus) and not merely the annual salary.  The only exception for this would be bonuses paid to prospects.

This is how the NFL treats their contracts since MLB does not deal with salary caps.

[joeshmoe]

I am not against restructuring contracts in the final year, but it should not affect the resign value.  The resign value should be based on average annual overall cap value (salary + signing bonus) and not merely the annual salary.  The only exception for this would be bonuses paid to prospects.

This is how the NFL treats their contracts since MLB does not deal with salary caps.

MLB salaries are 100% guaranteed, no?  What player would sign that restructured deal in a hypothetically realistic situation.  I should have just restructured all those bad contracts I inherited in my first season (Peavey and H. Bell). 

It also damages the salary structure as large teams could take huge gambles on players via free agency and if they suck they merely restructure.  Small market teams would immediately be damaged as they have less cap to bid on these players. 

It would also create insane market bids for players as there really are no consequences to signing a player way over his value if you can restructure him.  Really I could restructure immediately and get my money for bidding back too.  As you can see the loopholes are endless.  And as I stated first, I don't believe the MLB has anything like this.  If it did it would be hard to translate into this setting.