Contract Restructuring: How Teams Create Salary Cap Space

6 November 2025

Let’s be real—when you hear the words “contract restructuring,” your eyes might glaze over a little. It sounds like something only agents, general managers, and cap wizards care about. But hear me out—it’s actually one of the most strategic and sneaky tools teams use to stay competitive in a league dominated by the almighty salary cap.

Every offseason, you'll hear about teams being “cap-strapped” or “over the cap,” but then magically, they sign star free agents or extend big-name players. How? Are they using Monopoly money? Not quite. They're using a clever trick called contract restructuring.

So, buckle up—you’re about to step into the world of salary cap gymnastics. And trust me, it's way more interesting than it sounds.

What Is Contract Restructuring?

Let’s start simple. Contract restructuring is when a team and a player agree to change the terms of an existing contract—usually, to convert salary into a signing bonus or stretch payments over more years. The goal? Free up cap space right now.

Think of it like refinancing your mortgage. Same house, same value, but you rearrange how and when you pay the money. That's what teams do with contracts—they move money around to make the books look better, even if it means paying for it later.

Why Teams Restructure Contracts

So, why even go through this whole process? Can’t teams just budget better in the first place? Well, not exactly. There are a few key reasons why restructuring is a go-to for many front offices:

1. To Sign New Players

Free agency can get wild, and teams need dough to grab top talent. If a team’s cap is tight, restructuring current contracts can instantly clear millions—enough to land that star receiver or lockdown corner.

2. To Keep the Band Together

Sometimes, teams want to keep their core players but can’t afford everyone under the current cap. Restructuring lets them spread out costs so they can re-sign key guys without losing others.

3. To Stay Competitive

The NFL and NBA are win-now leagues. No GM wants to waste a championship window. Restructuring gives teams flexibility to stay aggressive while managing the long-term cap consequences later.

How Contract Restructuring Works (Without the Headache)

Okay, let’s break this down in plain English. There are a few common ways teams restructure contracts.

1. Converting Base Salary to Signing Bonus

This is the most popular move. Let’s say a player is due $20 million in base salary this year. The team says, “Hey, what if we give you $15 million now as a signing bonus, and keep $5 million as your base?” The player gets paid early, which athletes love. The team then spreads that $15 million bonus over the remainder of the contract for cap purposes.

If the deal has three years left, that $15 million bonus only counts as $5 million per year against the cap. Just like that, they’ve saved $10 million this year.

2. Voidable Years

Ah, the classic cap illusion. Teams can add dummy years to a contract that will never actually happen. These “voidable years” are just there to spread the bonus over more seasons. It’s smoke and mirrors, but it works.

Example: A player signs a three-year deal, but the team adds two voidable years to help spread a $30M bonus over five years instead of three. The cap hit is lower each year, and when the contract voids, the leftover hits as dead money—but that’s a future problem.

3. Extending Contracts

Teams might also tack on real years to the end of a deal. This adds legit seasons to the contract, often at reduced salaries, helping to balance the cap hit and give the team flexibility.

It's like putting your credit card debt on a 0% interest payment plan. More time, less pressure—at least for now.

Real Life Examples of Contract Restructuring Magic

Let’s look at how the pros work their wizardry, because some of these GMs are like cap-space magicians.

Tom Brady & the Patriots (and Buccaneers)

Brady was the king of restructures. Every few years, he’d redo his deal to give the Pats breathing room and add talent around him. He understood the bigger picture: more cap space = better teammates = more rings.

Even in Tampa Bay, Brady restructured to bring the band back for 2021 after their Super Bowl win. That move helped retain key guys like Chris Godwin and Lavonte David.

The Saints’ Annual Cap Dance

The New Orleans Saints are basically running a masterclass on how far you can push the cap. Each year, they’re tens of millions over the cap. And each year, they restructure deals like clockwork—converting salary to bonuses, adding void years, kicking the can down the road.

They might be the best (or most reckless) example of aggressive restructuring.

The Kansas City Chiefs & Patrick Mahomes

Mahomes’ $500M contract sounds massive—and it is—but the Chiefs structured it in a genius way. Because it's so long (10 years), they have tons of room to restructure and spread bonuses whenever they need flexibility. They've already restructured his deal multiple times to keep the roster competitive.

The Downsides of Kicking the Can

Of course, restructuring isn’t all sunshine and cap space. There's a cost to pushing money down the road.

1. Dead Money

When a player leaves before the end of the deal, all those pushed-out bonuses accelerate onto the cap. That’s what we call dead money—cap space being used on guys who aren’t even on the team anymore. Ouch.

2. Future Cap Bloat

The more teams restructure, the less cap room they'll have in future years. Eventually, the bill comes due. You can only stretch a rubber band so far before it snaps—or in this case, the cap situation blows up.

3. Risk of Declining Performance

Paying future cap dollars to an aging or declining player can backfire—badly. If a guy gets hurt or slows down, you're stuck paying for past production with almost no return value.

Why Players Agree to Restructure

You might be wondering: "Why would a player go along with this?"

Well, it usually works in their favor.

- Immediate Cash: Signing bonuses are paid upfront. Who wouldn’t want to get their money now instead of waiting?
- Job Security: Sometimes, restructuring includes guarantees or sweeteners. It makes a player's spot more secure.
- Team Success: If they're team-first kind of guys (think Brady), they know cap space helps everyone.

So while it seems like a sacrifice, most restructures actually benefit the player. It’s a win-win more often than not.

Crunching the Numbers: Who Does It Best?

Let’s give some love to the real MVPs behind the scenes—the capologists. These are the math nerds and legal minds making the moves that let teams stay under the cap while maintaining talent.

Teams like the Eagles, Rams, and Bucs have employed aggressive restructuring strategies in recent years, and they've seen results—Super Bowls and deep playoff runs. Coincidence? Not even close.

Is It Sustainable?

That’s the million-dollar question. Can teams just keep restructuring year after year and never feel the pain?

Well… yes and no.

Cap inflation (the annual rise in salary cap due to TV deals and league revenue) has given teams more flexibility and room to maneuver. But eventually, if you stack up too many restructures, you hit a ceiling. Future cap space shrinks, player costs rise, and you might be forced into a painful rebuild—like what the Falcons went through after years of bloated contracts.

So it's sustainable to a point. But it’s not magic. At some point, you have to pay the piper.

The Bottom Line: It’s Chess, Not Checkers

Contract restructuring isn’t just number crunching—it’s strategy. It’s GMs playing chess while the rest of us are still setting up the board. When used wisely, it can keep a contender in the fight and create windows of opportunity for teams looking to get over the hump.

But push it too far, and you’re just mortgaging your future for a shot today. It’s a delicate dance between risk and reward—one that separates the great front offices from the average ones.

So the next time you hear, “Team X just restructured Player Y’s contract,” perk up. It’s not boring financial jargon—it’s the sound of a team making moves, setting the stage, and creating space for something big.

Who knew accounting could be this dramatic?