Rams Restructure Jared Cook's Contract to gain some space

Rams Restructure Jared Cook’s Contract

http://www.turfshowtimes.com/2014/11/1/7137549/st-louis-rams-jared-cook-contract-restructured

USA TODAY Sports

The Rams’ front office was buzzing with activity this past week. With all the transactions that occurred, the Rams were forced to restructure a contract to get under their salary cap limit. Jared Cook, in a friendly restructure, agreed to terms allowing the Rams to gain $900,000 in much-needed salary cap relief.

In a whirlwind of roster activity this past week, the Rams counted 19 transactions involving 16 players. A number of the roster moves reduced the Rams’ Available Salary Cap Space. As noted on Wednesday in my roster update article, I believed the Rams would have to create salary cap space to remain under their salary cap limit:

“The Rams can ill afford further injuries requiring placement on IR. Salaries of players on IR count against the salary cap, as do the salaries of the players replacing them on the 53-man roster. With 8 players already on IR, the Rams’ available salary cap space sits in a precarious position, and was further squeezed by the trade for Mark Barron. It’s likely the Rams will have to restructure a contract or two, in order to remain salary cap compliant.”

On Wednesday – the day after Mark Barron was acquired – the Rams restructured Jared Cook’s contract to remain compliant with the salary cap:

The restructuring of Cook’s contract involved converting $1.2 million of base salary to a signing (or prorated) bonus. The $1.2 million is spread out in equal increments of $300,000 over the remaining 4 years of his contract (including 2014). The net effect is a reduction in Cook’s 2014 salary cap hit (from $7.0 million to $6.1 million), allowing the Rams $900,000 in salary cap relief.

This particular type of contract restructuring is referred to as a “friendly” restructure. Essentially, the Rams asked for Cook’s help in creating salary cap space. Cook didn’t take a pay cut, nor did he lose a single penny in the deal. The Rams restructured Chris Long’s contract twice in a similar manner in 2013.

In contrast, the Rams – in the past two years – restructured the contracts of Harvey Dahl, Austin Pettis, and Scott Wells on far different terms. All three of those restructures were considered “unfriendly” in nature. In each case, a portion of base salary was converted into incentives. The player, for all intents and purposes, took a pay cut, and in return was given the opportunity to earn back most of the reduction in salary.

Looking ahead, an “unfriendly” restructure may be the only the way Sam Bradford avoids being released by the Rams in 2015. Given his ongoing health concerns, the Rams aren’t likely to pay Bradford his full 2015 base salary of $12.985 million. A sizable cut in base salary, with the balance in incentives, is a far more likely scenario. The incentives would likely include amounts related to playing time, weekly active roster bonuses, and the team reaching the playoffs.

The accompanying chart presents Jared Cook’s contract figures before the restructure:

Year Base Salary Prorated Bonus Roster Bonus Salary Cap Hit

2,014 3,000,000 1,000,000 3,000,000 7,000,000

2,015 7,000,000 1,000,000 8,000,000

2,016 7,000,000 1,000,000 8,000,000

2,017 7,100,000 1,000,000 8,100,000

The accompanying chart presents Jared Cook’s contract figures after the restructure:

Year Base Salary Prorated Bonus Roster Bonus Salary Cap Hit

2,014 1,800,000 1,300,000 3,000,000 6,100,000

2,015 7,000,000 1,300,000 8,300,000

2,016 7,000,000 1,300,000 8,300,000

2,017 7,100,000 1,300,000 8,400,000

Every year, the Rams consistently operate near their salary cap limit. Much of it is by design. Many teams have salary cap issues because of the way they structure contracts and manage their rosters. That’s not the case with the Rams.

The biggest reason the Rams continually operate near their salary cap limit is a commitment to pay-as-you-go contracts. They avoid back-loading contracts, and strategically emphasize higher base salaries combined with lower prorated bonus inclusions. This approach affords the Rams flexibility in future years, minimizes issues related to dead money, and more closely aligns contractual obligations to current performance (as opposed to huge signing bonuses in the initial year of a contract).

The only downside to operating close to the salary cap limit is a team being forced to restructure a contract out of necessity – and not by choice – due to unforeseen circumstances. Signing additional players because of injuries negatively impacted the Rams’ modest season-opening reserve (approx. $3 million). When the opportunity arose to acquire Mark Barron, the Rams were forced to restructure a contract to remain compliant with the salary cap. The Rams’ salary cap situation will be an ongoing concern for the remainder of the season. Injuries requiring placement on Injured Reserve will necessitate further contract restructuring, something the Rams would like to avoid.