Restructuring now gives Brady leverage later
By agreeing to restructure his contract to facilitate the Randy Moss trade, Tom Brady put himself in line for a huge payday next spring, writes Len Pasquarelli.
No one need pass the collection basket for New England quarterback Tom Brady, who in the wee hours of Sunday morning agreed to restructure his contract to help Patriots management carve out the salary-cap room necessary to absorb the initial $9.75 million charge for wide receiver Randy Moss.
It was, of course, a selfless gesture by one of the NFL's classiest performers.
But while Brady was universally lauded, and justifiably so, people should know this: The reworking of the contract didn't cost Brady anything at the pay window. He still will earn the $6 million that is due him in 2007. Not a penny less.
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The money will just be distributed differently, that's all. Instead of having a base salary of $6 million for this year, Brady received a signing bonus of $5.28 million and had his base salary reduced to $720,000. Do the math, and unless your calculator is defective, that still adds up to $6 million.
Fact is, the maneuver actually netted Brady an additional $2.7 million over the course of his current contract, because as a part of the restructuring, the Patriots raised his scheduled base salary for the 2009 season from $2.3 million to $5.0 million. New England officials didn't alter his base salaries for 2008 ($5 million) or 2010 ($3.5 million). And Brady is still set to receive roster bonuses of $3 million each for 2008 through 2010.
That extra $2.7 million in base salary for 2009, however, is going to seem like little more than chump change in the big picture. And for Brady -- who bailed out the Pats on the Moss deal but also aided his own cause on and off the field -- it'll probably be sooner rather than later.
How so? Because while the restructuring for this year reduced Brady's 2007 salary-cap charge to $7.346 million, roughly $4 million less than before the deal was redone Sunday morning, it inflated the cap hit for each of the subsequent seasons through 2010. All of the maneuvering with the new six-year, $60 million contract that Brady signed in May of 2005 -- the initial $14.5 million signing bonus, a $12 million option bonus in March 2006 that was converted into a second signing bonus, and Sunday's machinations -- means the quarterback is carrying prohibitive cap charges over the final three seasons of the contract.
Just how prohibitive? Try a cap charge of $14.626 million for 2008.
Even if the league's spending limit increases to $116 million in 2008, as anticipated, Brady's cap charge, if untouched, would represent a whopping 12.6 percent of the New England budget. By comparison, his cap charge for 2007 is 6.7 percent of a $109 million cap. For owner Bob Kraft, such an excessive amount tied up in one player in 2008 would leave him little recourse.
He would almost certainly have to negotiate a new contract, which could be one of the most lucrative in NFL history, or extend the current deal.
Reducing such a monumental cap charge by consummating what is known as a "simple" restructuring -- taking a player down to the minimum salary and making up the difference in a signing bonus, which is, essentially, what the Pats did Sunday -- merely increases the future cap liability. It just delays the inevitable, and even with all of the various cap juggling and bookkeeping maneuvers available to every team (particularly to high-revenue franchises like New England), sooner or later the credit card balance has to be paid.
It's not as if Brady has ever needed leverage. But if he did, well, he's going to have $14.626 million worth of it next spring, when his 2008 salary cap charge kicks in.
About the only viable way to eventually squeeze out from under such a ponderous cap charge, short of releasing a player -- which isn't going to happen in Brady's case -- is to go overboard with a huge contract. Even extending a contract, which allows a franchise to string out the prorated items, has some built-in pitfalls.
Given their cap acuity, the Pats could probably knock down Brady's 2008 cap charges to something more acceptable, as they did Sunday, but that just temporarily silences the piper. At some point, the piper has to be paid, or his song grows increasingly shrill. That's one of the similarities between NFL fiscal policies and real-world economics. Teams with cash on hand, and New England certainly qualifies as one, can always shrink salary-cap charges. What they can't do is wipe them out altogether.
There's a lot of bookkeeping hocus-pocus in the league, but not even the shrewdest salary-cap manager has yet divined a way to make all the charges disappear.
So with Brady's cap charges mounting, there aren't a lot of alternatives for the Patriots, outside of negotiating a new, monster deal. Even though Brady this season will hit just the halfway point in his current six-year contract.
A new contract would still include some carryover charges, in terms of prorated bonuses, from the current one. But it might be the best and most manageable way for New England officials to address Brady's soaring future cap charges.
And consider what a deal it could be, given the exquisite timing for Brady, with the possibility that he and the Patriots could be coming off a fourth Super Bowl victory next spring. By aggressively adding to their roster this offseason, particularly at wide receiver, the Patriots figure to be among the Super Bowl favorites in 2007. A fourth Super Bowl ring would lift Brady into elite company, joining Pittsburgh's Terry Bradshaw and San Francisco's Joe Montana as a four-time Super Bowl winner.
It might also catapult Brady into an incredibly astronomical tax bracket.
Back in 2005, when agent Don Yee negotiated Brady's current contract, the quarterback was coming off his third Super Bowl victory. At that time, Brady took a deal that allowed the Patriots to hold their team together, to do business without being hamstrung by the kind of $100 million contracts some other quarterbacks have signed. The next time around, his sense of team aside, Brady could absolutely break the bank.
Indeed, it's just a matter of time until the restructuring completed Sunday precipitates -- perhaps mandates, in fact -- a new contract. The two-time Super Bowl MVP, under such a deal, certainly could become the NFL's richest player.
Kraft and coach Bill Belichick have fostered an estimable culture in which players have put the team first, and accepted deals for less money than they might have banked elsewhere. That was not necessarily the case with Brady's contract in 2005, which, by most measures used in assessing value, was still a tremendous deal in terms of average, if not raw numbers.
But the Patriots might not be as fortunate the next time they sit down with Brady and Yee at the bargaining table.
As for the one-year contract that Moss signed with the Patriots this week -- which replaces the two seasons he had remaining on his deal with the Oakland Raiders -- it includes a roster bonus of $500,000 and a base salary of $2.5 million. There is an escalator that could raise the value by $1.5 million if Moss reaches certain predetermined performance levels, and $250,000 in incentives that he's not likely to earn.
The 2007 cap charge for Moss, who was to have earned base salaries of $9.75 million this season and $11.25 million for '08 under his Raiders' contract, is an affordable $3.06 million.
Len Pasquarelli is a senior writer for ESPN.com.