Jason Fitzgerald


Recent Posts by Jason

Explaining the NFL’s Rookie Salary Cap

Troy asked me the other day a good question on NFL rookie contract’s impact on the salary cap so I thought this would be a good time to give another primer on the NFL rookie pool. It can be a confusing topic and often I see many people get the impact of the rookie pool incorrect when making salary cap projections for the summer. I’ll do this as Q&A style to hit on the main questions I usually receive on the topic. In case you don’t know it we also have a draft resource page which lists all our contract projections for the 2015 rookie class.

What is the “Rookie Pool”?

In the old CBA the NFL had a cap on how many cap dollars could be spent on rookies. This was called the “Entering Player Pool” and was generally considered the “Rookie Pool” or “Rookie Salary Cap”.  The league allowed a player’s cap hit to rise by 25% of his first years cap charge which in theory would keep rookie salaries in check. However, in practice it was not the case as teams and agents used all types of neat little cap mechanisms to render the 25% rule invalid, especially for highly drafted players.  This was a major renegotiating point in the 2011 CBA.

Per the current CBA, each NFL team is allotted a maximum amount of dollars to spend on their draft picks not only in year 1 cap charges, but also in total value.  Those loopholes that existed in the prior CBA were all eliminated and thus rookies are limited to increases that equal 25% of their first years cap charge. The new CBA refers to these allocations as the “Total Rookie Allocation” and “Year One Rookie Allocation”. The values for each team are determined by the round and position in which the player is drafted. I just call them “Rookie Pools” because I’m used to using that term.

While the formula itself is a secret for calculating the charges those of us who track the numbers are able to get a good idea of how the process works. In general it’s an exponential decay where there are rapid drops at the top of the draft in terms of value and minimal drops as you get into the 3rd and 4thround of the draft. This gives us a good idea at forecasting the charges, though the NFL and NFLPA made it a bit easier due to the way that they grow the rookie pool.

The various rookie pools are supposed to grow (or fall) by about the same percentage as the salary cap. However the sides quickly realized that the formula failed to account for the normal growth of minimum salaries by $15,000 a year in the event the cap rose at a slow rate (approximately less than 3.7%), which it did in 2012 and 2013. Since it would not make sense to lessen bonus money in a year where the cap is growing the NFL and NFLPA agreed to freeze bonus money to allow for the natural growth of the year 1 salary.

Despite the fact that the 2014 salary cap rose significantly the freeze still remained in place and because of that we are assuming it will remain frozen in 2015, though we do have estimates for an unfrozen pool if someone has information pointing in that direction.  So keeping all of this in mind we should get a pretty decent idea, barring some big changes by the League, as to what each team will spend on their rookies.

How does the “Rookie Pool” Impact the Salary Cap

This is probably the most confusing aspect for most people. Some people think that this is additional money added on top of the salary cap which is not the case at all. The “Rookie Pool” is a cap within the salary cap. It is essentially money that your team needs to place aside for your rookies. It is not added to your salary cap at all and it has to fit in the $143.28 million cap limit that is set for each team. If signing a rookie puts a team over the cap they will not be permitted to sign the player until they have the cap room to do so.

The second thing that confuses people is the amount of cap space required to fit in a rookie class. This is probably the biggest mistake made regarding rookie salaries and their role in cap management. Usually someone will see that rookie salaries are expected to total $6 million and then make the assumption that the team needs $6 million in cap space to sign their rookies. That’s not really correct.

During the offseason NFL roster expand to 90 players and only the top 51 players count against the salary cap.  Every rookie that is signed will either replace a player currently in the top 51 or not count enough against the cap to be in the top 51, in which case only their prorated bonus money will count against the cap. This is why it is important to understand the concept of effective cap space.

To illustrate let’s look at the Jets. I project that the Jets will have a rookie pool number of $6,046,013 to spend on 6 draft picks. That is a lot of required cap space for a team that just spent like the Jets did in free agency. But when we look at effective cap space it will paint an entirely different picture.

The number 6 pick is projected to count $3,002,182 against the cap. But once he is signed he will bump out the number 51 player on the roster. I currently estimate that player to be IK Enemkpali whose base salary of $510,000 will fall off the cap books once number 6 is signed. That makes the effective cost of pick 6 to be just $2,492,182.  When we do that for every pick in the Jets draft we get the following:

Pick63770104224225Totals
Year 1 Cap Charge$3,002,182$985,153$602,813$554,250$450,933$450,682$6,046,013
Replacement Cost$510,000$435,000$585,000$435,000$435,000$435,000$2,835,000
Effective Cap Cost$2,492,182$550,153$17,813$119,250$15,933$15,682$3,211,013

So really what the Jets will need is around $3.2 million in cap space to sign their rookies despite the total cap charge being over $6 million. You simply due this for your team to determine the charge. The quickest way to do it is to simply take the rookie pool we have listed and subtract from it $435,000 multiplied by the number of draft picks you have. This will represent the maximum possible amount the rookies will take up and is much faster than what I did above.

Do Rookies Immediately Count Against the Cap

No 99.9% of the time a drafted rookie will not count against the salary cap. The only time a drafted rookie will count against the cap is if a team has less than 51 players. Technically when a rookie is drafted they are tendered a minimum contract so if a team has less than 51 players the rookie would count for $435,000 against the salary cap, but not for the full cap charge. A team does not need to account for the full cap charge until the player is actually signed to a contract, which for most players will not happen until the summer, giving the team ample time to make any moves they need to be able to sign their rookie class.

So What Teams Need To Create Space for Rookies?

I’ll do the quick and dirty calculation here to get an idea of how much effective cap space is required for a rookie class. Please note that these numbers may be slightly off due to the changes tonight in draft order, which I attempted to account for but I may have made a possible mistake.

TeamNo. PicksRookie PoolEffective Cap Cost
Buccaneers8$8,112,982$4,632,982
Browns10$7,895,357$3,545,357
Titans7$7,490,535$4,445,535
Jaguars7$7,331,746$4,286,746
Raiders7$7,216,784$4,171,784
Saints9$7,087,249$3,172,249
Redskins7$6,942,849$3,897,849
Chiefs10$6,365,237$2,015,237
Texans10$6,309,174$1,959,174
Giants8$6,267,517$2,787,517
Falcons8$6,257,380$2,777,380
Ravens10$6,150,913$1,800,913
49ers9$6,067,953$2,152,953
Jets6$6,046,013$3,436,013
Broncos10$5,915,045$1,565,045
Bengals9$5,840,929$1,925,929
Bears6$5,733,850$3,123,850
Panthers9$5,572,767$1,657,767
Seahawks11$5,570,814$785,814
Vikings7$5,502,921$2,457,921
Patriots9$5,482,042$1,567,042
Colts9$5,386,895$1,471,895
Packers9$5,348,200$1,433,200
Eagles8$5,286,611$1,806,611
Rams6$5,218,925$2,608,925
Steelers8$5,160,845$1,680,845
Cardinals8$5,112,281$1,632,281
Dolphins6$4,579,499$1,969,499
Cowboys7$4,559,006$1,514,006
Chargers6$4,492,053$1,882,053
Lions6$4,141,082$1,531,082
Bills6$3,216,255$606,255

Based on the above I would say three teams will likely need to think about tweaking their rosters over the next few months. Based on our current cap estimates the Cowboys and the Chiefs would both have under $250,000 in remaining cap room after signing rookies, which is a pretty tight number to work with. New Orleans would be about $2.8 million over the salary cap once rookies are signed so clearly there is work that needs to be done before July when they will begin to sign their top draft choices.

For those curious about teams that could absorb Adrian Peterson’s $12.75 million salary the list would include the Chargers, Falcons, Raiders, Bengals, Buccaneers, Packers, Titans, Browns, and Jaguars.

Any questions feel free to ask and make sure to check out our draft page which we will update soon for the new draft order. We’ll have some draft articles up over the course of the next few weeks as well and for fun head over to Fanspeak and use their really cool draft sims to run your own draft.

The Bills Approach to the Charles Clay Extension

The numbers are officially in on Charles Clay’s new contract with the Bills and I thought this deserved a closer look because of the structure of the contract. At the time he signed the contract Clay was designed a “Transition” player by Miami, which gave them the right to match any offer for Clay. Though Miami had already signed Jordan Cameron to replace Clay, the Bills proceeded to craft an offer sheet as if Miami might consider matching the offer so let’s examine just what they did.

Last year there were two attempts made to sign player’s to offer sheets that the other team would not match. The Browns were successful in taking Andrew Hawkins, a restricted free agent, away from the Bengals by utilizing a frontloaded contract structure that would pay Hawkins 80% of the total contract value in the first two years. The contract was designed in part to go against the grain of the pay systems used by the Bengals in their very deliberate negotiations, plus they knew the Bengals did not want to over-commit money to a position they already had a great deal of talent in.

The Jaguars then attempted to take Alex Mack from the Browns by using a void clause in the contract that would allow Mack to earn a pretty large sum in the first two contract years and then void the contract. This was not successful as the Browns quickly matched the offer sheet likely for two reasons. One there was nothing from an actual valuation standpoint that would make a team think twice about paying the player. Mack wasn’t being overpaid nor was the deal structured in a way to deter the Browns from matching it. Secondly the void clause was too far out such that it was of little concern to the team.

I wrote about the Mack contract last year before the Jaguars made an offer and said that the only way to take Mack from the Browns was to put together an offer sheet that had so much money up front the Browns would not match it. It was basically a big money play using a similar mechanism as the Hawkins one. That is clearly what the Bills did with Clay.

The annual value of Clay’s contract is just $7.8 million a year which is in the realm of the second tier tight end (Jason Witten, Vernon Davis, Jared Cook, etc…) market.  The high end market consists of all players above $9 million (Rob Gronkowski, Julius Thomas, and Jimmy Graham).  The Bills put Clay, in terms of expected cash flows, in that top contract tier to discourage the Dolphins from matching the offer.

Here is the way the cash flows of the more recent free agent contracts at the position break down:

PlayerYear 1Year 2Year 3Year 4Year 5
Clay$13,000,000$24,500,000$29,000,000$33,500,000$38,000,000
Thomas$15,100,000$21,200,000$28,300,000$36,900,000$46,000,000
Graham$13,000,000$21,000,000$30,000,000$40,000,000
Cook$8,000,000$14,000,000$21,000,000$28,000,000$35,100,000

The two year total for Clay is massive, as is the three year total. Considering the true length of most free agent contracts is three or less years, Clay is essentially now a tier 1 tight end. While Cook is his closest comparable in terms of total value and production the true terms of the contract are never even remotely close. Basically anyone negotiation on the team side for a tier 2 tight end would immediately throw the Clay contract out of any analysis because of this.

When we look at it as a percentage of 4 year contract value (to bring the players to the same level as Graham) we can really visualize just how crazy the contract would be for any team to match.

PlayerYear 1Year 2Year 3Year 4
Clay38.8%73.1%86.6%100.0%
Thomas40.9%57.5%76.7%100.0%
Graham32.5%52.5%75.0%100.0%
Cook28.6%50.0%75.0%100.0%

Clay will earn over 73% of the four year value in just two years. Everyone else in the 50% range. He’ll be over 85% by year 3, again well above anyone else and any normal contract structure. When you factor in some of the soft factors of the contract such as a big signing bonus ($10 million) and possible second signing bonus ($10 million) plus the guarantees it is simply an unmatchable contract.

For Buffalo to get value on the contract they will either need Clay to play for five years at a very good level (similar to a Greg Olsen/J. Witten type career I’d guess) or they need Clay to play at an extreme level for two of the first three years (Graham/Gronkowski level). There has been little in his career to show that he can do that, but that must be their expectation otherwise they would not have signed him to this contract.

Had Miami not signed Cameron to a contract would the Bills have had to go this high in salary to keep them from matching. Maybe. I think they could have come up with a contract that would benefit the team somewhat while still protecting their interests, but they would have needed to do something aggressive like this structure.

Once Miami signed Cameron I think using this type of contract was pointless but I would not be surprised if the Bills and Clay had agreed to this deal a week before and wanted to see who Miami did with their roster before finalizing the structure of the contract to best block Miami. In this case the high salary cap charge in year two was developed based on Miami’s projected cap situation next year with a no trade implemented to make certain the Dolphins could not trade him off to avoid the charge.

Odds are this will go down as one of the worst signings of free agency, but if Clay does in fact become an elite level player, credit the Bills for thinking somewhat outside the box with their approach to a contract which could have been nothing more than them negotiating for another team like occurred with the Jaguars last year. We’ll see if more teams use these structures in the future for players that are internally projected to be much better in the future than the past.

NFL Free Agency in Review: The Worst Value Contracts of 2015

With free agency basically finished I thought it would be fun to do a review of the contracts that I thought were the best and worst from a value standpoint. I’ll start off with the worst contracts of 2015 and take a look at the best ones in a few days. We can come back to this later in the year and see who did and did not justify what seems to be overspending to get a player the team really wants.

10. Dwayne Harris, WR, Giants (5 years, $17.1M, $7.1M guaranteed)

Giants owner John Mara said this year’s free agent group was “mediocre” when justifying the team failing to add any impact players, but I would much rather hear his opinion as to how Harris is worth more than $7 million guaranteed. Harris caught just 33 passes, in total, not per year, in four seasons with Dallas. He does have two touchdowns returning punts, but in what universe is that worth over $4 million a season? At his peak Devin Hester earned $5.5 million a year with less fully guaranteed. While that was some time ago, Hester was a different grade of returner and had some potential as a receiver. Last year Hester played for $3 million.  Paying Harris this much is basically the low cost equivalent of some of the higher ranked bad deals on this list.

9. Dan Williams, DT, Raiders (4 years, $25M, $15.2M guaranteed)

There were a number of good defensive tackles available this season but I don’t think anyone expected Williams to be the highest paid one not named Suh. Williams is basically a 40% snap player that has had one really solid year playing the run and a number of non-descript seasons as a Cardinal. In some ways this piggy backs off the awful contracts the Falcons gave to Paul Soliai and Tyson Jackson in 2013, but two wrongs don’t make a right. The whopping $15.2 million full guarantee shows some of the downside of the all cash budgeting system used by some teams. You have to over-guarantee the player to remove the protection often offered by the sunk cost of the signing bonus. While that can help with dead money down the line, it can hurt you if the player isn’t that good which is what the Buccaneers have learned using this system the last few years. Oakland has to hope things are better for them.

8. Jeremy Maclin, WR, Chiefs (5 years, $55M, $22.5M guaranteed)

Maclin is a fine receiver, but $11 million a year for Maclin is very steep. Maclin peaked at the perfect time for free agency, but when you look much closer at his numbers it was clear that they were fueled in part by an over-reliance by Nick Foles on Maclin. Once Foles was injured Maclin settled right back into his normal pace of being a 900 yard type receiver.  It is hard to see how Maclin also fits with the Chiefs who are a sideline to sideline team and Maclin’s best asset is going down the field. The team is going to need to have to find a way to get Alex Smith to trust his arm more if the team will get the expected return on investment. The contract is made worse by the structure which includes a large signing bonus due to the Chiefs cap woes.

7. LeSean McCoy, RB, Bills (5 years, $40.05M, $15.75M guaranteed)

I’m not sure I can understand the Bills logic in this trade and renegotiation. McCoy will be 27 years old this year and has amassed over 600 carries in the last two years and in two of the last three years has not been a special player. McCoy was scheduled to earn just over $10 million this year which somehow the Bills converted to over $16 million on an extension with $13 million coming in the form of a signing bonus, meaning they are going to have big cap charges on their hands when it is time to move on from McCoy. McCoy has over $26 million guaranteed in the event of injury which is quite the haul for a player the Eagles were likely going to release outright from his contract

6. Jermey Parnell, RT, Jaguars (5 years, $32M, $14.5M guaranteed)

There is nothing worse in the NFL than looking at a small sample of games and using that to justify big dollars on players, but that is the kind of nalysis that makes players dreams come true if they reach free agency. Parnell has started a grand total of 7 games in his first four years in the NFL, four of which occurred this year as he stood out as a replacement for an injured Doug Free. Whenever I see these players sign I am always reminded of former Jets right tackle Wayne Hunter who signed a relatively low cost contract as a fill in type and then became the target for every fan of the team since he was granted a full time starter role. Parnell is all that and more. He is the second highest guaranteed contract at the position and it’s not like he’s a 25 year old with high upside. He’ll be 29 this season and whatever you get this year is about as good as it will be.

5. Charles Clay, TE, Bills (5 years, $38M, $23M guaranteed)

I don’t have the full details on this one outside of Clay earning around $24 million in a two year period and that alone is enough to put him in here. Clay was a $4-5 million a year player until the Bills made it known that they were very interested in Clay’s talents. Miami played the game and put the transition tag on Clay, basically goading the Bills into signing a contract with Clay that Miami wouldn’t match. Apparently the Bills were oblivious to the fact that Miami had already signed another overpriced tight end and decided to use a ramped up version of the Andrew Hawkins frontloaded contract from last season. It took Miami all of one day to inform the NFL they wouldn’t match the offer sheet. The only reason it took that long was their hands were probably too sore from the high five celebrations for getting one over on Rex and the Bills to pick up the phone and inform the office that Clay was free to go. About a day after signing Clay and taking about how he’s impossible to cover, Ryan said he wants to run 50 times a game.

4. David Harris, LB, Jets (3 years, $21.5M, $15M guaranteed)

Harris scored his second mega-deal in four years with the Jets, benefitting again from being in the right place at the right time for a contract. Harris’ run defense is ultra-dependent on the play in front of him and he can’t cover anyone in the passing game. Harris is so slow that he once picked off a pass on the run and was chased down by a 270 pound Alge Crumpler. That was three years ago and somehow I don’t think he has gotten any faster since then. The Jets decided on a $15 million guarantee, which is 4th highest at the position and far and away the highest based on the years under contract. This is an example of a team having too much cap room and looking to give some of it to a respected locker room guy before paying a lot of people who were not members of the team the year before.

3. Julius Thomas, TE, Jaguars (5 years, $46M, $21M guaranteed)

Just when I thought the Jaguars could never do a deal worse than the Marcedes Lewis deal they went and did this. Thought it’s a new group of people running the show in Jacksonville apparently the driving factor remains to be touchdowns caught. Last season Thomas finished the year with under 500 yards and the Broncos made it no secret that they saw little benefit in bringing him back. He will earn more money in the first two years of his contract than Jimmy Graham, which is pretty absurd. Even more ludicrous is the lack of protection in the contract. Thomas has missed 28 games in 4 years. Guess how much money the Jaguars have protected for him not playing?  Zero. Yes in a league where Aaron Rodgers has money tied up in being active, Julius Thomas does not.

2Bryon Maxwell, CB, Eagles (6 years, $63M, $22M guaranteed)

The Eagles have been down this road before with the high priced secondary talent, but this one is even more of a reach than the Nnamdi Asomugha contract. In four years Maxwell has started just 17 games and has had the good fortune of playing with Earl Thomas and Kam Chancellor protecting him over the top, not to mention Richard Sherman on the opposite side.  I think it speak volumes that the Seahawks were willing to sign the player the Eagles cast off in Cary Williams rather than keeping Maxwell. Both are essentially equivalent players except the perception of both is dramatically different.  Free agency is often about marketing and Maxwell had very vocal support in the media. He’ll be tested very early in the season and need to prove he can do it without the great supporting cast around him.

1. Ndamukong Suh, DT, Dolphins (6 years, $114.375M, $59.955 guaranteed)

Quite simply this is one of the worst contracts ever given in the history of the NFL. For Suh to justify this contract he would have to play above the level of any defensive player to ever play football. Suh hasn’t even been the best defensive tackle in the NFL let alone the best defensive player. I’m not sure who even led this negotiation other than someone looking back at a bad Mario Williams contract from 2012 and applying a cap adjustment to that number to come up with the $19M+ figure the Dolphins used. This is a contract that Al Davis, Daniel Snyder and Marty Hurney all would have said was too extreme to sign. To invest this kind of money Miami is banking on this contract paying off from a marketing perspective both to the fans and to the rest of the NFL to help make Miami a football destination again. It didn’t work that way for Detroit with Suh so I’m not sure why it would be any different in Miami

Honorable mentions: DeMarco Murray, Chris Culliver, Tramon Williams, Antonio Cromartie,  Rodney Hudson, Buster Skrine, Brandon Flowers, Dan Skuta, Darrelle Revis, Shane Vereen

OTC Podcast 3/20: Free Agency Thoughts, Borland Retires, Hardy Signs and More

In this weeks podcast I:

– Share my thoughts on how some of the teams made out in free agency

– Look over the big money that came flying to this years free agents

– Discuss the Giants assertion that free agency was “mediocre”

– Breakdown the Greg Hardy contract

– Talk about Borlands retirement and why the 49ers have to recover the money

– Give some quick thoughts on the Charles Clay deal

– Look at what Big Ben’s new deal means for Eli and Rivers

– Share some NCAA thoughts and get to all your other questions on the cap

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The 49ers Options With Chris Borland

Linebacker Chris Borland’s decision to retire from the NFL after just one season, due to fears about long term health concerns, has sparked a number of debates on the subject. The initial debates were about what this meant for the game and how player’s might react in the future to news about the dangers of football, but I think now we are starting to consider what are the potential negative financial implications associated with the retirement and what San Francisco may do to recover money from Borland.

In the NFL players are often paid a signing bonus upon signing a contract. For draft picks it is almost a certainty that they will receive a signing bonus. As long time readers of OTC know, signing bonus money is subject to forfeiture over the life of the contract for a number of reasons. The most common reason is drug/PED suspension, but a lesser known provision allows a team to recover money if a player opts to retire rather than honoring his contract.

Often a retiring player has expressed his potential desire to retire at the time a contract is signed. In other cases the player is a well established veteran who has given the NFL, and usually that team, so many great years of service that the player is lauded on his way out the door. There are also a number of situations where retirement allows the team and player to graciously end a career rather than having to release the player whose skills have declined significantly. An injury can also cause a player to retire and many times such players will be released for procedural purposes, such as David Wilson of the Giants.

One notable case I can recall where money was returned was when the Broncos traded Jake Plummer to the Buccaneers and Plummer refused to report and retired. Tampa did go after the bonus money because they had zero relationship with Plummer to consider his decision reasonable. Barry Sanders retired abrputly at the peak of his career in part because he wanted to play on a more competitive team and also returned a significant portion of his bonus money. The Lions had only two years before signed Sanders to a lurcative extension and and no idea that he would consider retirement an option.

With Borland we have a very unique case. Borland wasn’t injured. He wasn’t a veteran. He hadn’t been traded/drafted by a team he refused to play for. He decided that the risk of playing in the NFL was not worth the potential financial reward.

I think there are many reasons that a player who expressed interest in the NFL would change his mind the way Borland did. The 49ers were not exactly the ideal location for any player in 2014. He looked around him and saw guys injured. The organization was in disarray with a head coach being pushed out the door, a QB under heavy scrutiny, and a player being kicked off the team for a domestic issue off the field. He played with the greatest linebacker of the last decade, who himself decide it wasn’t worth it anymore just a few days before. He still would have to play at least two more years  before there was any significant financial reward. These things can quickly change the view of being in the NFL after actually experiencing it.

But regardless of why he chose to do it or if it was some grand gesture on his part, the 49ers should strongly consider going after his salary. There is precedent that is going to be set with this case. While Borland received a very modest (by NFL standards) signing bonus of $617,436, we should not get caught up in the amount of the bonus. What if Jedeveon Clowney, who struggled with injuries and had questions surface about his play, decided to retire after one year after receiving a $14,518,544 signing bonus? Not only is there the opportunity cost lost to the team but this would be a major financial loss. While the numbers are dramatically different the approach should be the same.

This is the same kind of logic that has forced the NFL Players Association to fight for the salary of Aaron Hernandez, who is likely going to be convicted of murder.  It has forced them to defend Ray Rice and Adrian Peterson. While many people look down on it they are doing it because they need to do it for the benefit of the other 2,000 or so player who play in the NFL. For as bad as it may look to to try to obtain nearly $4 million for Hernandez to likely use on lawyers, had they not acted on his behalf the NFL could potentialy throw aside contractual guarantees for a number of reasons.

The NFL has to protect the interest of the teams in this case while also protecting the contract structures of future draft picks. If Borland’s decision becomes considered acceptable around the NFL, teams will no longer be willing to use the signing bonus as a large first year payment for the player.  Instead they will increase yearly salaries and guarantee the compensation in order to protect it from being paid in the event of early retirement. That defers the time it will take for a player to earn his actual salary which is certainly not good for the players.

The 49ers are entitled to 463,077 of Borland’s salary, which is 3/4 of his signing bonus, if Borland does not reconsider his decision to retire. Recovering $155,468 of that money should be easy. That is the amount of Peformance Based Pay that was earned by Borland for 2014. The 49ers will simply withhold that payment as a form of recovery. The other $307K will need to be turned over by the player unless there is any other cash witholding in the possession of the 49ers.

Will 2015’s Free Agency Impact Upcoming NFL Contract Negotiations

This has probably been the most fast paced free agency period in recent memory. With Greg Hardy signing today with the Cowboys, the final tier 1 free agent is off the market, but in looking at who is left I would say that most of our second tier players are also gone and the NFL is already into Phase III of free agency. Normally that happens in another week or two.  Instead teams were incredibly aggressive, signing some very expensive contracts within days of the start of free agency, and I wonder if this will potentially have an impact on player decisions in years to come.

Normally if players are presented with an opportunity to sign an extension in their walk year they usually do so as long as they don’t feel that are being low balled. Football is a violent game and one play can end a career without another dollar being earned. That usually gives the team a great deal of leverage in negotiations.  To add to that leverage is the threat of the franchise tag that can block a player from free agency. Plus free agency can be a bit of a crapshoot as teams seem to go in cycles with money they allocate to certain positions.

But this year was something unique. With the cap rising at a rapid pace and teams looking to meet cash minimum spending requirements, free agency was like winning the lottery for many players. Contract after contract came in and the prices were outrageous compared to where things were even just a few months ago. That’s not to say this was the first time this has ever happened but it was one of the first times it seemed to hit on so many different positions.

In a rarity there were actually two players generally considered best at position that were able to hit free agency due to contractual manipulations that prevented their former teams from  applying that tag. Ndamukong Suh created a media firestorm around him that saw the Dolphins give him a contract that was closer to that of a top tier quarterback than a defensive tackle. Darrelle Revis followed that up with 39 million fully guaranteed from the Jets, who were desperate for help in the secondary.

The last time we had players of that caliber hit free agency was back in 2012 when both Mario Williams and Peyton Manning were available. Manning didn’t want to play the game and settled on a reasonable price to go to Denver while Williams signed a record breaking contract in Buffalo where desperation from the Bills pushed the price more than the player’s ability.  It was similar to the Dolphins push for Suh.

But it was not just the superstars cashing in. Byron Maxwell signed for over $10 million a season. Players who were castaways in 2014, like Antonio Cromartie and Brandon Flowers got massive contract. Jeremy Maclin, who has had one 1,000 yard season in his career signed an extremely player friendly contract worth $11 million. The tight end market became ridiculous with Julius Thomas hitting $9.2 million  year and Charles Clay and Jordan Cameron getting over 7 million a season. This just a year after the Saints fought with Jimmy Graham over making him worth more than $9 million. There is no comparison between the level of play.

Rodney Hudson became the highest priced center in the NFL while Mike Iupati reached the $8 million  year mark at guard. King Dunlap received a $7 million contract from San Diego. Devin McCourty received 9.6 million a year with a tremendous $22 million full guarantee. The only positions that for some reason had a problem hitting the big money were the pass rushers.

Looking at how things went down this year I have to believe that players will not concede on the summer time and in season extensions that usually happen. Tampa Bay defensive tackle Gerald McCoy, who is as good if not better than Suh, took a deal that pays him 6 million a year less than Suh. Chris Harris signed for less money and significantly less guarantees than a veteran like Flowers. These were players who were weeks away from free agency when they opted for their contracts.

Looking forward to 2016 there are a number of potential big time free agents. We have two premier quarterbacks that are going to be free agents in Eli Manning and Philip Rivers. Both players will cost a great deal to franchise and it seems clear after Ben Roethlisberger’s most recent extension that both will surpass Aaron Rodgers contract whenever they sign. If they hit free agency they may blow that contract away.

The big franchise players from this year of Justin Houston, Dez Bryant, Jason Pierre-Paul, and Demaryius Thomas should all refuse to sign their tenders unless they receive a no franchise tag designation for next year. If the team is going to extend them it’s going to have to be at free agent dollars not “we hold your rights” kind of prices. Given some of the deals signed this year these players should all receive close to record breaking contracts.

Some players likely cant avoid the tag- AJ Green, Julio Jones, Muhammad Wilkerson, Cam Newton, Russell Wilson- which is a sign of some of the small details in the new rookie wage scale that the union missed out on, but perhaps more of them will be more accepting of the franchise tag possibility if they want to run a two year risk.

The money isn’t drying out anytime soon. There are plenty of teams that didn’t “win” in free agency and will carry over millions to 2016 that they will try to spend. More and more teams are using short term veteran deals and favorable extension terms to go more year to year on the cap with the ability to turn over rosters far faster than in the past and to do it without having large amounts of dead money to compromise their spending.

Normally I would say that risk is far too high for the player to play things out, but in seeing this year’s free agency spending spree the reward is getting much bigger than it had been in the past. It should change the complexion of some of the extensions that we have seen happen in the past that are clearly favorable for the team.  Free agency may already be winding down but the next 6 months might be a very interesting time for contract negotiations for some big name players.

Looking at the Greg Hardy Contract With the Cowboys

Defensive end Greg Hardy signed a contract today with the Dallas Cowboys, officially taking the last monster free agent off the market. It is a very unique contract that is designed to protect the team in the event Hardy remains on the exempt list or suspended while offering both salary cap and actual cash protection.  So let’s look at the way the contract works.

The base value of Hardy’s contract is $11,311,000 with the potential to max out at $13,111,600. Why such an oddball number?  The $13.116 million was Hardy’s salary last year on the franchise tag. Being that he was will last year to sign that contract it was likely an easy to agree to number. The base value is made up of a $750,000 base salary, 1,311,600 workout bonus, and $9.25 million roster bonus that is earned in weekly installments for being on the active 53 man roster.

The roster bonus is the most important part of this contract. Hardy spent all but the first two games of the season on the exempt list, so for salary cap purposes the NFL will only consider 2/16 of Hardy’s roster bonus against the salary cap, a charge of just $1.5 million. This fully protects the Cowboys interests while the NFL decides what to do with Hardy during the season.Because it is tied into being on the 53 man roster any injury, PUP, NFI, exempt, or suspension designation will prevent Hardy from earning the money. Had the money been in the base salary it would be more protected from the injured or PUP lists. That is likely the tradeoff for the Cowboys taking a risk on signing a player who is a PR problem for the NFL right now.

The odd workout bonus is really what should be considered the signing bonus of the contract. This is the same amount that Hardy received from Carolina last season as a salary advance, so again an easy negotiating point. Once Hardy is reinstated he should be able to participate in offseason workouts since any suspensions won’t take place until the games begin in the regular season. Once Hardy’s earns his workout bonus that money can not be attacked in the event of suspension or any other off the field issues that could trigger an automatic forfeiture of bonus money. It is his to keep provided he shows up for the offseason workout prorgam.

All told I am calcuating his cap charge at just $3,217,850 (It will be about $2.6 million if I am incorrect about his exempt date), which fits him easily under the cap…for now. Yes there is a catch to this contract that we need to consider. When we deal with per game roster bonuses that do not count against the salary cap in the offseason, we have to be prepared for taking those charges on in the regular season.

For each week Hardy is active beyond the two week expectation his cap charge will grow by $578,125. If he plays all 16 games that means he will eventually count for the full $11.311 million against the cap in 2015. Obviously Dallas does not have the room to deal with that at the moment.

I would imagine that this puts Brandon Carr on the chopping block for a June 1 cut designation (or simply to be cut in the summer). Releasing Carr after June 1 creates $8 million in cap room, which would offset this potential charge for Hardy. While I would not expect Dallas to do anythin until the Hardy situation with the league is resolved, they should have all the leverage to approach Carr now about a pay cut if he wants to remain in Dallas. Another option is restructuring Tony Romo’s contract during the season as the need arises for more money.

So it is definitely a creative contract that allows the team to bring in a potential devastating pass rusher now and then come up with a way in a few months to deal with the potential cap charges assoicated with the move.