Opinion on Ryan Tannehill’s New Contract

So, here’s how it works out when you break it down by the years:

Figure 1: Ryan Tannehill’s Contract and Projected Cap Figures

(Remember: Click on the figures to open them up and enlarge them.)

Ryan Tannehill Contract Figures

So on Tuesday, when I say this contract, I was the guy I HATE, the Stephen A. Smith type, provocative assclown who thinks they know everything. I tweeted out, “Tannehill coule be a terrific QB, I believe in him, but Tannenbaum just paid him like he’s already arrived.” To be honest, I kind of took my pent up annoyance with Ndamukong Suh’s current contract and let that spill over into this situation. Don’t get me wrong, I still think Tannenbaum doesn’t understand the percentage of the salary cap analysis of the cap and that Suh’s Contract Cripples Dolphins (don’t you just hate people who do bad things to dolphins?), but this Tannehill contract is very good. Continue reading Opinion on Ryan Tannehill’s New Contract »

@ZackMooreNFL on Cameron Heyward via USA Today’s new Steelers Site!

@NealCoolong, formerly of Behind the Steel Curtain, now runs a Steelers website under the USA Today banner named SteelersWire.USAToday.com, which is now the #1 spot for Steelers information on the Internet. He recently contacted me about answering some cap related questions about the Steelers for a piece. It’s a very interesting move by USA Today to have a site like this for each team and I think it’s a great idea for them to help build a credible voice in each marketplace, so I hope they continue to expand on this. Continue reading @ZackMooreNFL on Cameron Heyward via USA Today’s new Steelers Site! »

2015 ECV Expected Outcomes: AFC North

2015 ECV Expected Outcomes:  AFC North

NFC East   |   AFC East

NFC West   |   AFC West

NFC South   |   AFC South

NFC North

As a reminder, the percentages listed in the second column represent the likelihood that the team will keep the player under contract for the 2015 season.  Also, keep in mind that ECV has no idea whether or not the player is talented, valuable, or healthy.  ECV also does not consider the salary cap situation of the team.  I did not run the model for 2011 draft picks whose fifth year options have been picked up.  I view these as one year contracts for which the team has already made its decision.  As a reminder, a pay cut is treated the same as a release.

I only ran the model for players with cap numbers of $2 million or more.  First, the model may break down as the numbers involved become very low.  At a certain point, the cap consequences become secondary to whether or not the player is worth a roster spot.  Second, at this point I am doing everything manually, so it was necessary for the sake of just getting all of this onto the website.  As the offseason progresses, I will update the outcomes in the last column.

Baltimore Ravens:

PlayerExpected OutcomeCut?Correct?
Eugene Monroe98.4%NO
Terrell Suggs98.2%NO
Joe Flacco98.1%NO
Dennis Pitta97.8%NO
Jeremy Zuttah95.1%NO
Elvis Dumervil76.1%NO
Lardarius Webb72.5%NO
Jacoby Jones71.9%NO
Daryl Smith56.2%NO
Marshal Yanda37.1%YES
Haloti Ngata36.3%YES
Steve Smith24.8%YES
Chris Canty22.1%YES
Sam Koch17.9%YES

Pittsburgh Steelers:

PlayerExpected OutcomeCut?Correct?
Ryan Shazier99.9%NO
Jarvis Jones98.3%NO
Maurkice Pouncey98.2%NO
Marcus Gilbert95.6%NO
Cortez Allen95.2%NO
Antonio Brown88.5%NO
Mike Mitchell87.8%NO
Shaun Suisham71.4%NO
David DeCastro71.2%NO
Lawrence Timmons61.9%NO
Heath Miller61.2%NO
Troy Polamalu46.6%YES
Cam Thomas44.2%YES
Steve McLendon39.5%YES
Ramon Foster36.9%YES
Ben Roethlisberger22.8%YES

Cincinnati Bengals:

PlayerExpected OutcomeCut?Correct?
Tyler Eifert97.4%NO
Andy Dalton97.0%NO
Carlos Dunlap95.2%NO
Vontaze Burfict94.9%NO
Geno Atkins93.8%NO
Dre Kirkpatrick81.0%NO
Domata Peko74.0%NO
Kevin Zeitler71.0%NO
Kevin Huber55.1%NO
Andre Smith46.0%YES
Leon Hall36.2%YES
Vincent Rey35.9%YES
Wallace Gillberry33.1%YES
Reggie Nelson27.4%YES
Adam Jones20.8%YES
Robert Geathers19.7%YES
Andrew Whitworth19.7%YES

Cleveland Browns:

PlayerExpected OutcomeCut?Correct?
Justin Gilbert99.9%NO
Joe Haden99.4%NO
Alex Mack95.6%NO
Barkevious Mingo93.8%NO
Donte Whitner83.0%NO
Karlos Dansby79.7%NO
Joe Thomas71.4%NO
Andrew Hawkins67.0%NO
Paul Kruger64.4%NO
Desmond Bryant63.8%NO

Introduction Part 1:  Justification, Theory, & “Contract Analytics”

Introduction Part 2:  Inputs & Outputs

Introduction Part 3:  Contract Comparison

Introduction Part 4:  Salary Cap Budgeting

Introduction Part 5:  Frequently Asked Questions

Expected Contract Value was created by Bryce Johnston and Nicholas Barton.

Bryce Johnston earned his Juris Doctor, magna cum laude, from Georgetown University Law Center in May 2014, and currently works as a corporate associate in the New York City office of an AmLaw 50 law firm.  Before becoming a contributor to overthecap.com, Bryce operated eaglescap.com for 10 NFL offseasons, appearing multiple times on 610 WIP Sports Radio in Philadelphia as an NFL salary cap expert. Bryce can be contacted via e-mail at bryce.l.johnston@gmail.com or via Twitter @eaglessalarycap.

Nicholas Barton is a sophomore at Georgetown University. He intends on double majoring in Operations and Information Management and Finance as well as pursuing a minor in Economics. Currently one of the leaders of the Georgetown Sports Analysis, Business, and Research Group, Nick consults for Dynamic Sports Solutions, an innovative sports start-up that uses mathematical and computational methods to evaluate players. He also writes for the Hoya, Georgetown’s school newspaper, and his own blog, Life of a Football Fan. Nick can be contacted via e-mail at njb50@georgetown.edu.

Identifying Value in the NFL Running Back

Last week we looked at wide receivers and some various ways to look at pricing and value. This week I wanted to look at running backs but from an overall standpoint. Rather than just veterans we’ll also consider rookies here as we again look to answer whether or not it’s worth signing or using a high draft pick a running back.

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The Metrics

I wanted to break down the group into two primary categories. One is very simple- absolute production which is simply yards gained on the ground plus yards gained through the air (yards from scrimmage).

The second category looks at what I call player generated yards (PGY). PGY is an attempt to measure what benefit is actually brought by the runner and utilizing him to carry the football. To calculate this I’ll again turn to the raw statistics maintained by Pro Football Focus.

The way we calculate PGY is as follows:

(rushing yards- offensive line yards) + (yards per target/avg. yards per target)

I think rushing yards is pretty self-explanatory as is the yards per target portion of the equation.  For the middle part of the equation I am attempting to separate the performance of the runner from the performance of the offensive line. To do this we calculate the yards before contact (ybc) per attempt for each team and then compare the players ybc/att to his teams ybc/att on carries by other backs. This gives us some approximation of how much more worth he brings to the line than the others on his team.

For example 651 of Le’Veon Bells yardage came before contact, about 2.25 yards per carry.  The remainder of the Steelers roster averaged just 1.22 yards before contract per carry. Based on that figure we attribute 351.7 YBC to his offensive line and 298.3 to Bell. So Bell is considered to have generated 1004 yards on the ground and another 214 yards through receiving.

By no means is that perfect, and for players like Bell and DeMarco Murray who make up an extremely high percentage of their teams’ carries the numbers are going to be skewed more than others since we have such a reduced sample size of other players. But at least it can put the performance somewhat in context.

In terms of productive yards the top 5 players were Bell, Murray, Arian Foster, Justin Forsett, and Eddie Lacy (808). Once we factor receiving yards into it our top 5 is Bell, Murray, Lacy, Foster, and Marshawn Lynch. Players who generated the most production per opportunity (attempts plus targets) are Jeremy Hill, Bell, Lacy, Frank Gore, and Foster, among the higher use players.  On limited snaps Roy Helu was on top of the league, primarily from his passing game performance

Veteran’s vs Rookies

While for many positions there is a debate about expensive veterans versus cheap rookies, no position is as strongly debated as this one. Looking at the numbers it would seem to be a knockout blow that the rookie is the far better value player.

PGYPGY/OYFSCap Charge
Rookie329.81.92775.0$973,564
Veterans390.11.85933.88$3,737,029
Vet Benefit18.3%-3.7%20.5%283.9%

Veterans are producing at about a 20% higher rate than their rookie counterparts, but on a cost basis teams are paying nearly three times the cost in cap dollars for those veterans. On top of that it seems as if the added yardage is from teams simply giving veterans more chances with the football as they are basically no more or less productive than players who have been in the NFL for less than four years.

Our split is quite even with nine rookies and eleven veterans making up the top 20 in player generated yards and yards from scrimmage, so the veteran benefit is certainly limited.

Calculating Value

To look at value we are going to break the market down into two categories- veterans and rookies. For each category we will calculate the average salary cap dollar paid in 2014 for each productive yard and actual yard gained and multiply that by a player’s production to determine their actual worth in the year.

Here is the veteran market:

NamePGYYFSActual CapPGY WorthYFS WorthAvg. Cap Change
Arian Foster898.51573$8,500,000$8,607,636$6,294,548-$1,048,908
Marshawn Lynch836.61677$8,000,000$8,015,185$6,710,717-$637,049
Frank Gore810.31214$6,450,000$7,763,318$4,857,967-$139,358
Justin Forsett736.61533$570,000$7,056,719$6,134,483$6,025,601
Jamaal Charles660.51329$9,633,333$6,327,948$5,318,153-$3,810,282
Joique Bell578.71182$2,300,000$5,544,264$4,729,915$2,837,089
Matt Forte573.61846$7,900,000$5,495,532$7,386,991-$1,458,739
Jonathan Stewart522.8981$4,585,000$5,008,723$3,925,589-$117,844
Chris Ivory432.4943$1,750,000$4,142,308$3,773,528$2,207,918
LeSean McCoy416.01478$9,700,000$3,985,093$5,914,394-$4,750,256
Rashad Jennings404.7865$1,312,500$3,876,780$3,461,401$2,356,590
Steven Jackson353.8855$4,166,666$3,389,862$3,421,385-$761,042
Chris Johnson338.5814$2,750,000$3,242,852$3,257,319$500,085
Ahmad Bradshaw305.5725$486,353$2,926,759$2,901,175$2,427,614
Shonn Greene270.4405$3,233,333$2,590,289$1,620,656-$1,127,861
Anthony Dixon249.2481$1,016,666$2,387,669$1,924,779$1,139,558
Fred Jackson246.41019$3,850,000$2,360,191$4,077,651-$631,079
Darren Sproles215.2716$2,000,000$2,061,449$2,865,160$463,305
Pierre Thomas195.8601$1,570,000$1,875,496$2,404,974$570,235
Toby Gerhart152.8512$4,000,000$1,464,339$2,048,829-$2,243,416
James Starks151.5480$1,384,375$1,451,809$1,920,778$301,918
Reggie Bush129.6550$2,944,117$1,241,794$2,200,891-$1,222,775
Ben Tate114.3392$1,772,059$1,094,613$1,568,635-$440,435
Darren McFadden94.5742$1,718,000$905,483$2,969,202$219,343
Donald Brown63.6434$1,833,333$609,585$1,736,703-$660,189

As we look at this model we are more less seeing that the maximum value in any given year that should be given to a running back is about $8 million and with that we are keeping our fingers crossed that we have a real workhorse player because if you get stuck with LeSean McCoy you end up with a major waste of cap space in a season.

Our average top 10 cap charge is $6.678 million and the average performance is worth about $1.56 million less than that. That should indicate a target value at the position of $5.2 million a year for the players projected to be the best in the NFL.

On the low end of the spectrum our true value is about $2.67 million, which I would think is the maximum value one can give to a projected low tier back. You may catch lightning in a bottle like with Forsett but it prevents you from getting stuck with a Toby Gerhart or Shonn Greene type.

Here is our look at rookie performance using the same criteria.

NamePGYYFSActual CapPGY WorthYFS WorthAvg. Cap Change
DeMarco Murray1015.92261$1,596,625$1,340,335$2,840,200$493,643
Le’Veon Bell1218.42210$936,500$1,148,437$2,776,136$1,025,786
Eddie Lacy914.71567$771,003$870,923$1,968,418$648,667
Alfred Morris455.81233$600,775$859,113$1,548,858$603,211
Lamar Miller690.31363$691,500$779,402$1,712,160$554,281
Andre Ellington363.71058$520,966$776,450$1,329,028$531,773
Mark Ingram417.11109$2,359,875$755,784$1,393,093-$1,285,437
Jeremy Hill807.01339$682,473$746,927$1,682,012$531,996
Andre Williams306.2850$533,400$720,356$1,067,745$360,650
Giovani Bernard313.61029$1,193,941$658,358$1,292,599-$218,462
Matt Asiata175.0882$570,000$655,406$1,107,942$311,674
C.J. Anderson539.11174$499,166$649,502$1,474,744$562,957
Tre Mason457.3920$579,375$602,265$1,155,676$299,596
Branden Oliver392.1852$420,000$599,313$1,070,257$414,785
Trent Richardson206.6740$2,252,708$563,885$929,566-$1,505,982
Alfred Blue198.3626$449,483$546,172$786,362$216,784
Terrance West340.4737$551,850$540,267$925,797$181,182
Bishop Sankey309.4708$698,818$513,697$889,368$2,715
Shane Vereen198.3838$1,101,275$495,983$1,052,670-$326,948
Denard Robinson358.7706$527,579$481,222$886,856$156,460
Isaiah Crowell369.9694$420,000$478,269$871,782$255,026
Knile Davis129.9610$646,504$460,556$766,264-$33,094
Doug Martin204.8564$1,851,144$454,651$708,480-$1,269,579
Jerick McKinnon262.8673$521,221$442,842$845,402$122,901
Ronnie Hillman161.8580$807,708$407,415$728,579-$239,711
Bobby Rainey340.7721$570,000$392,653$905,699$79,176
Benny Cunningham144.6580$498,333$336,560$728,579$34,236
Latavius Murray310.1567$446,550$307,037$712,248$63,093
Dan Herron274.0524$570,000$301,133$658,233-$90,317
Devonta Freeman180.0482$541,106$292,276$605,474-$92,231
CJ Spiller179.6431$5,916,666$292,276$541,409-$5,499,824
Carlos Hyde134.2401$669,396$292,276$503,724-$271,396
Zac Stacy158.4450$539,125$289,323$565,277-$111,825
Stevan Ridley146.7360$939,750$289,323$452,221-$568,978
Bernard Pierce84.2379$708,986$289,323$476,088-$326,280
Robert Turbin244.6496$684,114$274,562$623,060-$235,303
Jacquizz Rodgers86.9390$1,478,750$274,562$489,906-$1,096,516
Jonas Gray233.6419$271,765$271,610$526,335$127,207
Charles Sims107.2375$535,964$265,705$471,064-$167,580
Khiry Robinson216.2425$495,333$250,944$533,872-$102,925
Roy Helu346.6693$1,548,563$247,992$870,526-$989,304
Ryan Mathews254.6402$3,612,000$247,992$504,980-$3,235,514
Stepfan Taylor106.0287$545,125$224,373$360,521-$252,678
Lorenzo Taliaferro154.0396$481,381$221,421$497,443-$121,949

The reason our value numbers are so low here compared to veterans is because of the relative low cost of a draft pick. Murray, for example, would be worth around $9 million on the veteran scale because he is so much more impressive than a veteran player. But compared to this group of players it’s not realistic to expect.

As we look at rookies I think we are seeing a maximum contract value of just under $3 million for a rookie player, a number that is primarily based on heavy usage. If we consider both categories our max target will be $2 million. Our average top 10 performance based value is in the ballpark of $1.3 million.

The top 10 cap hits are $2.3 million though that number may be a bit skewed by CJ Spiller and Ryan Mathews playing under old CBA contracts, though it should be somewhat offset by the Trent Richardson trade. However the productive value of these players was under $800,000, making them essentially worthless picks. The value of the bottom 10 players, all basically playing at the $420K minimum was $648,000.

So how do we use these numbers?  In looking at the max values it would indicate that the highest any running back should be drafted is around number 25 overall and even that is a risky pick. In general teams should hold off on players until the 8th or so pick of the 2nd round to minimize your waste at the position.

Summary

I’d say the trends that we are seeing in the NFL right now certainly correspond with the performance. There is still some dead weight too clear out with veteran contracts that were signed a  few years ago, but teams are being safer now than before.

I think the main takeaways here are for teams to

  1. Strongly consider letting free agents walk away if they will cost any more than $5 million a season over the expected contract life
  2. Hold off on drafting running backs until the top 10 of the second round is complete
  3. Don’t be fearful of drafting backs in the 3rd and 4th round in hopes of finding a gem in UDFA.
  4. Don’t overpay low tier veterans just because its “cheaper than the alternative”. It’s still throwing money away especially when signed for more than one year.
  5. Identify veterans that will sign for $2 million or less that may have something left in the tank it may be worth the risk.

For free agents like Murray, Mathews, and Spiller teams need to proceed with caution. Bringing Murray in below the values of players like McCoy and Matt Forte may seem unfair, but it is the smart move for a team to make to protect their downside since the upside is so limited. For the latter it’s going to be low cost contracts to minimize the risk.

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Examining the Upcoming Free Agency of DeMarco Murray

The Dallas Cowboys will have an interesting contractual decision on their hands with running back DeMarco Murray. Murray is on pace for a 2,000 yard season, a feat just 6 players have accomplished since 1980. He has become the focal point of a Cowboys offense that has become a throwback to the decade where teams featured one running back and the offense flowed through that player. Set to be a free agent the question is how should the Cowboys approach the contract.

The Running Back Market

There is really only one massive contract for running backs, the contract for Adrian Peterson which averages just over $14 million a season. Prior to receiving that contract Peterson’s top season saw him run for 1,760 yards and he had run for no less than 1,298 yards in a season. Former Titans’ running back Chris Johnson had maxed out at 2,006 yards which also led to a contract worth around $14 million a season. Johnson was released this past year and its likely Peterson will be released following this season.

The secondary tier begins with LeSean McCoy of the Eagles at $9 million a season. McCoy earned his deal following a 1,300 yard season that he combined with contributions in the passing game. Arian Foster earned a similar number based on a 1,600 yard season at the age of 24. Matt Forte ranks third in the tier with $7.6 million a year, bringing an all around game to the table. His max rushing yardage was just over 1,200 yards but he was also consistently adding around 500 receiving yards a season.

Free agency has not been kind to runners who hit the market in the last two years. Chris Johnson and Steven Jackson topped the list at $4 million a season. Those players were considered proven commodities, but with a lot of wear and tear on their bodies. Those figures were nearly matched by completely unproven players Toby Gerhart and Donald Brown at $3.5 million a season.

With Johnson’s big contract void and Peterson’s soon to be, those two data points should be essentially useless for Murray. The secondary tier will likely shrink considerably this offseason as almost every one of those players could be a cap casualty following the season. The Chiefs and Seahawks did give moderate extensions to Jamaal Charles and Marshawn Lynch to make certain they reported to training camp, but neither contract indicated a long term commitment to either player.  Most likely that will be the tier that Murray will look to fit into with the Cowboys.

The question the Cowboys need to ask is should he fit there?

Is Murray’s Dominance Sustainable?

It’s easy to look at Murray’s numbers and say you have to pay him because the risk of losing him is too great and if he goes the offense may go with him. Thus you simply pay him more than the highest paid player, McCoy, at the position. But when you make statements like that you have to try to gain a better understanding of what Murray is expected to do in the future, rather than overpaying for the present.

The reason many teams began to shift away from the runner dependent systems was because of the inability to sustain the big numbers they were put up at a young age. Millions of dollars would be invested in a player only to have the player’s production rapidly fall off a cliff with no possible out for the team due to the cap charges associated with releasing the player.

There are 43 players who began careers in the NFL after 1980 who posted seasons of more than 1,500 rushing yards and continued to play football (Robert Smith retired following his big season).  13 of those players produced a second season of at least 1,500 yards (Arian Foster is could be number 14 this season if his body can hold up). So it would be fair to say that a back that produces 1,500 yards has around a 30% chance of doing it again. Just 8 of the players produced at least a third 1,500 yard season. Here is the breakdown of 1,500 yard rushers’ future performance.

1500 yard rushers

However, there is another factor that should be considered here and that is age. Many of the players on this list produced many of their dominant seasons in their early 20’s. Murray is already 26 years old. Just 10 players had a second season of 1,500 yards at the age of 27 or older. The only players to have at least a third 1,500 yard season at those ages were Barry Sanders and Tiki Barber.  Eric Dickerson was on pace for that type of year in the strike-shortened “scab” season.

There were 21 players in the NFL that had their first 1,500 yard season when they were 26 or older. Of those players just 5 did it again. Those players were Curtis Martin, Larry Johnson, Priest Holmes, Tiki Barber, and Shaun Alexander. I think when you factor age into play you would consider a 23% chance of hitting the 1,500 yard mark one more time and a very small chance (less than 5%) of getting there a third time.

How Many Good Seasons Should Dallas Expect?

For the purpose of this discussion I’ll adjust the 2014 stats and the strike seasons to represent a 16 game season. While we can look at the entire list of 43 players, I think we are better off filtering it down to players who are more representative of Murray’s age. I want to look at players whose first 1,500 yard season came between the ages of 25 and 28 and we want to see how they performed over the next five years of their careers. The reason for the five year period is because this should be the maximum contract length given to any player in the NFL that is not a quarterback.

I think most people have always considered a good season by a running back to be 1,000 or more rushing yards.  We can pretty much bank on Murray having at least one season of 1,000 or more yards. Of the group the only player to not gain 1,000 yards at some point after their first 1,500 yard season was Maurice Jones-Drew (McCoy is on pace to do so this season).

Getting a second 1,000 yard season might be more difficult. Of the 24 names who have had a second shot at 1,000 yards only 11 actually produced them. So there is less than a 50% chance that we can plan on Murray being able to give us two years of 1,000 yard production.

It gets bleaker after that. If we look at three years of 1,000 yard production we get Curtis Martin and Fred Taylor. Martin joined the 1,500 yard club when he was 28 years old while Taylor did it at 27. The only player to produce 1,000 yards four times after attaining his first 1,500 yard season in his mid 20’s was Jerome Bettis of the Pittsburgh Steelers. Bettis was a plodder of a back and averaged around 3.8 yards per carry in most of those seasons. It is unlikely that any other team in the NFL would have given him the attempts needed to reach that number.

1000 yard rushers

When can those seasons be expected?

This is also an important question because it gives us some idea of perhaps how best to structure a contract to build in our optimum exit points. Here is the performance breakdown of the set of players used above in the five years following their 1,500 yard season.

1500yard rusher breakdown

What this tells me is that if Murray is to have another great season it is most likely going to happen in 2015. There is a 40% chance that he is going to come in at over 1,200 yards(a majority of those seasons are over 1,300 yards) and a 68% chance I’ll get over 1,000 yards from him.

In 2016 and 2017 the odds begin to move out of Murray’s favor. We have around a 15% chance of the great season and around 40% chance of just having a good season. Most likely if he is to have a second 1,000 yard year it will come in 2016 with a decline in 2017.

2018 and 2019 are not years where we would really consider Murray an asset. The odds are strongly against another 1,000 yard season  and the odds are strongly in the favor of producing less than 600 yards. At that age he could be unproductive or simply looking to retire from the wear and tear on his body.

Setting the Price

I want to work from the bottom up with Murray, so the first thing I want to do is determine how much I will guarantee him upon signing his contract. Based on the performance of past players I want to look at a 3 year value for Murray, which is going to equal the guarantee I offer him on a 5 year contract. The guarantee is the most important part of the deal because it will define much of the structure since I need to have years 4 and 5 be completely escapable with a reasonable dead money total.

For each tier of yardage I’ll set a price based on past salaries. Normally I would go in year by year and use different values(contract structures are often a waterfall with the largest payments coming in year 1 and gradual reductions throughout), but for illustration I will just use one value per yardage category.

I will value a 1,600 yard season at $14 million, which is the top of the market even though that may not exist anymore. The 1,200 yard season I will factor in at $10.5 million a year, representing a raise from the current McCoy/Foster 3 year value levels of $10M to account for the increase in salary cap. A 1,000 yard season I’ll consider being worth $5 million, based on the Johnson and Jackson deals and between 800 and 999 yards being worth $3.5 million, which is around what teams will pay for the lower level talent. The next category has limited benefit so we will call that $1.5 million and for less than 400 yards I will only use $450,000, the average cost of a rookie the next three years.

If we multiply each percentage by the salary we get the following chart:

1500 yard rusher salary

$14.5 million is what I would call my reasonable price to guarantee Murray based on my three year expectation level.  I feel like I should be ok with that figure given the projected performance. That number alone is not going to get a contract done which is why I would only use it to set my guarantee. In general a full guarantee at the position should represent about 46% of the total contract value. So my offer to Murray is going to need to be somewhere in the vicinity of $31.5 million over 5 years.

If I factor in the 2018 and 2019 seasons I can bring my guarantee up to about $16.5 million. I would raise the amount guaranteed at that point to 48% and call it a $35 million contract. So I would be working between $31.5 and $35 million over 5 years. I would not go over that under any circumstance, and really anything above the $31 million I would probably walk away from. I’d likely consider 70% of the three year value to be guaranteed and I would raise that to 75% if I elected for the higher contract value, which is similar to what the Bears did with Forte a few years ago.

There are tons of cap possibilities with the contract depending on tolerance for cap hits in 2015 and 2016 versus the expected release date of 2017 and virtually guaranteed release date of 2018. Here would be a potential structure of the $31.5 million contract:

1500 yard contract breakdown

In this contract Murray receives a $5 million signing bonus, fully guaranteed 2015 salary and a partially guaranteed salary in 2016. In 2017 the cost to walk away is low enough that I can do that if necessary. My hope in the contract is that we can get two good seasons out of Murray. If I get one 1,200 yard season (preferably in 2015) and then a 1,000 yard year the following season I pretty much made my money back. I can then choose to chase a dream in 2017 or just release him.

The other course of action is to simply apply the franchise tag to Murray next year. The franchise tag will probably be in the ballpark of $10.5 million, which is similar to the cash value I had above in the first contract year. While that may be overpaying, I know that the best chance I have with him for another strong year is in 2015. He has a 40% chance of 1,200 or more yards and that is worth the salary if he gets there.

The important thing with the tag is I make no long term commitment to Murray if I use it.  If he does great then I get value. If he flounders I can negotiate a deal on my terms or just let him walk. Because of the way the position breaks down, the team will almost always have leverage negotiating with a running back. The longer I push off that contract the better off I can be.  I don’t think the tag is unreasonable in this case especially if his camp refuses to budge off a $9 million or so a year annual value, even if its unlikely to be found in free agency.

The Importance of the Contract

I find this contract to be a very important one to the future of the position. Most of the current contracts in that $7-9 million dollar range will be gone next year. It would not be shocking if the only player remaining in that tier is Jonathan Stewart of the Panthers who signed a ridiculous contract a few years back. If a 2,000 yard runner can’t break through and push past that figure it really means a very negative outlook on the position over the next 4 years. The running backs really need Murray to somehow break the bank on this contract even though there is no logical reason for the Cowboys or any other team to do that.

Most like the position needs younger entrants in the draft if it is to financially bounce back. They need the 21 year old underclassman to enter the draft, ala Clinton Portis a few years back, and reach that potential right out of the gates. At the most they would be 25 when getting a new contract and most likely just 24. Teams might give in more in those situations than they are now.

The only player on the horizon right now who could fit that bill is Le’Veon Bell of the Steelers. While he did not come out with the monster year he is on pace for close to 1,500 yards this season. He is just 22 years old.  If the Steelers can keep him going and limit the amount they use LeGarrette Blount, Bell can be the guy after the 2015/16 season to try to re-ignite the position. But that will be infinitely harder if he is working off lower rather than higher numbers set by Murray.

A Close Look at the Tyron Smith Contract Extension

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Since we now have the basic details of the Cowboys extension with left tackle Tyron Smith, I thought it would be worth looking at why calling him the highest paid player at the position is not exactly accurate.

Though Smith carries the highest annual value of any tackle, $12.2 million versus $11.5 million for Joe Thomas, the cash flows will tell a slightly different story. Here are the running cash flows of the two contracts:

SeasonThomasSmith
Year 1$20,700,000$20,000,000
Year 2$30,900,000$30,000,000
Year 3$42,000,000$40,000,000
Year 4$51,000,000$50,000,000
Year 5$60,500,000$60,000,000
Year 6$70,500,000$70,500,000
Year 7$80,500,000$84,000,000
Year 8$97,600,000

For the first five years of the contract Smith will trail Thomas before pulling even in year 6 and then ahead in the seventh and final year of the contract. These numbers do not take into account the fact that Thomas has roster bonus escalators in his contract in year 6 and 7. If Thomas reaches both escalators, which are based on Pro Bowls, His six year payout will rise to $72 million and his 7th year payout to $84 million.

Those escalators are more or less built in to the Smith contract, which is likely how the Cowboys arrived at the $84 million total. If both players continue to play at a high level this deep into their contracts the contracts are at best equivalent and realistically will always favor Thomas. The final year payout for Smith will ensure that he will always be the highest paid player among the current crop of players, pushing his annual value to $12.2 million, a number Thomas can not reach with this contract.

I read some complaints on Pro Football Talk about how the contract is crazy for Smith to sign due to the length of the contract. This now ties him to the Cowboys until he is 33 years old. But that opinion fails to realize that in order to achieve this type of contract it is a concession that you must make. Thomas did the same year ago when he signed his record setting deal and he will be 35 years old when he can next hit free agency, two years older than Smith. While it is true that Smith likely had more earning potential than Thomas, who was 23 when he entered the NFL and signed until he was 27, this is the path to the big contract.

Thomas is not the only individual who sacrificed years to gain big money.  D’Brickashaw Fergsuon of the Jets signed a six year $10 million contract extension in 2010 that would tie him to the Jets until he was 34. Like Smith, Ferguson was under contract for two more years when he signed the deal. Ferguson was generally considered overpaid (though his annual value is inflated by around $750,000), but he clearly sacrificed to get that $10 million number. These are concessions that must be made especially since the limited injury risk is now being taken off the player and absorbed onto the team.

One player who took a different route was Ryan Clady of the Denver Broncos. Clady was a franchise player and considered the best tackle in the game outside of Joe Thomas. Clady opted for the traditional five year deal (though it’s doubtful the Broncos offered other options) which gets him to free agency at 32, a bit younger than the others on this list. When we look at the percentage of payout over the five year value we see the big difference. Smith will consistently get a larger percentage of his contract over the first few years of the deal, with it not really smoothing out until the fourth season of the contract.

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SeasonSmithClady
Year 133.3%28.6%
Year 250.0%43.8%
Year 366.7%62.9%
Year 483.3%81.0%
Year 5100.0%100.0%

The other thing that we should do when looking at Smith’s extension is an alternative cash flow analysis. In this case we hold off on the extension because we are unhappy with the length of the contract being offered by the Cowboys. Here we play out the contract and will be subject to the franchise tag in 2016 and potentially 2017. For all the issues that may exist with the Dallas Cowboys salary cap they have already shown a willingness to use the tag multiple times on one player (Anthony Spencer) in years where the cap was difficult to navigate. If anything their cap will be better in the future.

Assuming the tag jumps by around $2.5 million in 2016 here will be the new money cash flows over the next four years:

YearCurrentTag
2014$9,000,000$0
2015$1,000,000$0
2016$10,000,000$14,100,000
2017$10,000,000$16,920,000
Total$30,000,000$31,020,000

If we discount these at a 7% rate the earnings in the current contract are actually higher than in the second scenario by about $700,000.  We have also eliminated our risks of injury or skill decline during that period. In the above analysis Smith would likely sign a contract in either 2017 or 2018. The terms would be 5 years at that point, which would bring him to either 2021 or 2022. Is that really a material difference than being under contract in 2023? Probably not.

Might he be trading off some money in this situation?  Its possible. The 2018 through 2022 seasons would see him earn $54 million. Would the market jump higher than that in that time?  Im not sure. Clady’s deal was worth $52.5 million over five years and would be used as the barometer, which would indicate $54 million is a fair number. The salary cap will be rising (by how much nobody knows), but we cant be sure if money will funnel to this position or simply go to higher quarterback wages.

All things considered this is a good contract for both sides. Dallas has a bit more control over his salary cap charges and will pay a bit more now to potentially lock up a player at what might be reasonable terms in the future. Smith has more or less reduced risk in the short term and not really sacrificed much in his overall earning potential to do it. While he may not really be the highest paid player, he can now claim he is based on that additional contract year. He’s not the first nor will he be the last player to do that.

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Looking at Jamaal Charles’ Contract and Chiefs Salary Cap

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According to KCTV5, Chiefs star running back Jamaal Charles is going to hold out of training camp in the hopes of earning a new contract with the Chiefs.

Charles’ situation is not all that different than the contract situation of Andre Johnson that I have alluded to in the past concerning the disgruntled wide receiver playing for years on an under market contract. Charles was one of the last signings under the old CBA, agreeing to a five year extension worth $27 million in December of 2010. Rather than fighting the uncertainty of the labor situation, Charles agreed to the deal in the midst of a 1,400 yard campaign in lieu of becoming a restricted free agent in 2011 in a very uncertain market.

Though Charles was injured in 2011, it became apparent that if he was healthy he was going to be grossly underpaid by the time 2012 rolled around. Following the mega contracts given to Adrian Peterson, Chris Johnson and, to a lesser extent, Deangelo Williams, a number of players earned massive contracts including Arian Foster, Ray Rice, LeSean McCoy, and Jonathan Stewart.  Foster’s contract had to be a dagger into the back of Charles as Foster was also set to be a restricted free agent when he signed his contract.

The following table presents the financials of the various running backs in the market:

PlayerAPYGuarantee1 Year Cash2 Year Cash3 Year Cash
McCoy$9,000,000$20,765,000$11,750,000$19,750,000$30,000,000
Foster$8,700,000$20,750,000$18,000,000$23,750,000$30,000,000
Williams$8,600,000$21,000,000$19,500,000$25,000,000$30,000,000
Forte$7,600,000$13,800,000$9,800,000$16,100,000$22,600,000
Lynch$7,500,000$17,000,000$10,000,000$17,000,000$22,500,000
Stewart$7,300,000$11,500,000$9,500,000$20,000,000$24,500,000
Rice$7,000,000$15,000,000$17,000,000$25,000,000$29,000,000
Charles$5,400,000$8,000,000$11,600,000$15,100,000$18,100,000

The difference between Charles and everyone of his peers is startling. Four players earned $29 million or more in the first three years of their contract. All earned over $22 million. Charles earned $18.1 million.

From a performance standpoint its hard to make an argument that any has been better. When we break things down into dollars per annual contract value its clear who is one of the best bargains in the NFL.

PlayerRush YdsPass YdsTotal YdsTot Yds/APY
McCoy2,4479123,359$2,679
Foster1,9664002,366$3,677
Williams1,5805202,100$4,095
Forte2,4339343,367$2,257
Lynch2,8475123,359$2,233
Stewart516201717$10,181
Rice1,8037992,602$2,690
Charles2,7969293,725$1,450

It’s no contest as to who has the greatest team value, which usually means a poor contract for the player.

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Charles is only scheduled to earn $3.9 million this season, which will only further the split between he and the other players. That number ranks 14th in the NFL and is $985,000 less than James Casey will earn as a fullback/tight end for the Eagles. Casey played about 14% of the offensive snaps for the Eagles last season. Other players earning more include a seemingly washed up Chris Johnson ($4M from the Jets in free agency), Toby Gerhart ($4.3M in free agency from the Jaguars), and Donald Brown ($4M in free agency from the Chargers). In 2015 Charles salary will jump to $6 million, none of which is guaranteed in the event of an injury.

Charles is hitting the age where the declines in production often come fast and so does the decline in salary, a topic we touched on with Marshawn Lynch a few weeks ago. That kind of makes this his last opportunity to likely gain some leverage since his performance has been so good and he is the best offensive player on the team. Charles is currently the 8th highest paid player on the Chiefs.

Charles does not have as much to lose as some other player. While he does have a $1 million reporting bonus in his contract, he does not have any signing bonus money that can be forfeited. Charles had received a roster bonus in 2010 that is prorated like a signing bonus but does not count in the forfeiture equation. Players can also hold out for five days without real penalty. So this may turn out to be much ado about nothing.

For the Chiefs this is just another in a long line of players who are looking for new contracts from a team that really has very little cap room to be able to accommodate them all. Kansas City went on a spending spree of sorts in 2012 and Dwayne Bowe receiving a deal worth $11.2 million a season likely sets an expectation that the Chiefs should pay their perceived high end player, top end money.

In addition to Charles looking for a new contract, quarterback Alex Smith and pass rusher Justin Houston are both in the final year of their contracts and expecting new contracts. Kansas City has $10 million of cap room left for this season and already has $126 million committed to the 2015 salary cap. Smith is likely seeking around $18 million a season and Houston in the ballpark of $10 million. That makes for a very complex series of negotiations if the Chiefs want to keep this team together in hopes of making a long term contender rather than a one season surprise in the playoffs. It is one of the most delicate situations in the NFL and the news about Charles makes it that harder. Over the next few weeks we will see if the Chiefs are up to the task.

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