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Jul 01

Everything You Need To Know Regarding The Potential Effects Of The Jimmy Graham Decision

Any minute now, arbitrator Stephen Burbank will hand down his decision re: Graham v. New Orleans–the highly publicized franchise tag grievance filed by Jimmy Graham and his agents. Burbank’s ruling will have a vast impact on a variety of parties, so here’s an in-depth look at the entire situation and the carryover effect that the decision could create.

 

The Facts:

  • The Saints placed the $7.053 million non-exclusive tight end franchise tag on Graham back on February 28th.
  • On May 8th, Graham, who lined up out wide or in the slot for 67% of his 2013 snaps, filed a grievance to be compensated $12.312 million—the non-exclusive franchise tag for wide receivers.
  • The grievance hearing took place on June 17-18, and a decision is expected later this week.

 

Scenario 1: Graham is ruled a tight end

Salary cap implications:

If Burbank determines that Graham is a tight end, nothing changes. His 2014 cap hit will remain at its current $7.053 million, and New Orleans will remain under the 2014 salary cap.

 

Long-term implications:

Franchise tagging a player two years in a row results in a 120% increase in salary from Year 1 to Year 2.  If New Orleans wins the grievance, they could essentially lock in Graham for a combined $15.5 million over the next two seasons—an absolute bargain for one of the games best weapons. The Saints would gain a tremendous amount of leverage in long-term contract negotiations if Burbank rules in their favor.

 

Most likely outcome under this scenario:

Graham, who turns 28 in November, is surely aware of the above. As a late third rounder who’s made just over $3 million during his four NFL seasons, he’s greatly incentivized to sign a set-for-life type of contract as soon as possible. While this outcome will leave the Saints with no reason to pay Graham the type of money he wants (reportedly over $10 million annually), there’s no questioning both sides mutual desire to come to terms on a long-term deal. Graham will be disappointed, but these circumstances favor a long-term deal being reached before the July 15 deadline.

 

Scenario 2: Graham is ruled a wide receiver

Salary cap implications:

If Graham is rewarded the $12.132 million non-exclusive receiver franchise tag, the Saints will have to act quickly. Currently just $1,588,821 under the salary cap, this ruling will force New Orleans to make cuts or restructure current contracts in order to get back under the cap. Otherwise, they could choose to remove the tag.

 

Long-term implications:

120% of $12.312 million is $14.774 million, and the Saints currently have one of footballs most unfortunate cap situations. All negotiating leverage would shift to Graham if he were deemed a receiver.

 

Most likely outcome under this scenario:

An aging Brees and a host of offseason moves that scream “win-now” point towards the Saints making the necessary corresponding moves to keep Graham and get under the cap. However, my money is on this outcome leading to the Graham camp tabling negotiations, agreeing to play the 2014 season under the $12.312 million tag, and taking their chances as a free agent again in 2015.

 

Scenario 3: A hybrid ruling

Salary cap implications:

It’s possible that Burbank decides to rule in the middle—designating Graham a hybrid WR/TE. The halfway point between $7,035,000 and $12,312,000 is $9,673,500. As in scenario 2, this ruling would still push New Orleans over the cap, though not by much.

 

Long-term implications:

120% of $9,673,500 is $11.6 million—a substantial difference from the $14.774 million number in scenario 2. With the Saints’ poor cap situation, the $3.1 million difference (when compared with Graham winning the grievance) of placing a second franchise tag on Graham will certainly impact make New Orleans’ willingness to negotiate.

 

Most likely outcome under this scenario:

Drew Brees recently commented that Burbank told him what his ruling would be. Brees also said “there’s a fair way to do this”. Was he insinuating that a middle ground would be fair? It’s certainly possible. Brees badly needs his most dangerous weapon, and could already be talking to management about pushing some of his own salary forward to not only create the necessary cap room in the present, but also propel a long-term deal. However…

 

Appeal Process :

A wildcard in all of this is that the losing party will inevitably appeal Burbank’s ruling. As noted by ProFootballTalk’s Mike Florio, a decision on the appeal may or may not be made before July 15—the deadline for player and team to strike a long-term deal.

 

Graham’s True Worth & The Future of the TE position

Tight ends salaries have grown at a tremendous rate over the past several years.

Avg. Top 5 Cap Figures of NFL TEsNFL Salary Cap% of Cap Comprised By Top 5 TEs
2005$2.3 mil$85.5 mil2.70%
2006$3 mil$102 mil2.90%
2007$3.4 mil$109 mil3.10%
2008$3.3 mil$116 mil2.90%
2009$4.7 mil$123 mil3.80%
2013$8.3mil$123 mil6.80%
2014 (Graham TE)$7.8mil$133 mil5.90%
2004 (Graham WR)$8.8 mil$133 mil6.60%

 

In 2005 & 2006, the average cap hit of the leagues top five tight ends accounted for less than 3% of the NFLs salary cap. By 2009, with a $123 million salary cap, that figure had increased to 3.8%. Last season, with the salary cap still at $123 million, it was up to 6.8%.

On the surface, this makes sense. The NFLs shift towards a pass-first league theoretically increases the value of skill-players who can catch the ball. However, production from the top of the tight end position has not grown along with this salary increase.

TE2h

TE1

Shown above is the average production of the top-5 tight ends since 2005, in terms of Yards,TDs and AV (Approximate Value, a ProFootballReference created statistic that attaches a single number to every player season). While touchdown production from the tight end position has increased over this period, yards and AV have remained constant.

 

Tight end salaries (as a percentage of the salary cap) have likely hit their ceiling, meaning they’re due to plateau in the near future. If Graham loses the grievance and signs an extension before the July 15 deadline, the beginning of a period where tight end salaries decline may begin.

But Graham—a once-in-a-lifetime type talent— is not just any tight end, which is why this ruling holds so much importance. If Graham wins the grievance and hits the open market in 2015—a year where the salary cap is projected to increase—there’s no telling how much money he might get.

And it’s that hypothetical—the prospect of a still-in-his prime Graham hitting the open market in 2015, that ultimately has agents drooling. Not just Graham’s agent, Jimmy Sexton–one of the games most powerful negotiators. But the agents of all tight ends, as the deal Graham signs will be used as a benchmark for tight end deals of the future.

A situation that has been in-flux for months will begin to take shape in the coming days. And it all resides in the palms of one man: arbitrator Stephen Burbank.

 

Andrew Cohen
@ajcohen03
ajcohen3@gmail.com