With Maurkice Pouncey locked up and surpassing Alex Mack as the highest paid center in the NFL I thought it would be a good time to dissect the contracts at the top of the position and see why looking at annual value can sometimes be very misleading.
For the prior three years the Panthers’ Ryan Kalil has been the top earner at the center position. Carolina signed him to a six year contract in 2011 that would pay Kalil $49.116 million which worked out to be $8.186 million per year. It seemed like a number that would never be touched until the Jacksonville Jaguars offered Alex Mack a five year deal worth $8.4 million per year. Mack was a transition player so the Cleveland Browns matched the offer and made Mack the top paid in the game. That distinction did not last long as the Pittsburgh Steelers quickly signed Pouncey to a five year deal worth $8.827 million a season.
But numbers can sometimes be misleading and in the NFL we have to look at all kinds of aspects of a contract. To best compare apples to apples when looking at Pouncey’s contract we need to take into account the new money in the contract. This simple adjustment is made by adding Pouncey’s cash salaries in 2014 (the final year of his old contract) and 2015 (technically the first year of his new contract) and subtracting the money he was already going to earn in 2014. For Pouncey that works out to be $15,636,625. Lets look at the five year cash flows for each player.
There are a few things we should find interesting with this chart. The first one actually concerns Mack. Despite having the highest annual valued contract for a few months, this was an inferior contract to Kalil’s through the first four years of the contract. Considering the life of an NFL player is not the longest it would be pretty easy to argue that Kalil never really lost his standing as highest paid player at the position.
Between Pouncey and Kalil the results are a bit muddles. Kalil earned more in his first year than Pouncey, but Pouncey will exceed his cash flows in year two, only to trail him again in year three. Provided Pouncey gets to year four this is where he lays claim to being the highest paid player. That’s certainly not guaranteed.
Looking further into the contracts we need to look at two other factors when determining the true value of a contract and those factors are the guaranteed dollars and the dead money protections that come in the contract structure. Teams do not like to pay players to not play on the team nor do they want to carry excessive salary cap charges for a player no longer on the team. This further muddies the waters as to highest and not highest paid players.
Pouncey received no contract guarantees beyond a $13 million signing bonus that will be prorated through the fourth year of his contract. Mack received no signing bonus but did receive a full guarantee on his year one and two salaries. Kalil hit the jackpot receiving an $18 million signing bonus, prorated through the fifth year of his deal, and another $5 million bonus in the third year of his contract that would be prorated over the remaining four years of his contract.
Remember that money not yet accounted for on the salary cap or money owed accelerates onto the salary cap when the player is released. Here are the dead money charges that would be associated with releasing the player.
These numbers paint an entirely different picture for the players. Pouncey’s contract is a little different in year one since his deal is an extension where proration begins in 2014, but I think its safe to say he would not be cut that year even though his protection is much less than the other two.
In year two Pouncey has the least secure contract for a few reasons. For Pouncey the $7.8 million dead figure represents money already paid to the player. If his play declined greatly their option is to save $7 million in real cash plus another $1.8 million in cap room. To see the magnitude of this I try to compare the savings to the players cap charge (this is the CSC ratio you see on the cap pages) where I’ll add the players cash plus cap savings and divide it by his salary cap charge. For Pouncey it’s a 0.92, which is close to the range where releasing a player is somewhat feasible.
Mack’s year two salary is protected by a guarantee so the Browns will be ambivalent on releasing him. They gain no cap and save no cash giving a 0.00 ratio. Kalil, assuming he was released before his year three guarantee kicked in, would cost the team $14.4 million in dead money which amounts to a loss of $9.05 million in cap room with a savings of just $1.75 million in cash. We don’t need to look at any ratio to realize Kalil is protected as well from release.
Mack loses almost all protection from that point forward (he has a vesting guarantee in year three but that would not save him from release), giving Pouncey more security from the dead money in his deal, but Pouncey would never come close to the security that Kalil has. Here are the yearly cap plus cash savings if the team released the player:
When looking at these numbers we would consider Kalil’s three year payout “virtually guaranteed”. Pouncey and Mack’s are anything but. The magnitude of Kalil’s savings were so small in year four that payout would also likely be considered “virtually guaranteed”. If the contracts are never touched there is no arguing who has the more valuable contract regardless of what the cash flows might say. Pouncey needs four years to best Kalil and the current contract structure is nowhere near as solid to make that happen. In fairness to Pouncey he will likely get that protection since the Steelers, like the Panthers, over-rely on using yearly prorated bonuses to deal with their salary cap problems. Once that happens the dead money will soar thus reducing the cap savings the Steelers would see.
All of this doesn’t mean we should not consider Pouncey the highest paid (we should as the four year is significantly better than the four year for Kalil unlike Mack’s contract), but it should give some pause when we value the contract or criticize the Steelers for the final five year number. The goal for the next center to sign (likely Pouncey’s brother) is to exceed the $30.75 million paid over three years to Kalil or get significantly more virtual protection in the contract that matches the Kalil protection That really sets a complete new standard when that happens.