Has the Rookie Option Destroyed Players’ Contract Leverage?

Earlier today Jason Cole wrote an article at the National Football Post detailing issues that agents are having with the CBA as it pertains to rookies and the lack of leverage they now have in negotiations.  I’ve been pretty outspoken on the way the NFL really wiped out the Players Association with this last deal, and my first inclination was yes the option year is a major hindrance to the players but the fact is very little if anything has changed and most players are actually benefiting from the option year rather than being hurt by it.

In a vacuum with no context the option year sounds like a crushing blow to the player. Essentially the team is receiving an extra franchise tag to use to limit player movement. Not only can they use this “low cost” option tag but then the following year can use the franchise tag to further prevent movement and slow down the payday. But when looking at it that way we are pretending that the last CBA did not exist and that rookies were completely free to negotiate contracts after their 4th year in the NFL. Except they weren’t.

In the last CBA players selected in the top 15 picks in the draft received a contract that was either five or six seasons in length. Players selected 16 through 32 all received contracts that were five years in length.  Not one player drafted during that time would have been an unrestricted free agent just four years into the contract. In the new system the NFL eliminated the sixth year entirely from the equation and changed the non-guaranteed fifth year into the option year.

Back in the old CBA those final contract years were filled with what are called escalators. These are essentially increases to ones base salary for performance. The earlier you were drafted the easier it was to realize the full escalator. For example Sam Bradford, the final number one overall pick of the old CBA, earned nearly all his escalators in his rookie year. As you get towards the end of the first round the escalators are more difficult to earn. In addition as the draft wore on the escalators reduced in size, in most cases significantly.

None of those late contract escalators were guaranteed, whereas the 5th year option is guaranteed for injury in 2014 and fully guaranteed at the start of the 2015 League Year. That means a decision has to be made ASAP by a team regarding the players status, either fully guaranteeing him his pay or letting him hit free agency in March. In the 2006 CBA the player could have been forced to go through all of training camp and then be released before the season giving him little time to find a new home.

What I wanted to do was to look at the 2010 draft class and see what their projected cash earnings would be in 2014 had they been drafted under the terms of the new CBA. Had they been drafted under the terms of the new CBA this would be their option year instead of their fifth year under contract. For some of the players I estimated escalators, but most of the escalators have been accrued already. For option year estimates I originally was going to use the top salaries from 2013 as a baseline, but Albert Breer tweeted out some early estimates so we can use those instead. In addition I added a salary cap column and leverage change. Levergae is basically defined as having a high cap charge that forces a team to renegotiate. Here are the results:

 

rookie salary cap

 

So overall our 2011 CBA adjustments would earn this particular class an additional $90,411,716 in cash payments in the “option year” system rather than the old system. That does not sound too bad. It may not make up for the lack of front end money but its certainly not the low cost number we believe it to be. The only players who would be worse off are Sam Bradford, Ndamukong Suh, Gerald McCoy, and Eric Berry.  Bradford is almost a push so that’s really a stretch. Suh and McCoy got great rookie deals and played extremely well to max those contracts out while playing a less than premier position and financially they would be hit hard. But as you work down the list the gains are actually massive because the league makes no distinction between pick 11 and 32 and those players were never huge money earners in the old CBA anyway.

In terms of trying to force our way into renegotiated contracts for salary cap relief we have three players hit hard in the new system- Suh, McCoy, and Berry. Bradford would be moderately hurt. Williams and Okung would be slightly hurt. Essentially it’s the top 6 picks in the draft. After those six players everyone except one player has more salary cap leverage via the option than they had on their original rookie contracts based on how they actually played. The lone exception is Jermaine Gresham of the Bengals because he happens to play at a lower cost position and pretty much maxed his contract out.

When we discuss the leverage the franchise tag gives teams in 2016 we need to note that it existed for every one of these players before. Of the 2010 draft class, Bradford, Berry, Williams, and Okung all are under contract for year 6. Bradford and Okung would likely earn slightly more if they were franchised in the new system. Berry and Williams would earn less. But for everyone else the franchise tag is in play the same as it always has been.

The impact of the franchise tag again really only hits Suh and McCoy. Because of the structure of their original rookie contracts the franchise tag numbers would be so high for those players that they would never be franchised under the old CBA since their tag figures would equal 120% of their 5th year salary cap figure which are huge. For almost every other player the regular franchise tag would come into play when discussing 6th year salary.

Now none of this means that there were not rookies sacrificed in the new CBA because they were, specifically those top 15 or so picks who will now earn millions less if they are exceptional players or poor players. Those who are good or decent players will likely be treated the same, but the extremes on both ends lose out.  But the new CBA is not having a devastating effect on most of the players, at least not because of the option. That franchise tag leverage always existed for the 6th year.  The low salaries always existed in the 5th year. Many of those low first round draft picks have significantly more leverage to negotiate an extension in year 5 if their team is in salary cap trouble.

I get why agents would be upset by this. Agents had their ability to get great contracts for unproven rookies completely stripped away. In exchange for giving up rookie contract money the union did not get concessions to make it significantly easier to gain the lost money through fast extensions. But the ability to try to get a new deal with a team exists just as it did before with almost no exceptions and for most of the players it puts them in a better position in year 5 than they would have been in had they been drafted in 2010 rather than 2011. Will every team exercise it?  Maybe, but in the old CBA it was pre-exercised with a lower salary and cap figure for almost everyone in the draft class.

The option year is not to blame for any lack of contract movement. If there is a finger to be pointed it is to the removal of a salary cap floor that has allowed for millions upon millions in cap carryover that makes it easier for teams to afford high “franchise player” type cap hits, but the option year has essentially always existed and now its either guaranteed or you are guaranteed to see free agency in March rather than the summer.


 

  • NW86

    Interesting stuff, thanks for the research. One thing though, which you did mention in the article, was that this is only looking at the 5th year cash and cap implications, while all those drafted in the top half of the first round would have earned millions less under the new CBA than the old CBA. I understand why you limited it to the 5th year only, because of the implications it has in the leverage for their second contract.
    Still, I would be interested to see what the TOTAL earnings numbers would look like after 5 years. This would be the old 5 year contracts from 2010, vs the 4 year contracts from 2011, plus their option years. Obviously, the top several picks from 2011 have lost a lot of money vs the corresponding 2010 picks, that’s been well documented. But I would be interested how the second half of the first rounders would compare.

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