Rookie Option Updates

We learned last night that the first set of rookie options from the 2011 draft class were starting to be picked up, so I thought it might be useful for us to have a running list of the players who are having their contracts extended by one season. The rookie option year is a new rule in the CBA that allows teams to extend the term of a first round draft choice by one season by exercising an option between the end of the players third season and May 3 of the following League Year.

The cost of the option year is dependent upon where a player was drafted and what position he plays. If the player was drafted in the top 10 picks of the draft his one year contract will equal the transition tender for the NFL in 2013. If the player is selected outside of the top 10 then his one year contract is calculated the same way that the transition tag is calculated except the 3rd through 25th highest salaries are used rather than the top 10 highest. All offensive linemen and all linebackers are each grouped as one position and are not specialized (i.e a tackle is paid same as a center or a inside linebacker is paid same as a 34 outside linebacker).

Once the option is exercised the salary is guaranteed for injury only. So if a player is injured in 2014 and unable to pass his physical the following season his entire option salary is protected. However the player can be released at any time up to the start of the 2015 League Year without penalty if he is healthy enough to play football. If the player is on the roster on the first day of the 2015 League Year (first day of free agency) the salary becomes fully guaranteed for all terminations.

There is nothing that prohibits a team from negotiating another contract with the player following the option pickup. In most cases teams will pick the option up to protect their negotiating rights with the player, which is an indication of how little teams really think of injury guarantees. If the option was fully guaranteed there would be a much different approach taken by teams. If teams do not exercise the option they can still use the Franchise or Transition tag the following season, but in most cases that will be more expensive.

What could be interesting is if teams internally calculate out the Transition tag number in 2015 using the 2010 through 2014 cap figures currently available to see if there is a potential decline in the value next year. Being that the salary cap is now rising that would be near impossible, but if a team like the Cardinals estimated that the cost for a cornerback in 2015 could be $9.5 million they may opt to just use the Transition tag in 2015 on Patrick Peterson rather than locking him up at slightly over $10 million now. This would not be applicable to players selected outside the top 10 and would also eliminate a team from using the tag on another veteran player on the team.

My own opinion on the tag is that, while there is no downside to using it, if you have a player you like but not at the option value it is better to try to work out a reasonable extension without having that factored into the equation. Once you lock a player in at say $6 or $7 million it becomes much harder to work out a long term contract valued at $4 or $5. We have seen that often enough with the Franchise tag impeding progress on a long term deal and that can be a detriment to both sides.

Contrary to popular opinion most of the players who will have the option picked up will earn more in their 5th year and have a higher 5th year cap charge than the rookies that were drafted in the old CBA system. So they will have some leverage to negotiate favorable terms if they are a good player. This is not the case for the top 6 or 7 picks who will earn less and have less leverage than their 2010 counterparts. So the option is not a block to a player friendly extension in almost all cases.

The following chart gives a breakdown of the tag values we do know and the players who are eligible for the option. As more options are picked up I’ll update the table.

 

finaloptions

 


 

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  • NW86

    This will be interesting to watch. Obviously players like Gabbert and Locker won’t get their options exercised, but I think the vast majority will. This decision comes up pretty early to get a long-term extension signed first. And while the option pays pretty good money, the fact that it isn’t guaranteed means why not do it? The team would still have leverage in negotiations for a long-term deal because the player is still playing under the low 4th year salary in 2014, so an extension that pays them a signing bonus now and moderate salary in 2015 could still give the player more money over those 2 years, and could guarantee the salary in 2015. Otherwise if negotiations don’t go well, the team can still make the player play out the cheap 2014 season, then release them before the option year salary is guaranteed (or get them to sign a cheaper deal with the knowledge that the team is prepared to release them otherwise). I’ll bet we see 25-26 teams picking up the option year for now.

    • NW86

      Looks like I was pretty close – a little high, 23 were exercised. Apparently a few of the teams from the end of the first round thought the players weren’t worth that much on a yearly basis and didn’t want to give the players an annual value to negotiate toward.

  • Jim

    A reason “not” to do it, if you cut a player you would not get draft compensation for losing the player. With Aldon Smith becoming a distraction, the 49ers are better off not not giving him the option. They can still try to resign him later, but if they don’t, he will command money probably worth at least a 4th RD compensatory draft pick.

    • NW86

      The comp pick angle is interesting, that hasn’t been mentioned much. That could be a minor factor if you were on the fence about your player, but I don’t think it would change the minds of most GM’s. You wouldn’t give up a guy you like just to get a mid-round pick to take a flyer on a developmental guy.

      I agreed with you at the time on Smith, but it turns out they did exercise it at the 11th hour. I think that just goes to show that since they are only guaranteed for injury, it’s worth taking a chance on Smith. Injury isn’t much of a concern for him, it’s his character and legal issues. Now, if he stays clean for a year, they still have him under contract, and if he doesn’t, they will just cut him. If he doesn’t stay clean, he probably won’t get a huge contract from anyone else anyway, so the comp pick probably wasn’t a major factor on him.

      • Jim

        Right obviously if you like the guy, you exercise the option. But like Aldon Smith, you love the guy as a player, but he’s a constant suspension threat and a distraction.

        Nick Fairley for the Lions was an interesting case. I think he merits $5.5 mil option, but he’s been having weight issues. Apparently, the Lions feel he will play better if he doesn’t have an injury-guaranteed 5th year on his contract, so he’s more motivated for this upcoming season. In addition, the Lions have so much money wrapped up in Suh, I don’t know if they can even afford the $5.5m for another D-Lineman. So I think here’s a case that the Lions don’t option Fairley and if they can’t resign him they will pick up a 3rd or 4th Rd pick, depending on the type of deal, instead of option now, and cut him later if they can’t maneuver him under their cap and still maintain a decent all-around roster.

        • http://www.nyjetscap.com/ Jason Fitzgerald

          Valid point. My guess is his salary range would be a 4th/5th rather than 3rd/4th but the motivational standpoint is a big thing. Right now hes being told that he isnt worth $5 million a season. That should give the player something to shoot for. The Bengals did something similar (perhaps unknowingly) with RT Andre Smith for whom motivation and weight was a major issue. Rather than picking up an option year on his rookie contract they let it void. He still has incentives tied to games and the like, but they may have gotten more out of him by dangling free agency in front of him and claiming he was unwanted than playing out his rookie deal as normal.

          I do think most teams are cautious about the motivation issues with players other than at the WR position. I know many Jets fans liked Bryan Thomas and the front office liked him as well, but he basically had the season of his life in 2006 and convinced the Jets he was a legit pass rusher that needed a positional switch not a guy who didnt seem to care about a role. He was extended late in the season and in 2007 played like a dog. He even admitted that his effort level was poor after the year. He played well enough after that but I think if they were to do it all over again they would have put more protection in the front end of that contract as well.

      • http://www.nyjetscap.com/ Jason Fitzgerald

        The one other thing that likely pertains to Smith is that usually when players have issues related to drugs or other crazy things off the field it voids any and all guarantees in a contract. I probably should have looked more into that when discussing Smith, but the 49ers could very well assume that even if he stays clean this year and his salary guarantees that they still have plenty of outs during the rest of the year to allow them to void his guarantees prior to the season in the event he does something.

        Had he not been a troubled player he would have been the first player extended from this class, IMO, even with the 49ers tight cap.