Steve Smith’s Contract Situation with the Carolina Panthers

One of the questions that seem to be popping up every now and then is what exactly are the Panthers plans for wide receiver Steve Smith. The team has been somewhat non-committal to him when asked about his future as a Panther. So let’s take a look at Smith’s situation.

The central theme at play here is how much money is an older player really worth.  Smith will be 35 in 2014, making him one of the oldest receivers in the NFL. The other plus 35 players who may get a contract in 2014 are Reggie Wayne, Santana Moss, and Plaxico Burress. Smith still has three years remaining on his contract and in each season the dead money is of growing importance since the need to cut or retire increases with each passing season.

Since 2000 there have been just 25 receivers who have recorded at least 20 receptions in a season at the age of 35 or older. At 36 the number decreases to 17. Only 7 receivers have done it at 37 or older and at that point the only viable receivers were Jerry Rice and Terrell Owens with most of the others at less than 50 receptions and 500 yards. So the Panthers need to be cognizant of Smith’s lifecycle as a player and by the end of the year he certainly looked to be trending downward.

Smith has three big money years remaining on his contract that he signed in 2012. The extension was more or less designed to be a two year deal that provided immediate salary cap relief that provided the Panthers with a five month renegotiating window in 2014. In 2012 Smith was in the final year of his contract and set to count for $10,713,111 against the salary cap. Set to earn $7.75 million, the Panthers increased his salary to $11 million and fully guaranteed him an additional $3.75 million in 2013 and $3 million in 2014. Carolina got his cap number down to a manageable $5,996,989 in 2012 and at worst was going to pay him $17.75 million for two years of work in 12 and 13. This is not much different than what the Ravens recently did with LB Terrell Suggs, except the Ravens did the smart thing and tackled Suggs’ age head on in his extension while the Panthers simply made it a headache to be worried about two years later.

Smith will earn $7 million in 2014, $7 million in 2015, and $9 million in 2016 under his current contract structure. Those numbers are unsustainable at his age. While NFL contracts are not guaranteed the Panthers poor cap management and heavy reliance on prorated bonuses has placed large amounts of dead money on the books for most of their players, Smith included. A portion of Smith’s $7 million salary in 2014 is one of those prorated bonuses. If the Panthers leave the contract as is that will lock them into a charge of at least $6 million in 2015 even if he retires or is released. Here are the actual salaries earned by some of the more recent “name players” from the ages of 35 onward with Smith’s current contract structure included for reference.

 

Player

Age

Salary

Steve Smith

37

$9,000,000

Steve Smith

35

$7,000,000

Steve Smith

36

$7,000,000

Terrell Owens

35

$6,500,000

Reggie Wayne

35

$6,000,000

Donald Driver

35

$6,000,000

Donald Driver

36

$5,000,000

Reggie Wayne

36

$4,000,000

Hines Ward

35

$4,000,000

Donald Driver

37

$3,500,000

Derrick Mason

36

$3,500,000

Derrick Mason

35

$3,000,000

Randy Moss

35

$2,500,000

Terrell Owens

36

$2,000,000

Muhsin Muhammad

36

$1,500,000

Muhsin Muhammad

35

$1,500,000

Derrick Mason

37

$1,310,000

 

In looking at these numbers I think both sides can make a case that the $7 million figure should or should not stand. From the Panthers perspective he would be the highest earning player at that age, but from his perspective it would not be by much (Wayne, Owens and Driver were all close) and the Panthers should reward him for a long and very good career, which justifies that number. What he can not justify are the $7 and $9 million charges coming in 2015 and 2016.

Carolina has three big contracts that will be coming due in the next few years and the team needs to put aside salary cap space for those players. DE Greg Hardy is a free agent this season and should command well over $12 million a year. The following season QB Cam Newton will either be playing on a high cost option, that pays around $14 million, or on a long term contract that pays $16-$18 million a year. Finally LB Luke Kuechly will be extension eligible in 2015. This is going to not only put a drain on the Panthers already difficult cap situation but is also going to require ownership to pay millions of dollars to star players. It becomes more difficult to make large payments and allocate large cap dollars to former superstar players with these big deals on the horizon.

Smith has $3 million that is fully protected this year in the event he is released, but the Panthers have time to decide on his fate which works to their advantage. Smith has an option bonus due of $3 million but the team has until June 30 to make a decision on this option. Normally the option would need to be exercised in the first few days of the League Year to facilitate a quick release for the player. By the time they would decide in this case, though, the bigger money in free agency will have dried up.

If the team fails to pick up the option and release Smith by July 1 they will owe him a $3 million non-exercise fee. If they release him they will need to pay him $3 million in fully guaranteed base salary. So $3 million of this money is indeed protected for Smith. In addition I believe that Smith’s guarantee is of the no-offset variety meaning he can double dip if released. So at a minimum Smith will earn $4 million in the NFL this season and most likely a few dollars more.

The Panthers would gain little by releasing Smith. His cap charge for the year would be $6 million, assuming his is a post June 1, and he is currently only counting for $7 million.  The team would then be responsible for $3 million in cap charges in 2015 ($4 million in acceleration and a $1 million credit for not picking up the option). His roster spot would also need to be replaced by someone making at least the minimum of $420,000. What it boils down to is that releasing Smith in 2014 is going to cost the Panthers $9.84 million in cap space and $3.84 million in cash plus a somewhat negative PR situation over the next two seasons.

The best case for both sides is to find a way to make Smith’s contract more reasonable for his age and expected performance level. According to a source with knowledge of Smith’s contract his true cash salary in 2014 would be $5.5 million due to half of his option being deferred until 2015. That should be the first starting point. Eliminate the option and pay him $5.5 million in 2015, with $2 million coming as a roster bonus in June (thus getting him more immediate cash than he would get in the option) and reducing his P5 to fully guaranteed $3.5 million. $5.5 million is likely more than he would make if the situation dragged out and he was released on July 1.

The trickier part of the negotiation is what is a fair value beyond this season. While most players seem to believe that there are greener pastures in free agency most often there are not. Players with a long history in one city often get a great deal of leeway when it comes to performance and expectations. Smith’s struggles in Carolina would be looked at less critically than in another city. He would retain a big role simply because of his name value in Carolina and both fans and media (and some likely within the organization) will rationalize a year where he catches 46 passes for 554 yards like he did in 2010.

The same can’t be said in another city. If Smith struggles he’ll likely get benched. Fans and media will be all over him. Even if he does moderately well like the 2010 stat line he’ll probably be cut after the season. After all who wants a 36 year old receiver with mid line numbers when you can find a 28 year old with some upside to do the same?  Just look at the treatment Ed Reed received in Houston this year if you want a recent example of aging players trying to fit in with a new franchise where they have no history.

Even as we look at that list above the players who earned the most money all re-signed with the original teams. Wayne, Driver, and Ward finished out (or will finish out) with the Colts, Packers, and Steelers. The Bills and Bengals had no use for Owens after a one year audition. The 49ers showed no interest in doing anything with Moss. The Jets traded away Mason the minute they got him. Muhammad came back to Carolina to earn what he earned.

The Panthers front office likely assumes that if they release Smith, Smith will collect $3 million from Carolina, another $2 million from another team, and then that might be it for his career. His next step is taking a one day contract to retire a Panther. The following is a list of some players who finished up their careers with a different squad than the team they were associated most with post-35 who I felt were noteworthy players.

 

PlayerAgesTeams

Games Started

Receptions

Yards

Jerry Rice

39-42

Raiders/Seahawks

30

268

3,648

Keenan McCardell

34-37

Chargers/Redskins

34

159

2,003

Terrell Owens

36-37

Bills/Bengals

27

127

1,812

Randy Moss

35

49ers

2

28

434

Isaac Bruce

36/37

49ers

7

21

264

Joe Horn

35

Falcons

12

27

243

Terance Mathis

35

Steelers

0

23

218

Tim Brown

38

Buccaneers

4

20

200

Derrick Mason

37

Jets/Texans

2

19

170

Andre Reed

36

Redskins

0

10

103

Joey Galloway

38

Patriots

2

7

67

Cris Carter

37

Dolphins

1

8

66

Bobby Engram

36

Chiefs

0

5

61

Amani Toomer

35

Chiefs

0

0

0

 

Of all these players only Rice, McCardell and Owens were useful. Rice’s longevity was legendary as was his career and you can’t really compare him to any player. McCardell was traded to San Diego at the age of 34 but I wanted to include him here since he was a well known player in Jacksonville and Tampa Bay. He would last three seasons in San Diego before a tryout in Houston and mid-season run in with the Redskins. Owens, while not a top level player, was still productive and it was his locker room reputation and off the field endeavors that likely saw him more or less blacklisted from the NFL.

For most players it was one and done and a rather non-descript ending to some very productive careers in the NFL. This is probably the reality for Smith if he was to leave the comfort of Carolina. The job for the Panthers is to convince Smith that this is reality if he were to leave. If he was released this season he would likely get one chance with another team and that is the end. At the most he might eek out two seasons.

I’d probably propose something like a $3.5 million salary in 2015 at the age of 36 and $3.0 million salary in 2016 at the age of 37. That gives him a strong chance to earn $9 million by 2015, and that is likely going to be much more than he would earn as a free agent. He also wont have to chance finishing his career in a place he is not appreciated nor will he have to deal with the headache of moving for what may be just one season. His cap charges would fall from $10 million and $12 million under his current deal to $5.5 million and $5.0 million.  Dead money in 2015 would fall from $6 million to $4 million and in 2016 from $3 million to $2 million.

The one thing that I would not do if I was Carolina is use the void year provision that they are slowly falling in love with for cap relief. The purpose of doing anything with the Smith deal is to maintain your cap flexibility in the future. To prorate money out five years for a few dollars in cap room now is counter-productive.

But I do think it is good for both sides to continue the relationship. Smith can still play and it is not as if the Panthers are exploding with offensive talent that they can just ship him out and plug someone into the spot, even if they draft his replacement and attempt to use that as leverage. I doubt this is a situation settled anytime soon, but I think most fans of the game would like to see Smith finish his career in Carolina.


 

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  • Ox

    Curious is he can accept fading into a 2nd and 3rd option with the Panthers. I have a feeling even if the good times continue in the offseason and everything works out for him to stay on the team, it’s going to be a long season of him complaining

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

      I have to think at this stage of his career he knows he can’t do that. Im actually amazed the way he bounced back when Cam came to the team as I thought he was checking out before that. A big thing as well is what opinion other teams in the NFL hold of him. Im sure his agents have an idea of that but for the most part other teams wont put up with the sulking/attitude when things dont go their way. Reggie Wayne didnt seem to get any interest in free agency before coming back to Indy. I think it would be a similar case here except Im not sure if Carolina takes him back if he makes them go through the process of releasing him.

      • Ox

        We’re talking about “Ice up son” here, whole different ball game then Reggie. I was amazed at a quick ESPN story today of him talking about his contract status. The quotes seemed like a rational, thoughtful person talking.

  • Jeff Cook

    This is one of the best articles describing the contract and intricies that are invovled. I can’t or don’t want to see Smith in another uniform. NFL is a business but for the fans it is much more and both the teams and players need to remember that. For where would the NFL or these huge contracts be without us. Loyalty is a rarity these days so I hope they redo the contract to a resonable number and remember the fans.