2015 NFL Stock Up Week 1

Posted on September 15, 2015September 15, 2015 by Jason Fitzgerald

Every week during the season I’ll take a look back at the games and select three players who are entering important stages of their contract that may have helped their stock in upcoming negotiations with their play on gameday. In addition we will also look at one player signed in the offseason to a new contract that exceeded all expectations and provided exceptional value to his team. So let’s see who made the cut in week 1…

Stock Up

Matt Forte– Running back is the toughest position in the NFL to convince a team you are worthy of a third contract that carries a high cost, but Forte did all he could to prove he’ll be the exception with his 141 yard game against the Packers. Forte kept the Bears in the game and had they run him more may have just snuck out of there with an upset. Forte was hoping for a new deal this offseason which didn’t happen, but a few more games like this and the Bears may bite. Continue reading 2015 NFL Stock Up Week 1 »

Dallas Cowboys: Navigating The Salary Cap

Posted on October 21, 2013October 21, 2013 by Jason Fitzgerald

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I had planned, time permitting, to do these cap breakdowns towards the end of the season or in the offseason, but with the Dallas Cowboys making the news today with Adam Schefter’s report that they are $31 million over next years’ projected salary cap I figured this was a reasonable time to look at the Cowboys.

I’m going to base everything off my estimates which have Dallas with a payroll of about $145 million for 46 players next season. That number seems to mesh with most reports so it should be a reasonable starting point. It should be noted that the 46th player under contract here is Jeff Olson an injured player who will be released as soon as he is healthy enough. With the cap currently at $123 million that obviously leaves some distance between my estimates of $22 million over the cap and Schefter’s reported $31 million. So how do we account for the discrepancy?

Well first of all his information is likely from someone projecting at least 51 players, and most likely a full 53. To get from 46 to 53 we need to add 7 futures contracts which will add $2.94 million in salary. We also need to account for the 2011 draft classes “Proven Performance Escalator” which is a bump in salary to the RFA tender for those who played in either 35% of the total snaps from 11-13 or 35% in two of three seasons from 11-13. That would include RB DeMarco Murray, G David Arkin, and WR Dwayne Harris and add another $2 million if all 3 qualify, putting our number at $27 million, leaving us just $4 million short. CB Orlando Scandrick, G Mackenzy Bernadeau, and DE Justin Durant I know have escalators/incentives in their contracts. While I don’t know how much those incentives are worth I’ll give you a guess that we are looking at close to $4 million to give us the $31 million figure Schefter was given. So we are probably working with a roster that is around $29-30 million over the salary cap when the top 51 accounting takes place.

Getting around the 2014 salary cap

Sites like mine and various media reports can sometimes blow a teams’ cap situation out of proportion. From my time working exclusively covering the Jets salary cap I saw this occur twice, once in 2009 and again in 2013. While the 2013 situation was not great it was never as overblown as portrayed by a salary cap sheet. In 2009 the salary cap situation was actually fine. What occurs is that teams often have contracts that are designed to be restructured or terminated to aid a teams’ salary cap. That does not show up in a static chart.

The one contract Dallas has that is designed that way is Tony Romo’s. Romo has a salary cap figure of nearly $21.8 million in 2014, but the contract contains two “empty” proration years in 2018 and 2019 that were there to absorb restructured dollars. This is no different than Joe Flacco’s contract with the Ravens containing two option bonuses for cap purposes, except for the Ravens their salary cap will look fine on paper because they chose to use options in the initial deal. Dallas never does that and instead makes their situation look worse than it is.

It is basically a given that Dallas will reduce Romo’s base salary in 2014 from $13.5 million to $955,000 and convert the remainder to a bonus. That will free up $10,036,000 in salary cap commitments and reduce his cap figure to $11,737,000. That’s the intended value for Romo’s contract and will shave $10 million off Dallas’ $30 million overage. The team will also carry over around $2 million in cap space so we are looking at a team that is $18 million over prior to free agency.

The Cowboys have one major problem moving forward and that is the lack of cap relief the team can find by releasing players. While Romo fits the intended restructure category, the team has nobody in the intended release category. My estimates only have 8 players that would save Dallas more than $995,000 in cap room via release. These include starters Dez Bryant, Barry Church, and DeMarcus Ware. The following would be the releases:

Name	Savings	Net Savings
Phil Costa	$1,500,000	$1,080,000
Jeremy Parnell	$1,500,000	$1,080,000
Mackenzy Bernadeau	$1,425,832	$1,005,832
Justin Durant	$1,250,000	$830,000
Kyle Orton	$995,000	$575,000
Total	$6,670,832	$4,570,832

The net savings, after factoring in costs of replacements, are just $4.6 million. We mentioned that Bernadeau likely has an escalator worked into the Schefter estimate so we’ll call this $5.5 million in savings. That brings Dallas to approximately $12.5 million over the cap. I think it’s also safe to say that if the Schefter figure includes Arkin’s and Harris’ PPE that neither will happen due to playing time so we are around $11.1 million.

I know some will discuss the additional savings that could be realized with the June 1 designation, but a June 1 cut stays on the books until June 1 at the full cap charge. That designation will only be used to create functional cap room during the season and is only going to be used on players whose dead money and salary cap charge are essentially equal. The only real candidate for this is Doug Free whose $3.5 million dollar salary guarantees early in the League Year, but with Brian Waters contract expiring Free should have a role in 2014 either at Guard or Tackle especially since he has played so much better this season. Miles Austin is another candidate but they don’t actually have a need to cut him until after June 1.

The first restructure will probably be that of CB Brandon Carr. Carr has a $12.2 million dollar cap charge in 2014 with a $7.5 million base that makes up a majority of the charge. With a conventional restructure they can save $4,908,750 in cap space. By adding a voidable season, which is likely what they would do, they will save $5,236,000.

Fitting the Romo restructure category will be that of newly extended LB Sean Lee. Lee has a $5.5 million base salary in 2014 with empty proration years in 2018 and 2019. These seasons are just waiting to have money pushed into them. By reducing his salary to $730,000 and prorating the remainder they will create $3.816 million in cap room while adding $954,000 to the next four years. This puts Dallas in a position where they are approximately $2 million over the cap with three restructures (two of which were planned on signing) and five cuts.

Going forward Dallas is going to have a very difficult decision to make regarding DE/OLB DeMarcus Ware. Ware will be 32 years old in 2014. He is the lone Cowboys whose release or trade saves significant money- $7.4 million. Ware’s cap figure in 2014 is $16 million and then $17.5 million in 2015. These are very difficult cap numbers for 32 and 33 year old pass rushers. Julius Peppers has that kind of figure this season and won’t be back in Chicago next year. The going rate for older rushers is around $5 million a year. Ware will earn $27 million in cash in 2014 and 2015.

The reality is Ware really needs to have his contract ripped up and to take a paycut that makes him the highest paid older player rather than one of the highest paid player, but Dallas’ negotiations throughout history would give them almost no leverage to even push it. It would require a complete philosophical change. Most likely they will look to restructure his contract, which in my mind would be a disaster, but I don’t see them going another route.

If the Cowboys go all in with Ware and reduce his salary to the minimum they can save $8,471,250 against the salary cap even if they do not add void seasons to the contract. The problem with that move is it pushes Ware’s salary cap figure to $20.3 million in 2015 with a whopping $13,789,000 in dead money if they need to release him. Is that worth doing? Probably not and the team needs to avoid touching that deal if at all possible.

The team is probably best suited to first restructure the contract of Jason Witten and reducing his base salary from $5 million to the $955,000 minimum. This creates $3,031,500 in cap space which should be enough to at least get Dallas to be cap compliant. Witten will be 32 next season but his cap charges, even if he begins to decline, are more reasonable at 33 than Ware’s would be.

The other move would be to work with Austin on his contract. Personally I don’t believe Austin is worth the headache. He’s missed a few games this season and has slid down the depth charts. Austin really should be by ace in the hole. I cut him in June and free up $5.5 million to move the Cowboys to around $6 million in cap space which I can use for the rookie class when they sign in June and July.

If something disastrous happens I can then work with Ware but Ware is a deal Dallas should only touch as a last resort. The door needs to be open to take him off the roster in 2015. There are also a few other small deals that Dallas could terminate to gain a few hundred thousand here and there.

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Where Will Dallas Stand

What works to Dallas’ favor in all of this is that the only starters who are free agents next season are G Brian Waters and DT Jason Hatcher. The team won’t have the money to go into free agency and replace them with starters, but you can find rotational players that may fit in the limited budget. These are also draftable positions, specifically on the offensive line where many teams find first year starters.

Dallas starting lineup would have an average age of about 27 years with the offense being the problem unit, featuring four players over the age of 30. If Romo and Witten can continue to perform age should not be a primary factor of weakness in 2014. Basically what this amounts to is that the team in 2014 will look almost identical to the team in 2013 and 2012.

2015 Salary Cap Outlook

By reworking the contracts of Romo, Carr, Witten, and Lee we added $5,785,000 to the 2015 salary cap. That’s not too bad, but the roster at this point is in shambles and our top 5 players now account for nearly $76 million in cap commitments. The team will already have $9,086,200 in dead money on the books via the June 1 release of Miles Austin and Doug Free’s contract voiding.

Not including the 2014 draft class, Dallas would have around $109 million in salary cap commitments in 2015 with just 22 players under contract. One would assume that the team would invoke the option on starting Tackle Tyron Smith, which would be equal to the 2014 Transition tag. In 2013 that was $8,709,000 so we’ll assume $8.7 million for 2014 as well. I think it’s safe to assume two players from the 2012 draft class will earn the PPE adding around $1.3 million in cap to our total giving the team $119 in cap committed to 23 players.

Not among those 23 players is superstar WR Dez Bryant who will end up being the recipient of the Franchise tag, which should be valued around $10.6 million. Seven draft choices from 2014 should cost around $6 million in 2015 cap dollars. This brings Dallas to a fair estimate of 31 contracts of $135.6 million. If the remainder of the offseason roster is filled with players earning the minimum the salary cap will stand for Dallas at $144,300,000.

2015 Problems

We just navigated 2014 which seemed to be even worse so why is this different? Assuming the Bryant and Smith moves and one 2014 rookie starting the team would be looking at returning just 12 or 13 starters from the 2014 team. Of these starters Romo will be 35 while Ware and Witten will be 33. Neither Carr nor Lee would be youngsters anymore at 29 years old. These 5 players account for $74.3 million in cap charges and there has to be real questions about how much further can you push on with the same group.

Romo would carry a $27.782 million dollar cap charge in this scenario. The team could save $12.824 million in a restructure which virtually guarantees Romo will be QB through 2017 as his 2017 dead money would rise to $14.636 million if cut. Even at 38 years old he would still cost $8.921 million to part ways with.

Releasing Ware saves the team $12,186,000, which is why I would not want to touch his contract in 2014. He needs to go in 2014 to allow the team to move forward. There really are no other options. Through all the restructures we had to use for 2013 and 2014, Carr is already going to cost $11.36 million to release in 2016. I can’t go further in on a cornerback about to turn 30. Same goes with Witten.

2015 and Beyond

Most likely, barring a salary cap explosion in 2015, those two moves will give Dallas a few million to work with to fill all their open roster spots with players other than rookies. The two franchise type players will need to be signed to long term contracts with low cap charges in the first two years to help deal with some of the issues in 2015 and 2016.

Dallas is not going to trot out 10 rookies to start for the team if at all possible especially with Romo still at the helm. That is going to require significant creativity to do. They have to avoid doing anything with Ware, unless it’s a major paycut, and the desire to rework Carr’s deal another time. I would imagine the end game is something similar to what we saw in New York in 2013 with a slew of minimum salary benefit contracts filling out the roster.

By 2016 the team should move into full turnover mode with Romo being the last man standing from the old guard. Witten and Carr will combine for over $14 million in dead money in 2016, which should mark their fourth year in a row with well above the average dead money on their salary cap, but it should help them avoid the one mega season of dead money that has hit some other squads.

Can They Survive the Cap

In terms of success this is really a two year window for Dallas. They will cruise to a division title in 2013 because the NFC East is so bad. At this point it’s about gearing up for the playoffs. It is why if they are really considering a trade to upgrade a position it makes sense to do as long as they realize it is a one year commitment and they will move on next year. This is the best chance Dallas will have and you have to do everything you can to make it happen. If Dallas believes Maurice Jones-Drew can help them win its worth the $2.2 million carryover loss they would have.

2015 is really the year for the massive shakeup which Dallas will probably piece together over a few years rather than just one massive dump in a single season. By then many of the playmakers they have will probably be too old to make the same type of contributions that they are making now. But Dallas should be able to navigate 2014 without too much issue contractually. The problem is if everyone gets older a year earlier than expected. That is what is happening in New York in 2013 as they hung on one year too long with an overpriced veteran group. If 2014 ends up being a poor season on the field it will be a bleak outlook for the future because the team is still going to be stuck in neutral when it comes to making big additions over the next two seasons due to cap constraints. For better or worse they have to win with this group.

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Today and Tomorrow: The Cowboys Salary Cap Woes

Posted on July 16, 2013 by Jason Fitzgerald

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I had a question/request from Scott last week in regards to the Dallas Cowboys. I planned to do a podcast on the topic but just didn’t have time to do it so instead we’ll write this out and examine some of the harsh criticism I have and others have for the Cowboys handling of their salary cap. I’ll break it up into two parts, one of which deals with a cap violation and the other of which deals with future cap issues.

The Cap Penalties

First of all I should state that I don’t think either team really deserved the penalties that they received. There were plenty of teams that took advantage of the uncapped year in ways that may not have been exactly “within the spirit” of the rules, but the Cowboys and Redskins I believe got singled out because of who their owners are. It should be noted that two other teams received semi-penalties- the Saints and the Raiders. While their cap was not adjusted downward they did not receive any of the prize of the Cowboy/Redskins troubles. The Saints many of us always felt was because of the use of something called a completion bonus and the Raiders due to their handling of JaMarcus Russell, plus the fact that the league I think was done with Al Davis at that point. In hindsight I now question whether or not this was the first slap on the wrist for the bounty scandal in New Orleans, but that’s another topic.

The question here was why I often discuss the Redskins penalty, but rarely discuss the Cowboys one as a reason for the cap issues. The basic reason I discuss the penalty for the Redskins is because the number itself was so high that it has a material impact on any cap planning that a team can do. The Redskins never tried to “band aid” the team together to deal with the penalties, at least not to the extent the Cowboys have, but really it just comes down to overall cost. An $18 million downward adjustment kills your team. A $5 million one doesn’t come close to that. That said the actual penalties themselves were overblown for both organizations. Had the NFL done the right thing and not allowed the deals to be accepted, the actual cap charges would be very close to the penalty amounts. The penalties kind of brought the salary caps back to where they should have been had no violation occurred.

The damage that happened to both teams was not the penalty itself but the fact that they never could have planned on receiving them. The league allowed the contracts in question to be approved and then waited a full season before hurting both teams. That is not right. If the league informed the teams in 2011 that they would be taking action against them they could have planned accordingly, but instead they were blindsided by the decision.

Playing the “what if” game we can see how the penalties are not so severe in reality had they been able to plan for the penalties. The Redskins most likely never would have traded Albert Hayesworth if the league had not allowed them to make the change in his contract. IMO, the Redskins would have voided his guarantees in 2011 and designated him a June 1 cut.

	No Contract Change	Actual Charges	Gain/(Loss)
2011	$5,200,000	$0	$5,200,000
2012	$14,600,000	$10,500,000	$4,100,000
2013	$0	$10,500,000	($10,500,000)
2014	$0	$0	$0
Total	$19,800,000	$21,000,000	($1,200,000)

All in all the Redskins only lost about $1.2 million in cap room due to the penalties, assuming that his guarantees would have voided due to his personal conduct. Had they been aware of this in 2011 it would not have been nearly as tough a blow.

DeAngelo Hall likely would have been a June 1 cut this year or at the very least would see his prorations charged that way since he ended up back with Washington on a minimum salary deal. Here are the differences with his deal:

	No Contract Change	Actual Charges	Gain/(Loss)
2011	$8,300,000	$5,000,000	$3,300,000
2012	$9,800,000	$14,000,000	($4,200,000)
2013	$3,300,000	$7,500,000	($4,200,000)
2014	$3,000,000	$0	$3,000,000
Total	$24,400,000	$27,400,000	($2,100,000)

Again the actual loss is not as great as people believe, but these charges greatly impacted the way the Redskins could plan for the cap taking far more losses in 2012 and 2013 than they would have had the void provisions not be accepted by the NFL. In this respect the penalty for Hall was much more severe than the one for Haynesworth despite Haynesworth’s deal being larger.

The Cowboys were assessed a $10 million dollar penalty, which I would assume was the determination of what past history said they should have paid Miles Austin in a signing bonus. Going back to his original untouched contract you would get the following cap changes.

	No Contract Change	Actual Charges	Gain/(Loss)
2011	$10,540,000	$8,540,000	$2,000,000
2012	$3,150,000	$6,150,000	($3,000,000)
2013	$8,732,000	$11,732,000	($3,000,000)
2014	$2,000,000	$0	$2,000,000
Total	$24,422,000	$26,422,000	($2,000,000)

Its actually more of a penalty than the Haynesworth deal and pretty close to the Hall one. It is not as bad on the front end as the Hall penalty, specifically in 2013, but the overall impact is close.

All told the effect of the penalties is actually small on both teams, with the disclaimer being that they had some idea of them coming in 2011. The Redskins have made noticeable changes in their contracts and negotiations due to the penalties in order to be cap compliant. The Cowboys have not, which is another reason why I often avoid the Dallas penalty effect.

Overblown Cap Problems

Scott also pointed me to a link over at Blogging the Boys, going over the Cowboys salary cap. It’s a good article and worth a read so please read it if you get an opportunity. That said one of the difficulties in working with the salary cap is thinking short term. Decisions made in 2013 and 2014 impact you years down the line. The Cowboys 2014 salary cap is a problem but not as much of a problem as the 2015 one. Really when I talk about “paying the piper” or “bills coming due” that is the period of time we should be looking at, not the immediate future.

So since I’m not as familiar with the Cowboys roster as I am the teams of say the AFC East, I decided to use the BTB articles roster decisions to look ahead at Dallas’ salary cap for the upcoming years. Based on the projections made the Cowboys should enter the 2013 season with around $10.5 million in cap room. You would need to adjust for the Practice Squad ($1 million) and some misc costs ($1 million) to come up with the final cap total which we can guess to be $8.5 million if they avoid the injury bug.

While the original article mentioned signing Sean Lee we’ll just leave that be for the time being. In 2014 the suggestion was to cut Mackenzy Bernadeau and Justin Durant so I did that. We would then restructure Tony Romo’s and DeMarcus Ware’s contracts. I just assumed a reduction to a minimal type salary of $1 million with $12.5 million being prorated over 5 years for Romo and $11.25 million over 4 years for Ware. That creates $18.4 million in cap room. All of those savings now become potential dead money in future seasons. Assuming the cap rises to $124 million and they carry over the $8.5 million, the Cowboys will have around $18 million in cap room going into the 2014 League Year.

That assumes Dallas signs no futures contract players as the $18 million is for a 41 man roster. The team needs to get to 53. If we earmark a rookie class of 7 that counts for around $4.5 million (right about the Cowboys total this season) and take into account the workout bonus money the Cowboys are looking at spending $13 million for 3 players to reach the 51 man limit. I’m not sure what Lee would cost (7 mil or so a year with a low year 1 cap?) but he will eat into that total a bit. Still I would call that a workable number after going further in on Romo (which is planned) and Ware (which likely is not).

The problem is as we turn into 2015. In 2015 Doug Free and Kyle Orton will have their contracts void, immediately jumping into the dead money pool. I also made the assumption that the team will cut Jay Ratliff. If we throw the 7 rookies in the mix from the year before and assume they all stick at $5.5 million we have a roster with a $122.4 million dollar payroll with only 29 players under contract. The Cowboys would likely be about $10 million below the cap limit after the 2014 carryover and need to sign 24 players with that money. The minimum salary in 2015 is $435,000, meaning they would not even have enough to sign 24 undrafted free agents to complete the roster.

Those totals don’t include Lee or WR Dez Bryant, who would be a free agent in 2015. It also doesn’t include the Cowboys 2011 first round pick who will either be on an option season or need to be re-signed. You can go to a 35 year old Romo for more cap relief (again his deal is designed that way) but where else are you going? A 33 year old Ware? Doubtful, though through all the restructures you are now at a $20.3 million dollar hit so maybe it’s a must. You can cut Austin and Orlando Scandrick to save $8 million. That’s still not enough to do anything but at least you can begin to field a team. Most likely the team is stuck reworking Romo’s deal again to free up $12.8 million or so. That gives you $30 million, give or take a little, to sign 26 players to the team. With at least three big free agents not counted in that figure that is a tall order to overcome.

The one constant in all of this is that there is never a point where I can look at Dallas thru 2015 and simply say “they can leave things alone”. Every season it’s reworking contracts for stars or deciding players that can save some money by being released. Even all the way out into 2016 the base roster would still have $72 million in cap charges for just 14 players. Throw in a Bryant and Lee and you may be looking $87 million for just 16. The 2014 and 2015 rookie classes can bring that up 28 players for $102 million. It is just not that much to work with.

There are few, if any teams, that have these issues year after year. Usually every team has a breakdown year. One year where you see a number of players come off the books with little or no dead money. The average dead money per club this year is $9 million. Just in our base assumptions that number is a starting point in three of the next four seasons just to “get by”. That is going to put the Cowboys at a competitive disadvantage relative to the NFL each year. The lack of money to spend doesn’t allow them to get much better via any mechanism besides the draft. They will only be getting older on the top.

Maybe that’s not as bad as it sounds since successful drafting teams will be better than the teams built thru free agency, but it is often nice to be able to add some parts to complete the puzzle. I cant see ways for Dallas to do that.

That’s not to say Dallas is the only team in a bad cap position- the Panthers, Saints, and Lions are all a mess for various reasons as well- but Dallas is consistently in the worst position. They have also been a team that had various ways to avoid some of these charges. Franchising Anthony Spencer will cost Dallas over $10 million in cap that they could have put to better use. Signing Orton to a contract nobody in the NFL would have signed him to adds to the problems. Adding void years onto players contracts with no regard for the future have led to unnecessary excessive cap charges. Overpaying Austin as a one year wonder and extending an old defensive tackle to a league high contract when he had two years remaining on an existing deal are typical of the Cowboys woes.Did the cap penalties hurt the team? Sure but almost any other team would have made choices to take that into account. Dallas just kept on going as if nothing happened.

It might be one thing if this strategy ever worked, but the last time Dallas truly had a successful season Wade Phillips was the head coach. The last time people regarded Dallas as a legit threat for a title Terrell Owens was catching passes from a 27 year old QB with great potential. That 27 year old QB is now looked at as an overpriced failure more in part because of the Cowboys poor cap management and failure to surround him with a cohesive team than anything he has done to deserve that label.

If Dallas wins this year, and barring a game changing home run in the draft this to me is the year they have the best chance, it’s going to be in spite of the way they run their franchise. It’s not a sustainable business model and I’m not sure you could find one NFL executive outside of Dallas that would recommend running the franchise this way. Right now they are either on the path to having a Raiders like implosion in a few years or fielding the oldest team in the NFL.

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Looking at a Potential Darrelle Revis Extension

Posted on April 21, 2013 by Jason Fitzgerald

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I just wanted to post some opinions on what I think would be a contract that might make Darrelle Revis happy in terms of compensation. With the years of working on understanding the Jets salary cap Revis has been a hot topic of debate so he has been a player that I have really tried to get a better understanding of from a financial standpoint. Tampa has a very specific way of doing business so let’s see if we can get the two sides to meet.

Revis’ biggest desire in recent times has been to be the highest paid defensive player in the NFL. That distinction currently belongs to the Bills Mario Williams, who earns $16 million a year from the Buffalo Bills. Considering the market crash of 2013 and the fact that Revis is coming off an injury I think even he has come off that stance. I think at this point it will be acceptable to Revis to come in at a number that is going to be looked at as long term the highest in the game.

Clay Matthews recently signed an extension worth $13.2 million a season to top the OLB market and that becomes a number that Revis will need to top. The next highest paid defensive player is Julius Peppers of the Bears which averages $14 million a season. That is probably the high end for Revis and a number he would love to top but might not be reasonable. Pepper and Williams could both be gone by 2014 and the reality is any number close to the $14 million is most likely not going to be surpassed barring a dramatic change in salary cap limits. The next “dominant” talents to have the chance would be JJ Watt of the Texans and potentially Jason Pierre Paul of the Giants if he put together two dominant years in 2013 and 2014.

So for the sake of argument I’d say $13.5 million gets the contract done, but we have to consider that Revis has one year under contract left at $6 million dollars. Under a normal valuation the extension would kick in beginning in 2014 with $6 million of old money being built in, but I can’t see Revis buying that logic as it was an issue with his last Jets contract as well. In real terms that would make a deal $12.25 million for 6. He is going to want the full $13.5 for 6, making the extension years actually worth $15 million a season, for a total of $75 million. That number shatters the new money for Matthews and surpasses Peppers as well.

While Revis will compromise on the total value, if you can call it that, I do not think he will compromise as much on two other areas. The first is going to be the 2 year payout on his contract, which is typically where the guarantees of most contracts lie. Mario Williams takehome is $40 million over the first two years of his contract. That is the same number that DeMarcus Ware of the Cowboys and Terrell Suggs of the Ravens earned. I think that will be a deal breaker or close to it. Ware and Suggs will earn similar or less money annually than Revis and there were ways to have those high payouts early in the contract. To me he has to hit that number, unlike Matthews. The 3 year is important to him as well but I think more in terms of comparing to Ware than Williams. Williams’ takehome is $53 million while Ware is $45 million. Revis will want somewhere in between. Again I cant imagine a compromise to fall under Ware.

The Buccaneers are a team that rarely does signing bonuses and I cant see them doing one here. They rarely do option bonuses either. For the most part they are a team that works on a cash to cap basis matching cash flow to cap hits other than for drafted rookies. To me that fits in fine with Revis. Revis wants to be the highest paid, in terms of cash, cornerback year after year. This was constantly a holdout argument from his side almost every year against the Jets who used option bonuses, void years, and salary advances in his prior two contracts to keep the cap hits reasonable. When you pay large sums of prorated money to a player it often inflates 1 year cash and deflates future cash flows. You would not hear a peep from Revis in a year designed to earn over $20 million, but the next year when his cash flow is around $7 million the rumblings of being underpaid occurred. You cant have it both ways and I think its important that a deal is structured in way that Revis is almost always guaranteed to be close to a double digit earner in cash flows.

To me that ties in fine with Tampa’s way of doing business. While they did prorate deals for Vincent Jackson and Carl Nicks this past year in preparation for a Revis trade they were not part of their original contract structure and I don’t think they want to compromise the way they do business. If they fully guarantee base salary with no offset provisions that will provide Revis with the same level of protection as the signing bonus, at least early in the contract. While the Bucs could hold options to convert guaranteed salary to a prorated bonus, that would be as far as I think they would take it.

One of things that I think both sides will look at is the structure of the Jake Long contract with the Rams and a few deals done by Tom Brady with the Patriots. These were contracts where guarantees kick in provided a milestone occurs. Brady’s contracts in the past have had potential to be fully 100% guaranteed provided he was on the roster the day after a Super Bowl or, towards the end of his contract, the last day of the regular season. Jake Long’s has some similar provisions to kick in smaller guarantees and they are based on IR status, which could be a consideration for Revis’ knee. The sides could look at the Peyton Manning deal where passing one physical unlocks 2 years of guarantees as well, but with Revis in his prime and perhaps no prorated bonuses I think they may opt to try to go for year after year guarantees if the Bucs don’t make a decision early about his status. The first two years will be fully guaranteed regardless.

The Buccaneers have over $30 million in cap room and less than $100 million committed to next season (though without a QB under contract) so they can certainly frontload a pure cash contract to Revis and not get into too much trouble. Per CBA rules you have to maintain at least 50% of the salary between year 1 and year 2, but that should not be a problem considering he needs to earn $40 million in that time. Keeping in mind the fact that he has the one year under contract they could do a deal like this:

	Cap	Real Cash Total	New Cash Total
Year 0	$24,000,000	$24,000,000	$18,000,000
Year 1	$15,000,000	$39,000,000	$33,000,000
Year 2	$7,000,000	$46,000,000	$40,000,000
Year 3	$10,000,000	$56,000,000	$50,000,000
Year 4	$13,000,000	$69,000,000	$63,000,000
Year 5	$12,000,000	$81,000,000	$75,000,000

At these numbers (and you could easily split the cap numbers up to offseason roster bonuses for early payments without hurting the cap) Revis would hit pretty much all his desires. $13.5 million annually. $15 million in “new” money. Yearly cash flows that are almost always double digit millions. Over 50% of his contract coming in the form of guarantees and two year payouts. $40 million in new money over the first two years while having a cash takehome over the first two years of $39 million. He ends up as the highest paid defensive player in the game for the foreseeable future and will have the opportunity to guarantee large amounts of his contract.

The only worry from the Bucs point of view is that year 2 payout, but that early in his contract and given his reputation I do not think Revis would threaten a holdout. I guess there are ways you can protect from that but it would be the only concern. It wont deter Tampa who dealt with a similar malcontent in Vincent Jackson, also repped by the same team that represents Revis, and had no issues finding a deal structure that they hope made him happy.If Revis proves to be unhealthy they would be able to move away by 2016 with no cap penalties. At worst It would cost them $46 million in cap space for a 3 year look at him, and they have alot of that money already earmarked for him to spend now. If you think he is the guy that gets you over the top its a risk well worth taking. They just need to protect themselves from getting cap penalties beyond that year if they are going to pay him that kind of money.

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Breaking Down the Real Value of the Clay Matthews Contract

Posted on April 18, 2013 by Jason Fitzgerald

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Yesterday we discussed the key metrics to look for when really valuing the Clay Matthews contract and now that the numbers are out per the Milwaukee Journal Sentinel we can put the numbers a bit in perspective compared to the Ware and Suggs contracts we focused on.

Despite the lofty totals of Matthew’s extension his contract is significantly less player friendly than the other contracts. First of all Matthews has $2.5 million tied up in per game roster bonuses, a major win for the Packers. Neither Mario Williams nor Julius Peppers, the two higher level defensive contracts, have such provisions nor do the Suggs and Ware contracts at the positions. In terms of cash flows here is how Matthews stacks up against Ware and Suggs:

	Ware	Ware Total	Suggs	Suggs Total	Matthews	Matthews Total
Year 1	$32,800,000	$32,800,000	$15,100,000	$15,100,000	$25,250,000	$25,250,000
Year 2	$7,200,000	$40,000,000	$24,900,000	$40,000,000	$8,600,000	$33,850,000
Year 3	$5,000,000	$45,000,000	$3,400,000	$43,400,000	$9,650,000	$43,500,000
Year 4	$6,000,000	$51,000,000	$4,900,000	$48,300,000	$11,100,000	$54,600,000
Year 5	$12,750,000	$63,750,000	$6,400,000	$54,700,000	$11,400,000	$66,000,000
Year 6	$14,250,000	$78,000,000	$7,800,000	$62,500,000	NA	NA

The key numbers here are the 2 and 3 year totals. His two year takehome of $33.85 million pales in comparison to the $40 million made by Ware and Suggs. Its 15% less salary than those two players earned in their first two new money years. His 3 year takehome barely eclipses that of Suggs and falls short of Ware by $1.5 million and these numbers are assuming he plays all 16 games for the Packers. It is really the backend of the contract in year 4 and 5 where he pulls away from Ware and Suggs in pay. As is often the case in the NFL these backend salaries are rarely earned and nothing more than fluff in a contract.

That brings us to functional guarantees. I stated in yesterdays piece that Ware had a functional guarantee of $40 million while Suggs had one worth $48.3 million. There was a strong probability that Ware would earn $45 million and Suggs just over $54 million. Here is how Matthew’s contract plays out:

	Base	Prorated Money	Misc.	Cap Number	Dead	Savings
Year 1	$1,000,000	$4,100,000	$6,000,000	$11,100,000	$16,400,000	($5,300,000)
Year 2	$7,600,000	$4,100,000	$1,000,000	$12,700,000	$12,300,000	$400,000
Year 3	$8,650,000	$4,100,000	$1,000,000	$13,750,000	$8,200,000	$5,550,000
Year 4	$10,100,000	$4,100,000	$1,000,000	$15,200,000	$4,100,000	$11,100,000
Year 5	$10,400,000	$0	$1,000,000	$11,400,000	$0	$11,400,000

The only year of the extension fully protected by dead money is the first year of the deal, though with such minimal savings I would consider year 2 protected as well. That would make the functional guarantee similar to Ware’s in that it only lasts two seasons. By year 3 he becomes fair game if the play declines badly. I fool around at times with a number you see on the site called a CSC ratio which is the cap savings plus cash savings divided by the cap hit for a player. Basically it tells you if you gain something positive with a cut and once the ratio goes over 1 the power sways towards the team. Matthews is at a 1.11 by year 3 of his deal, while Ware was at 0.66. Suggs was in negative terms due to the lack of cap savings associated with a cut at the time. In Year 4 Ware jumped to a 1.2 and Suggs didn’t reach close to Matthews’ Year 3 number until the 6^th year of his contract. In terms of protection Matthews’ deal doesn’t rank close.

So while Matthews will go down as the player with the highest annual value at the position the contract itself is much more reflective of the downturn in the NFL market. In real terms he is earning less than both Ware and Suggs, and its actually pretty significant. He has almost no protection it would seem beyond 2015, the third extension year of his contract. The other players were far more protected. Maybe some new details emerge today regarding ways he can earn more protection or more money, but based on the initial reports Matthews is highest paid in name only, but in the key valuation points this is not the top of the market deal it appears to be.

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Valuation Metrics for the Clay Matthews Extension

Posted on April 17, 2013 by Jason Fitzgerald

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After weeks of rumored contract negotiations between the Green Bay Packers and LB Clay Matthews, the two sides made it official that Matthews would not become the highest paid outside linebacker in the NFL, surpassing the $13 million per year that the Cowboys DeMarcus Ware received in his 2009 contract extension. While no numbers are in as I am writing this (who knows by the time I’m finished) I wanted to look at the two real benchmark deals ahead of time so that we can get a better idea of just how strong the contract really is. The two deals I want to look at are those of Ware and the Ravens’ Terrell Suggs.

When I evaluate high level deals like this for the site I like to look at two sets of numbers- yearly cash flow and functional guarantees. The cash flows are pretty self explanatory. Functional guarantees are the amount of money that a player will actually earn not just because of the guarantee but because of the structure of the contract which comes with prorated bonus protections that leads to excessive dead money if cut.

Ware’s case is more similar to Matthews in that both were currently under contract to their teams on rookie contracts when they signed their extensions. Suggs had gone beyond the rookie deal and was on a franchise tag. The following cash flows represent the new money totals per year for the players

	Ware	Ware Total	Suggs	Suggs Total
Year 1	$32,800,000	$32,800,000	$15,100,000	$15,100,000
Year 2	$7,200,000	$40,000,000	$24,900,000	$40,000,000
Year 3	$5,000,000	$45,000,000	$3,400,000	$43,400,000
Year 4	$6,000,000	$51,000,000	$4,900,000	$48,300,000
Year 5	$12,750,000	$63,750,000	$6,400,000	$54,700,000
Year 6	$14,250,000	$78,000,000	$7,800,000	$62,500,000

The first benchmark for Matthews is clearly the $40 million over a two year period, matching what both Ware and Suggs received. Ware’s number is a bit more misleading since it actually took him 3 years to reach $40 million due to the prior year contract not counting in the calculation. If Matthews surpasses $45 million over his first three extension years he will get the best deal of the group. Matthews was already set to earn over $3 million this season which would mean his 4 year total would surpass Suggs’ 4 year if he gets $45 million over the first three new years of the contract. Ware’s contract was filled with big money at the end which normally wont be earned which is why I want to go to the functional guarantees next, first with Ware and then with Suggs.

Ware:

	Base	Prorated Money	Misc.	Cap Number	Dead	Savings
Year 1	$7,800,000	$5,430,693	$0	$13,230,693	$25,226,772	($11,996,079)
Year 2	$6,700,000	$3,998,693	$500,000	$11,198,693	$11,996,079	($797,386)
Year 3	$4,500,000	$3,998,693	$500,000	$8,998,693	$7,997,386	$1,001,307
Year 4	$5,500,000	$3,998,693	$500,000	$9,998,693	$3,998,693	$6,000,000
Year 5	$12,250,000	$0	$500,000	$12,750,000	$0	$12,750,000
Year 6	$13,750,000	$0	$500,000	$14,250,000	$0	$14,250,000

Suggs:

	Base	Prorated Money	Misc.	Cap Number	Dead	Savings
Year 1	$1,000,000	$2,020,000	$4,000,000	$7,020,000	$14,100,000	($7,080,000)
Year 2	$1,900,000	$6,620,000	$0	$8,520,000	$31,080,000	($22,560,000)
Year 3	$3,400,000	$6,620,000	$0	$10,020,000	$24,460,000	($14,440,000)
Year 4	$4,900,000	$6,620,000	$0	$11,520,000	$17,840,000	($6,320,000)
Year 5	$6,400,000	$6,620,000	$0	$13,020,000	$11,220,000	$1,800,000
Year 6	$7,800,000	$4,600,000	$0	$12,400,000	$4,600,000	$7,800,000

This actually drives home a major difference between the two contracts. The fact that Suggs got massive prorated bonus money rather than base salary guarantees in the first two years of his deal make him virtually uncuttable for the first 4 years of his contract and even Year 5 is a difficult choice. This would be a functional guarantee of $48.3 million with a decent chance of earning $54.7 million before being released.

Ware, before Jerry Jones went wild with the restructures, did not have that protection upon signing. In this case I would consider the first two years functionally guaranteed with a decent chance of the third year being earned. So the reality is its $40 million and a good chance at $45. If his play trailed off he would have been a prime candidate for a restructure in year 4 and easily cut beyond that. In reality his year 5 and 6 were nothing but funny money. Now Dallas has virtually guaranteed the whole contract because of their cap problems, but when signed Suggs had the far better contract structure despite lower money totals.

For Matthews to come out on top of the market he needs a structure that is closer to that of Suggs. Something that functionally guarantees him those first four years and a great chance at 5 years. If he can reach that $51 million over 4 year plateau and have a structure that makes it difficult for the Packers to wave good bye in 2018 he will truly have the best contract in recent memory at the position. If the Packers have outs early on and his cash flow is similar to that of Ware it may be a case where it’s a deal that looks better on paper than it plays out in real life, especially since the Packers are not going to get in a deep mess the way the Cowboys did.