There are a number of ways to look at roster construction in the NFL, and Nick recently did a great job with his roster texture charts(which you should read if you haven’t already), but today I wanted to look to see how teams really derive their value when they build a roster. Normally when we look at a roster we look at two basic numbers- salary cap charges and contract annual value- and then compare franchises across the board. But I got to thinking, wouldn’t it be a much more accurate portrayal if we put those numbers in perspective by seeing how much marginal value a team is really assigning to their highest paid players? For example Peyton Manning makes more than Darrelle Revis, but Manning plays a position where the average salary for a starter is over $12 million. Tehnically the Jets are giving up more by having Revis as the highest paid player on the team, even if Manning has a higher stated salary. So we can best define value by determining the cost above average a team spends on their top players on the team. Continue reading Examining the Marginal Value Implied in Player Contracts »
So, here’s how it works out when you break it down by the years:
Figure 1: Ryan Tannehill’s Contract and Projected Cap Figures
(Remember: Click on the figures to open them up and enlarge them.)
So on Tuesday, when I saw this contract, I was the guy I HATE, the Stephen A. Smith type, provocative assclown who thinks they know everything. I tweeted out, “Tannehill could be a terrific QB, I believe in him, but Tannenbaum just paid him like he’s already arrived.” To be honest, I kind of took my pent up annoyance with Ndamukong Suh’s current contract and let that spill over into this situation. Don’t get me wrong, I still think Tannenbaum doesn’t understand the percentage of the salary cap analysis of the cap and that Suh’s Contract Cripples Dolphins (don’t you just hate when people do bad things to dolphins?), but this Tannehill contract is very good. Continue reading Opinion on Ryan Tannehill’s New Contract »
Thursday night during my weekly salary cap Q&A on Twitter I started getting a great deal of questions about the rumors about Ndamukong Suh signing with the Dolphins. The basic questions centered around how could a team like the Dolphins, who are cap strapped, compete with a team like the Raiders who will have $70 million in cap room by the time free agency begins. So let’s expand on this and show the ways Miami can create a stronger contract for Suh to consider.
Now for this exercise I will base everything on a 6 year $100M deal for Suh. The cash flows would closely mimic those of JJ Watt with slightly more going to Suh over the first three years than Watt received.
The major difference between the two organizations at the moment is their approach to contract structuring, something the Dolphins will try to exploit. The Dolphins are now run by Mike Tannenbaum who will be willing to use both the signing bonus and option bonus mechanisms to work a player into the salary cap as evidenced by his time on the Jets.
The Raider’s Reggie McKenzie has been essentially opposed to using any prorated contract mechanisms. The only value player last year where the team prorated significant money was for tackle/guard Austin Howard and that was most likely caused by a clerical error than being intentional. This is something the Dolphins will try to exploit.
In my proposed contract with the Dolphins Suh will receive a $32 million signing bonus and $1 million base salary for a first year salary of $33 million. In year two Suh would receive a $6 million option bonus and $5 million salary. The first two years would be fully guaranteed and figure year 3 is injury guaranteed. Here is how the contract would look:
Our contract gives the Dolphins two years of virtual cap relief on the contract with just $20 million to be accounted for in 2015 and 2016. This gives the Dolphins time to get their roster in order, dead weight off the books, and be helped by a rising salary cap before Suh’s contract becomes a burden.
The Raiders would be unable to match the first years cash flow using their traditional model, due a small rule known as the 50% rule that will cause large differentials in first and second year salary to be treated as a signing bonus. Without moving off their preferred structure, Oakland would need to offer more money to Suh in the first two years of his contract than Miami (nearly $50 million total) which would seem excessive for any player. Here is how the Raiders would be able to most closely match the cash flow of the contract:
Oakland would essentially eat up half their cap in one year on Suh, which isn’t unreasonable. The Raiders simply have to convince Suh that the one year less in upfront cash is fair. The team can combat this a bit by turning a majority of his 2016 base into a roster bonus paid in March to try to improve on the timing of payments compared to Miami’s.
But in looking at the two contract’s the important thing to consider is what happens for Suh after the guarantees in the contract run out? We can turn to the Expected Contract Value metric to try to put the two offers more in context:
In this valuation the Dolphins offer would be expected to earn the player about $2.5M more than the Raiders one. This is mainly due to the likelihood of Suh seeing the 3rd and 4th contract years being greater with Miami (89% and 65.8%) than Oakland (77.3% and 58.1%).
That outcome should also change even more in the Dolphins favor if they either give him a larger option bonus but smaller base in year 2 or restructure his contract in 2017 for further cap relief. Neither of those, specifically the restructure, is remotely likely in Oakland.
What this means is that if Oakland doesn’t come off their standard contract they will likely need to beat the Dolphins four year cash offer by somewhere between $3 and 4 million to actually have the earning power of the player remain the same. If we begin to factor in things like state taxes it may be even more.
None of this means the Raiders don’t have a shot unless they change their contract approach and we are certainly making many assumptions on contract structure, but this illustrates the why and how a team with such limited cap space can compete on equal footing in a competitive market with a team with huge cap room. We’ll see how things play out next week but Miami will need to employ a very player favorable structure to make this work in their favor.
Estimated 2015 Cap Space: -$300k ($140M cap limit)
Players Under Contract: 58
Pro Bowlers: 2
Unrestricted Free Agents: 12(6 with 50%+ playtime)
Draft Selection: 14
Salary Cap Breakdown
Free Agents to Re-sign
Jared Odrick has developed into a solid, all around talent and should be able to give Miami a solid presence for the next few seasons. They should do what they can to bring him back, though he may prefer looking elsewhere as he and the team seem to be at odds. I would imagine he will be looked at as a $5.5 to $6.5 million a year player…Backup QB Matt Moore may arguably be the second best QB available this offseason, which says little for the position. He should receive top backup money around $4-$5 million a season if Miami wants to retain him. I could see that being difficult with their salary cap position but I think its too impotant to have a decent backup in the event of injury….Charles Clay is one of those players with potential that the Dolphins should hold on to, but my guess is he might be considering a one year deal in the hopes of improving his value.
Free Agents to Let Walk
Knowshon Moreno was worth the one year risk, but he couldn’t remain healthy and with the emergence of Lamar Miller probably is not needed anyway…Daniel Thomas never developed for the team and would not seem to have a place going forward…Pro Football Focus graded Daryn Colledge as one of the worst lineman in the entire NFL so bringing him back should not be in the plans for the team next year. Samson Satele was a late signing to fill for injury, but the Dolphins will be better moving Mike Pouncey back to center and finding another guard rather than retaining Satele.
Contracts to Modify
The decision made to pay Mike Wallace well above his performance level led to high expectations by the fans, media, team and player himself. Not surprisingly, things haven’t worked out and now they are stuck with a $12.1 million cap charge and $3 million salary guarantee. The best situation for all is to bring his salary down to a fair level in 2015. At this point he is a $6-$7 million player, which means a $3-4 million pay reduction. Because the guarantees have offsets the Dolphins don’t really need to consider that number as a sunk cost and can renegotiate just as if it is a new contract… Signing Cortland Finnegan to a $5.5 million contract was definitely on the high side and seemed to indicate desperation to find another cornerback. They still need corners so they probably should keep him but his contract needs to be brought down to $2.5 to $3 million in 2015…Randy Starks could be in danger of being cut, but the team should consider it a better option to bring his salary down from $5 million and keeping him for one last season.
Players to Consider Releasing
Signing linebacker Dannell Ellerbe to a big contract in 2013 was a head scratcher and they can finally get out from the contract in 2014. His cap charge is $9.85M and they will save $5.65M by cutting him. He earns more cash salary than any other inside linebacker in 2015, so there is no logical reason to keep him…It’s hard to understand what has happened to Brian Hartline, but he has become the third target on the team and his role looks ready to decrease further in the future. A $7.35 million cap charge for a 3rd target is far too expensive. They will save $3.15 million by cutting him…Nate Garner was barely used in 2014 and landed on the NFI list late in the season. With $1.65M in savings with his release, it seems a guarantee that he will not be back in 2015.
Miami needs to question if they have gotten as far as they can with this group and if they need to begin revamping the team, especially on defense where they completely fell apart late last season. Miami has 4 starters on defense over the age of 30 and 10 players in total that were at least 28 last season. That’s essentially half of the team they need to turn over within the next two years and it includes some of their best players in Cameron Wake, Brandon Albert, Brent Grimes, and Randy Starks. Do they make moves to try to extend the window with this group one more time and perhaps sacrifice the future or do they begin a transition strategy?
If the Dolphins opt for the former it could move their upcoming cap situation into one of the worst in the NFL when you consider than Ryan Tannehill will likely end up with a $14-$15 million per year contract in 2016. The only way they can actively upgrade the roster is with big free agent acquisitions and they are only going to be able to do that by pushing more money into 2016 and 2017 with this current group. Given that the team has shown to be little better than a 0.500 team and doesn’t show a dominant trait this would be a highly risky strategy.
Instead they should consider the process of piecing things together for this season while building up cap space for a splash in the future when Tannehill may be more of a finished product. That will likely mean focusing on the draft to fill major needs at corner, linebacker, and the interior line as well as hoping to find a young pass rusher. The organization is now being run by Mike Tannenbaum, who is not afraid of making a splash, and it wouldn’t surprise me if one of those big veterans is moved to build for the future, Wake being the most logical.
My guess is Miami is working hard on identifying possible player cuts and coming up with ways to entice those players on a low cost one or two year contract. Trades for disappointing first and second round picks would also be something that they could be open to. Actual free agency should just pick and choose some younger players with upside that maybe just need a change of scenery.
I would also expect the Dolphins to get a more defined contract strategy in the future. Recently their contracts have been somewhat haphazard, playing hardball with many of their own players and receiving good terms for players like Hartline and Grimes, but signing outlandish deals for players like Wallace, Ellerbe, and Wheeler. That may be an example of Miami picking their battles or simply going all in when they feel that there can be an open competition. Because Miami had no long term contracts in place when they began their spending spree they were also at a possible negotiating disadvantage since it was obvious they had money to spend. By staying tight on the cap they will have a different perception around the NFL and force players to choose the Dolphins sales pitch rather than just the dollar signs.
While this strategy is probably not what people expect from Tannenbaum he did go through something similar to this with the Jets in 2006. Those Jets were in a worse place than the Dolphins but it was a two year plan with a focus on remaining competitive, finding bargains, and preparing for a big free agent frenzy down the line. I see this as a similar job with a transition being needed to bridge the gap from a veteran group to a younger one.
A few days ago Armando Salguero of the Miami Herald wondered if the Miami Dolphins might try to trade DE/OLB Dion Jordan. Former GM Jeff Ireland traded moved up nine spots to make the selection by trading the 12th and 42nd overall choices for Jordan. Now that Ireland is gone there could be a chance that his pick goes with him. So let’s look at the salary cap consequences and financial considerations for both sides.
As a rookie Jordan only saw action on about 29% of all snaps and primarily was used in passing situations, as 75% of his snaps were on passing plays. His performance as a rusher was not bad for a rookie. He pressured the QB on 11.7% of his pass rush opportunities which was second among Dolphins’ defensive lineman to only Cameron Wake (17.1%). However he produced few sacks and considering his role never grew during the season it did not seem as if he was growing as a player or earned the trust of his coaching staff, which still remains in place.
Jordan signed a four year contract worth a fully guaranteed $20,572,298. While the deal does contain offsets all of the remaining salary and cap charges would be due to Jordan if released, so for anyone discussing that option it will not happen. Trades however are a possibility. If traded the situation would be somewhat similar to the situation with RB Trent Richardson, who was traded last year from the Browns to the Colts. When traded all of the future guaranteed salaries transfer to the new team, leaving the drafting team’s responsibility to simply be the prorated bonus charges remaining in the contract. That is still a hefty figure, but much more reasonable than an outright release.
The Dolphins, if seriously considering this option, would need to make the trade sometime before the 5th day of training camp. If Jordan is on the roster as of that day the team would have to pay him $845,104. Most likely he would be traded prior to this years draft, but here are the three trade scenarios and cap charges, and savings involved:
|Before June 1|
|After June 1/Before Camp|
|After 5th day Camp|
It should also be worth noting that if they opt to trade him for the 22nd pick in the draft they will also be spending more money on a draft pick. The cap charges for that player should be $1,499,745 and $1,874,681 in 2014 and 2015 so the savings are less than listed in the above charts due to the replacement player cost.
From the side of the Eagles that presents an interesting situation. They would take on cap charges of $1,340,104 in 2014 and $2,275,209 in 2015 which means over the next two years they would pay just an additional $240,887 in salary cap for a player with, on paper, top 5 talent if they execute the trade. The Eagles overall would be responsible for $6,825,626 in total salary paid for Jordan over the next three seasons compared to $6,703,248 for the number 22 pick. The guarantee for the number 22 pick should be just over $7 million with a first year cash payout of $4,738,980. So the Eagles would save over $3 million in cash expenses in 2014 and have less guaranteed salary left for Jordan than on the blind draft pick.
So clearly there would be a financial advantage for the Eagles to strongly consider the trade if they feel that Jordan is truly a top 10 player. Miami would just be accepting a sunk cost as gone and moving on from a player they don’t believe in.
Based on various reports about the future of Dolphins G Richie Incognito I just thought I would throw my opinion out there as to the options for the Dolphins.
The Dolphins suspended Incognito yesterday for conduct detrimental to the team. Per my understanding of the CBA the longest period he can be suspended for is 4 games, which would make it mandatory that he return to the roster following the Dolphins game against the New York Jets on December 1. Incognito will not be paid for this period of suspension which would cost him $941,177 in lost salary and $50,000 in bonus money.
The NFL Players Association can challenge validity of the suspension which I would imagine presents them with a difficult dilemma. In this case the detrimental conduct by Incognito was directly pointed at another member of the NFLPA. Normally the NFLPA would challenge an assertion that the player was harming the team and thus subject to discipline, but in this case it’s a reaction to a complaint made by a union member. This may be even more difficult than challenging the Patriots on behalf of Aaron Hernandez where there was at least an argument to be made to protect the guaranteed contracts of players from wrongful termination.
There are many saying that the Dolphins should just release Incognito, but once the Dolphins do that they will be on the hook for the remainder of his salary which is protected under the Termination Pay provisions of the CBA. There is one manner in which a team can attempt to avoid that pay, but it requires a player to not exhibit a good faith effort to fulfill his responsibilities to play football and that would be a major stretch in this situation.
With that in mind I have the same response to this as I did the Hernandez case and that if the act is that terrible (and by no means am I lumping Incognito anywhere near Hernandez) that we should never reward the person with money if it can be avoided. If Miami chooses to release Incognito now they will have to pay him the $941,177 in salary that he would lose while suspended. If they simply wait 4 weeks Incognito loses that money.
By waiting Miami’s final bill would be $941,177 for the final four weeks of the year rather than $1,882,353. The bonus is money is lost whether he is cut now or later as that money is not protected by Termination Pay. If this is indeed Incognito’s last season in the NFL he should also be eligible for severance pay from the Dolphins. I believe his severance pay will equal $102,500 which he can claim after a year out of the NFL. Unlike Termination Pay, this charge will not impact the salary cap.
As Ryan continues his excellent State of the Rebuild series, in which he looks at new General Managers and their situations, I thought it might be worthwhile to just give a general overview of the manner in which teams are utilizing free agency to build their starting rosters for the 2013 NFL season. For this I will look at the AFC (I’ll be happy to run the numbers for the NFC if requested) and use the current starting players listed on Ourlads depth charts. Traded players do not count when looking at free agency unless they signed a new contract with the team. For example Chris Ivory of the Jets would count (though he is not listed as a starter) but Alex Smith of the Chiefs would not.
Free agency is often a short sighted approach to building a football team. The NFL is a young man’s game and often the most productive years for a player come during the first six or seven seasons of a career. For some teams this leads to a philosophy of extending draft picks early in their careers. The manner in which this works is that a team, after a players third season in the league (it used to be his second season), extends the player for a period of anywhere from three to five seasons on top of his existing contract.
The benefit to this is that the player is locked up for what are considered his “prime” football years with minimal down the road impact if the player needs to be released for dropoff in performance. The reason the impact is minimized is because bonus money can only be prorated over a 5 year period, leaving the final extension years often clean from a salary cap standpoint. Teams also have a great deal of leverage in these early extension negotiations and can lock up players at below market values. In general you are sacrificing the salary cap benefit of the rookie contract for long term salary cap flexibility. The 49’ers, Packers, and Eagles have all been major proponents of this strategy.
Of course there is risk involved in this strategy. First of all you have a very small sample size of real game action to evaluate the player. For many players you can throw a rookie season out simply due to the immense learning curve of the NFL, leaving a team with just one or two years to evaluate the talent. If the talent busts you are stuck with cap charges you never would have had if you allowed him to play the rookie contract out. This is how the Patriots got into cap problems with Aaron Hernandez. While that is an extreme example it shows the negative side of the early extension.
It can also be a difficult strategy to stick with because GM’s jobs are directly tied to wins and losses and this strategy is a better long term rather than short term strategy. You are sacrificing the opportunity to get better immediately to stay better over a longer period of time, which could lead to some losing seasons early in the philosophical transition. That often leads to a team going in the other direction and looking to build via free agency.
There are various types of building through free agency. There is the more short term enhancement designed to put a “win now” team over the top. The Broncos would be an example of this. They will have nearly $20 million(as measured by annual value) in new talent take the field for them this year, but three of those four players are signed for 2 or fewer seasons. This, in essence, gives the team a great escape if the “win now” team doesn’t win. There is no long term commitment whatsoever.
There is the barren roster situation which would be exemplified by the Raiders. The Raiders are essentially an expansion team and need bodies on the field. They have eight new starters signed as free agents, tied for most in the AFC. They are not signing them to turn the franchise around; it’s simply better than the alternative of the completely unknown undrafted free agent. Of those eight, six will be free agents after this season. It is a stop gap solution with no long term damage.
There are other teams that see free agency as an opportunity to add one or two big pieces to the long term plan of the team. The Browns and Titans would both fit in that category. They added some significant big money players but not to the point where it completely overhauls their roster. These players are not short term solutions either but more admissions of either draft failures or a desire to not spend future draft allocations on these positions.
Finally you have the complete rebuilding approach. I find this to be the most fascinating to watch unfold because the expectations are not so much to build on what is in place but to turn a franchise completely around in a very quick manner. Failure at the early stages of this process often lead to significant salary cap damage down the line. This strategy is completely opposite to the “extend early to avoid the cap pain late” approach. Teams that build this way often do not have a happy ending when the 28 year old free agent makes the turn past 30 and they have all kinds of guarantees or bonus prorations in their contracts. What makes this even more difficult is that you are not putting one or two parts into an existing system but multiple pieces. With limited practice time in the preseason it can leave units of 11 that need to function as 1 right out of the gate struggling for answers on the field. By the time they figure things out the season could be lost and GM’s jobs will be in jeopardy.
The two AFC teams utilizing this strategy this year are the Miami Dolphins and Indianapolis Colts, though there are differences to both internally in the way that they approached this. Miami is one of the most unique attempts at a quick rebuild that I can recall. They have more or less been waiting for the last two years for contracts to run out so that they had significant money to spend. Miami doled out over $42 million in annual salary to other teams’ free agents. That is nearly $8.5 million more than the next closest team. They will have 7 new starters this year, nearly 1/3 of their starting roster.
What makes their situation even more unique is that for all this money spent, $13.5 million of it is just for one year rentals. That $13.5 million represents the contracts given to TE Dustin Keller, CB Brent Grimes, and RT Tyson Clabo. Normally you would expect this more on a “win now” team where you go all in on a few short term pieces, but the Dolphins have shown no signs of being that type of team. They have been a steady as a rock 6 to 7 win team since their trip to the playoffs in 2008.
They also have five other starters in their walk year (Randy Starks, Paul Soliai, Chris Clemons, Koa Misi, and Richie Incognito) which could keep the Dolphins in line for another major overhaul in 2014. With a good deal of cap room to carry over into 2014 and some wiggle room to restructure existing contracts, Miami could conceivably go on a large spending spree again in 2014, potentially under a new GM if the team fails in 2013. So it’s not really a big window of opportunity for the team as presently constructed but more of a one year vision with an open window to improve internally and externally in the future.
The Colts are different. They have taken an approach that you can take a relatively young overachieving team, and I’m not sure any team has ever overachieved more than the Colts last season, and quickly take it from the learning stages right into the advanced playoff stages. Indianapolis will have 8 new starters in 2013, 5 of whom are signed for 4 or more seasons. They committed 26 seasons to these 8 players so this was a long term plan, not a short term fix.
But the Colts are also making a leap of faith on the talent they acquired. These players are not so much proven talents as they are key backups now expected to start. The 8 players only combined for 72 starts in 2012. S LaRon Landry and RT Gosder Cherilus are really your only true proven starters. Almost everyone else the team signed long term comes with a huge “buyer beware” sign and the decisions left a number of people around the league wondering why they paid so much for some of the players.
That said I would consider this a more traditional approach to building via free agency with long term deals as the centerpiece. Normally teams might wait one more season rather than right after the rookie year of a number of key pieces but the Colts are young and cheap enough to where this may just be the prelude to the main event which could take place in free agency in 2014. They will be tough to outbid next year if they want to add more pieces.
I do think that many teams will watch the success or failure of the Colts and Dolphins very closely. There are a number of teams that are going to have significant cap room next season and what could be impatient owners and/or fanbases that want to see results fast. These teams include the Raiders, Jaguars, Jets, Browns, and Bears. If the Dolphins can go from a 7 win to an 11 win team it is going to be hard to state that you want to avoid free agency and build via the draft on a 3 year plan. But if Miami goes 7-9 again and the Colts fail to make the playoffs it will likely be another reason to not go wild in free agency.
A lot may hinge on these types of teams besides free agency philosophies. Spending in general was down last season on most positions other than QB and WR. The flat salary cap has made some teams a bit more cautious than they were in the past with their spending and as a result free agency in 2013 was almost a non-event outside of a handful of contracts. Players need some of these big money contracts to actually result in improved won-loss records and playoff success to convince teams that spending is just as important as drafting.
I’d actually say it is far more important to the players to see players like Mike Wallace and Paul Kruger help turn the fortunes around of their franchise than it would be for a bargain chip like Wes Welker to push the Broncos to the Super Bowl. While a player like Welker would show that you can enhance your results by participating in free agency, his next to nothing contract would still signal that teams should put low caps on their offseason evaluations. If the big money items make a meaningful splash more bidding wars could ensue.
The following chart illustrates the annual amount spent per team on 2013 starters that came via free agency. The two lines show how many players were signed and how many total years were potentially invested in those players. If you would like to see an overview of the NFC feel free to send me an email.