A Fair Value for QB Aaron Rodgers

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With Aaron Rodgers supposedly deep in contract negotiations I thought it might be worth looking at what he should expect to make. I don’t want to bother going into statistics or anything like that. (If you want to read my piece on statistical measures to assign contract values you can click to it here). I just want to look at the marketplace and some trends and see where we go from here.

I think most people will agree that Rodgers is the best player in the game right now. He has the one Super Bowl win. He has the prolific passing numbers. The Packers are a great regular season team. When it comes to comparables for a contract the two players I want to look at are Peyton Manning and Drew Brees. Rodgers does not have the pedigree Manning had, with Manning being considered one of the all time great draft prospects and pretty much coming out of the gate firing. Rodgers sat for a few years behind Brett Favre before getting his opportunity and making the people of Green Bay forget about Favre. It took Brees some time as well to get going, though he had chances he just was not an exceptional player until late in his Charger run and then took it to another level when he hooked up with Sean Payton in New Orleans.

I want to try to find some trends with contracts when coming up with a fair market price for Rodgers. In my mind Joe Flacco should be looked at similarly to Ben Roethlisberger.  Roethlisberger signed an extension back in 2008 that was worth around $14.6 million a year in new money. It represented around a 5% increase in what Manning had earned per year in his $98 million dollar contract signed in 2004. Roethlisberger didn’t have the cache of Eli Manning, selected number 1 overall and with a famous last name, who would eventually go on to be the market setter at the position. Roethlisberger did have enough success, even when labeled as a perfect situation QB due to his franchise, to push the market at a young age. Though the market this year has been stagnant overall Flacco was able to push slightly past Brees and about 4.6% past Manning’s deal with the Denver Broncos.

With Flacco playing the Roethisberger role I want Rodgers to now take the position of either Manning or Brees. Manning’s  2011 contract represented an 18.3% raise over Roethlisbergers’ new money from 2008. Brees 2012 new deal was a 36% raise. That puts the APY for Rodgers between 23.7 and 27.3 million a season. Now I know that $27.3 million is unrealistic and looking at Flacco’s contract I tend to think that the Brees number is looked at as somewhat of an outlier. If we push Manning into the top slot at $19.2 million we come up with a high value of $25.1 million a season.

From the Packers point of view I think they will want to look at Flacco as Eli Manning in terms of a data point. Using Manning’s $16.25 million as the market setting base the Rodgers deal would then be $21.6 million at the low end and $23.7 million at the high end. Looking at those two sets of numbers I would say the logical “fair market value” is $23.7 million, representing the high end for the Packers and lowest acceptable level for Rodgers.

In some ways Rodgers bargaining would probably be helped if Matt Stafford or Matt Ryan had been able to accomplish what Flacco did. Since those players have a much higher pedigree I tend to think they would have made more than Flacco in a comparable situation. They would clearly be the Eli Manning. Flacco might be, but its definitely not clear that he is.

In fairness Rodgers is at a big disadvantage because he has two years remaining on his contract that the Packers can force him to honor, but he isn’t talking about holding out and I think Green Bay wants to get a fair deal done. I would think Rodgers rebuttal is that he is far younger than Manning was in 2011 and Brees in 2012 and you are paying for a player in his prime not coming out of it. It is also in the Packers best interest to make the move now to lessen the cap blows and possibility that the market does increase with Stafford and Ryan up for new deals soon, not to mention Eli and Ben in line for new contracts within the next 2 years.  It makes for a very tidy 4 year deal that gets Rodgers two important things- top of the market money now and a chance to be a free agent again at the age of 35, an age where top QBs are clearly going to still make massive amounts of money barring a market correction.

Remember that if the Packers agree to a $23.7 million dollar deal they will also roll into it the 2 remaining years at $20.75 million. From the Packers point of view a 4 year extension is going to technically be a 6 year contract for about $19.26 million, which for salary cap purposes helps them greatly. Given the Packers current cap situation they can pack away over $20 million in cap dollars on Rodgers without issue. He already counts for just under $10 million and using another $10 million is not an issue. For the Saints, who paid Brees $40 million in year 1 the cash to cap ratio was 3.85:1. For Flacco it will be 4.4:1. These are cap killers for a team in the future. The Packers can probably be close a 2:1 ratio which is extremely beneficial for long term planning.

So it just seems like a deal that should make sense to happen for both sides right around that $24 million a year mark. Both sides I think gain from making the move now rather than letting it hang out there and hang over the head of the team and the player. Rodgers gets his injury protection and a chance at one more payday down the line while the Packers get their guy on a relatively cap friendly contract.

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Thoughts on Joe Flacco’s New Contract

Dan Hanzus of NFL.com has the particulars as it relates to cash flow on the record setting contract for Ravens QB Joe Flacco. It is certainly quite the deal for Flacco, a player who has yet to throw for 3,900 yards in a season. The QB salaries are getting so out of whack with the rest of the league that at some point you are going to see teams suffer for overpaying good but not great QB’s. Flacco had a miracle playoff run, but a contract like this completely disregards 5 years of performance on the field.

That is not to say that this should be a surprise. A few weeks ago I looked at Flacco and predicted he would get a contract close to $21 million a year. Why?  It was the Eli Manning model. Manning, who had a similar career trajectory but with more draft status cache and a slightly better track record, blew the field away in 2009 when he signed his contract worth $16.25 million a season. Eventually the bigger names like his brother Peyton surpassed that number, but Eli had more of less been the standard mark for a QB that was not considered prolific but had some playoff success.

The difference between Eli then and Flacco now is the new CBA. The new salary cap limit is $123 million and the union had to jump through hoops to even get the number that high. The salary cap limit back when Eli signed his deal was $123 million and growing rapidly. Basically there has been no inflation in the cap but the same player salary has now risen greatly. On an APY basis Manning’s deal was about $13.2% of the cap. Flacco’s is16.3%.  Sure Flacco and the Ravens will manipulate that cap figure this year but at some point it will catch up with them and teams will suffer because they spent far too much money on a position, even one as important as QB. Here are some very early (and totally unofficial) estimates of what Flacco’s deal may look like.

Base Salary Prorated Cap Charge Dead Money Cash Flow
2013 $1,000,000 $5,800,000 $6,800,000 $52,000,000 $30,000,000
2014 $6,000,000 $8,800,000 $14,800,000 $45,200,000 $21,000,000
2015 $4,000,000 $10,550,000 $14,550,000 $30,400,000 $11,000,000
2016 $18,000,000 $10,550,000 $28,550,000 $25,850,000 $18,000,000
2017 $20,600,000 $10,550,000 $31,150,000 $15,300,000 $20,600,000
2018 $20,000,000 $4,750,000 $24,750,000 $4,750,000 $20,000,000

These numbers are assuming that this $7 million dollar option bonus is paid in 2015 and is prorated over the life of the deal. Sure some will say that its a 3 year contract where you simple re-do the deal in 2016, but look at that dead money figure. What leverage does a team have to force any kind of market correction when cutting a player costs nearly $26 million on your cap?  Those backend cash flows are important because it more of less gives Flacco a starting point of $19.5 million a year in a renegotiation. Its really absurd.

In my value price model I worked on, Flacco’s regular season was worth about $11.5 million a year comparative to the current marketplace. That is a ton of ground to make up to justify this contract. Its just amazing the way the QB position has been treated in the last 8 or 9 years, really since Peyton signed his first mega-deal in 2004 with the Colts. Think back to the early 2000s. Players like Trent Dilfer and Brad Johnson couldnt cash in. Thats not to say Flacco was along for the ride like they were, its just to point out the way things have changed.  Even Tom Brady could not cash in relative to what others in the league were getting after his Super Bowls.

Green Bay is next up in the crazy QB carousel with a far better QB that is going to look for far more money. They don’t usually give in like this but I would not have expected the Ravens to cave in this badly either. The team that makes out the best in all of this is the New England Patriots who got their QB under a cap friendly contract until he retires. Sure he is much older and likely declining but they have a long term advantage that few teams, unless they have outstanding rookies on their rookie contracts, will be able to match in the salary allotments to field a full roster.

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Value Pricing the NFL QB

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