The Bursting Wide Receiver Market Bubble

Brian Blewis just had a good article discussing the four Pro Bowl wide receivers who are entering the final year of their rookie contracts: A.J. Green, Julio Jones, Alshon Jeffery and T.Y. Hilton. This offseason, four other Pro Bowl receivers received new deals, Dez Bryant and Demaryius Thomas were franchised, Randall Cobb resigned with Green Bay on a four-year, $40 million deal, and Jeremy Maclin signed a five-year, $55 million contract with the Chiefs.

What I think we’ll see in the coming years is that the wide receiver contracts of the 2012 and 2013 offseason were where and when the market reached it’s peak before falling down to it’s true value.

This is best illustrated in the contracts of Calvin Johnson, Mike Wallace, Vincent Jackson, and Larry Fitzgerald. Excluding the franchise tag contracts of Bryant and Thomas, even with Fitzgerald’s restructure, they are the four highest contracts by average salary per year in the wide receiver market. Of course, the franchise tag contracts are up there because of these top of the market contracts. Andre Johnson’s was up there too before he was released by the Texans and resigned with the Colts.

On an average per year basis, Calvin Johnson’s contract is worth $16,207,143, Mike Wallace’s is $12 million, Vincent Jackson is $11,111,111 and Larry Fitzgerald’s is $11 million.

During this 2015 offseason, the three highest contracts were signed by Jeremy Maclin (five-year, $55 million), Randall Cobb (four-years, $40 million) and Torrey Smith (five-years, $40 million). These contracts are worth $11, $10 and $8 million a year. While none of these players are Calvin Johnson, I don’t think that Wallace and Jackson were ever seriously in the conversation for best receiver in the NFL either, they were both great receivers like Maclin, Cobb and Smith, but never worth their massive deals.

The year before Wallace signed his big deal with the Dolphins, he had 64 catches for 836 yards (13.1 ypc) and eight touchdowns in 15 games. Jackson had 60 catches for 1106 yards (18.4 ypc) and nine touchdowns. While Larry Fitzgerald was a great player, no one was worth the eight-year deal worth as much as $120 million that he received. In 2012, the first year of his new deal, he made $14.5 million, which was 12.05% of the $120.375 million salary cap that year.

Part of the reason why I think we’ve seen uncertainty with the Cowboys and Broncos in resigning two of the best receivers in the NFL, other than Bryant’s off the field issues, is that the receiver market has become very cloudy.
When I was in Indianapolis, I got the chance to see former Bucs GM Mark Dominik speak and be in a small group that spoke with him during a lunchtime break-out session. Someone asked Mr. Dominik something along the lines of what the easiest position to find and replace talent at is and Mr. Dominik said that position was wide receiver, to which I agreed.

There are a few reasons for this, first being that wide receiver is the position most reliant on another player, the quarterback. The wide receiver isn’t just reliant on the quarterback though, he’s also reliant on having an offensive line that protects the quarterback and gives him time to throw.

Another reason is that to succeed, a wide receiver has to be in a system that gives him a chance to succeed. The next reason is that every year it seems there is one deep wide receiver draft class after another coming into the league, this means that there is cheaper talent entering the market. Wide receiver is also a position where young players can make a real difference, which increases the value you receive from young players.

Last, it’s a position where players can contribute well into their thirties, Andre Johnson, Anquan Boldin, and Reggie Wayne have been some of the best receivers in the NFL the last couple years with Wayne having 1355 yards receiving two years ago at 34 years old.

These reasons are all factors that can go into decreasing the value of the top wide receivers.

I can’t determine for sure if the decrease in the value of the top receivers the last couple years has been because the other deals were so out-of-touch with the market or that it’s a genuine decrease in the top of the market, but I do think that the wide receiver market will decrease moving forward on a percentage of the cap basis. I must stress, while Maclin’s $11 million a year contract is only $111,111 less than Vincent Jackson’s per year, Jackson’s was signed going into 2012 when the salary cap was $22.905 million less than it is in 2015. That’s a huge key to this whole discussion as these contracts were agreed to when the salary cap was in a much different place and wasn’t growing at a pace of plus $10 million a year. A $10 million per year contract in 2012 took up much more of the cap and the projected salary caps in the coming seasons than a $10 million per year contract in 2015.

Jordy Nelson signed an extension heading into last season for four-years worth $39.05 million, currently, he’s the 10th highest average per year contract in our table on Over The Cap at $9,762,500, just slightly behind the deal that Randall Cobb just signed.

In 2014, Nelson had a career year with 98 catches for 1519 yards (15.5 ypc) and 13 touchdowns. If he hit the open market, who knows what kind of money he could have commanded, but as with Randall Cobb, the Packers were able to come to an agreement that kept both sides happy, paid them what they’re worth and gave their team more of a chance at long-term success due to having the best receiving duo in the NFL at a reasonable cap hit.

Together, in 2015, they will take up 6.94% of the salary cap. If the cap moves up to $153 million in 2016, they will take up 11.73%. As you’ll see with most of the bigger contracts, the year one cap hit is lower due to the signing bonus the player just received.

So, even in year two when their cap hits bump up, they’re going to take up less of the cap together than what Andre Johnson took up in 2014 with the Texans, 11.76%. In 2015, Calvin Johnson will take up 14.35% of the cap, which is 168% of what Jerry Rice made in 1994 with the Super Bowl champion 49ers, 8.56%. Vincent Jackson aka Not Jerry Rice will take up 8.52% of the cap, while Mike Wallace will take up 6.91% with the Vikings after taking up an absolutely absurd 12.97% in Miami last year.

I always bring up these Super Bowl winners and the highest paid per position because I think with 21 Super Bowl champions in this salary cap era, it’s a large enough sample size to see patterns and understand what a team needs to spend their money on to win a Super Bowl. So if Jerry Rice, the greatest receiver ever takes up only 8.56% of the cap during the prime of his career, a year his team won the Super Bowl, then how can the Lions justify paying Calvin Johnson so much more? How could the Dolphins ever justify what they did with Mike Wallace?

As I often remind you guys in these articles, this is not an attack on the talents or the players themselves, I think Vincent Jackson is a great player, and he’s a great American for the work he does for our veterans, I love the guy, but as I often say when talking football, business or current events, financials and economics don’t care about our feelings or what we think should happen or what we wish would happen. That’s part of what interests me so much about the cap, it’s a lesson in finances and economics in itself.

What I think we’ll see over the next few years is that this market is beginning to settle back in line with the line of logic that I’m using when discussing Jerry Rice, a team just can’t win paying even the best receivers in the NFL so much more than Rice’s 1994 cap number. Frankly, there are more good receivers in the NFL today and it’s more important to have more than one good receiver with the prevalence of shut down cornerbacks, so I’m not even sure if a 32-year-old Jerry Rice playing today should take up 8.56% of the cap.

During that season, Jerry Rice had 112 catches for 1499 yards (13.4 ypc) and 13 touchdowns, but that team’s second leading receiver was running back, Ricky Watters, with 66 catches for 719 yards (10.9 ypc) and five touchdowns.

Their third leading receiver was TE Brent Jones who had 49 catches for 670 yards (13.7 ypc) and nine touchdowns.

Their second best wide receiver was John Taylor who only had 41 catches for 531 yards (13.0 ypc) and five touchdowns.

Their fifth leading receiver was Nate Singleton, a WR who only had 21 catches for 294 yards (14.0 ypc) and two touchdowns.

In 2014, the Steelers had similarly construction in the passing game, but with Ben Roethlisberger throwing for 1000 more yards. Their top 5 receivers went WR, RB, TE, WR and WR, like the 1994 49ers, but the stats tell a story of how the game has changed.

Brown went off for a career year with 1698 yards and Le’Veon Bell was their second leading receiver with 854 yards, but Heath Miller, Markus Wheaton and Martavis Bryant followed him with great seasons of their own.

Those three pass catchers combined for 1954 yards, which rounds out a dynamic group of pass-catchers. With Brown taking up only 3.40% of the cap after a 2014 restructure, Miller at 4.61% and young talent on their rookie contracts, the Steelers had a great group. Their receivers took up only 6.60% of the cap last season, which is mind-boggling for how good they were, but a sign of the times with three inexpensive, rookie deal skill players doing big things in their offense.

Roethlisberger and Steve Young were both the highest paid players on their rosters, which helps bolster the passing game of course. The Steelers got a huge pass game boost from young talent, which is part of the game we live in today, young receivers who come from the college game polished, educated and ready to ball out. This is part of what’s decreasing wide receiver costs and with the most heady receivers able to adjust and stay relevant into their thirties, receivers in their prime are getting squeezed on both sides by lower-cost options.

The Ravens traded Boldin after their 2012 championship season because he was deemed too costly for them and he’s been a 1000-yard receiver in San Francisco the last two seasons at the age of 33 and 34, while taking up 4.88% of the cap in 2013 and 1.78% last season.

It’s worth mentioning that the Steelers signed Antonio Brown to a five-year, $41.7 million contract extension in July of 2012, the summer after his first 1000-yard season and the summer before they let Mike Wallace walk in free agency.

What smart organizations do is sign their cornerstones to contracts before they reach a price point that becomes restrictive for the team. Brown’s $8,392,000 per year contract makes him the 14th highest paid on the average per year basis, so they got the best receiver in the NFL last season, a guy who fits their system perfectly and is one of the best punt returners in the league for about the cost of Pierre Garçon’s March 2012 contract.

The Patriots did this with Rob Gronkowski by signing him to a six-year extension worth $54 million back in 2012, which makes the best tight end in the NFL the third highest paid one heading into 2015. The Texans did it with JJ Watt by signing him last offseason rather than let him get into the market that just paid Ndamukong Suh a ridiculous $19,062,500 a year.

That Steelers team shows how important it is to have four or five legitimate receiving threats in today’s NFL and it’s very difficult to accomplish that paying your WR1 more than 7-8% of the salary cap. Not only will it decrease the amount of money you can spend on other receivers, but it’ll push your wide receiver spending too high to build a strong team around it. And you need money to spend elsewhere because without a good quarterback, the wide receiver has no one to throw to him. Without a good offensive line, the quarterback can’t get the ball off to his receivers and without a good running back, the offense doesn’t have the kind of balance that let’s a receiver thrive.

One key point that I think should be made before we finish this up is that only eight of the 32 receivers that were the highest cap charge on their team were the leading receivers on their teams. These were AJ Green, Andrew Hawkins, Dez Bryant, Mike Wallace, Jordy Nelson, Steve Smith, Antonio Brown and Greg Jennings and two of those receiver, Wallace and Jennings were wildly overpaid for 862 and 742 yards respectively.  Only seven number one cap hit receivers had over 1000-yards receiving: AJ Green, Vincent Jackson, Dez Bryant, Calvin Johnson, Jordy Nelson, Steve Smith, and Antonio Brown.

Figure 1: 2014 Top WR Cap Hits

2014 Top WR Cap Hit

The question that this raises for me is if wide receiver is a position where 22 teams (68.75%) have a wide receiver who isn’t their highest paid leading the team in receiving yards, with tight ends Rob Gronkowski and Travis Kelce leading the Patriots and Chiefs, then what are teams doing wrong in terms of judging talent? This includes the four teams who’s highest cap hit at wide receiver is a dead money player who is no longer on the team.

A few other questions that we should think about: are teams doing something wrong in judging wide receiver talent? Judging how a player will fit into his system? Are number one receivers seeing a decrease in their stats due to an increase in shutdown cornerbacks? Is receiver a position that you should build with players on rookie contracts to save cap space? All good questions with many more we could discuss. (As always, feel free to tweet me @ZackMooreNFL to continue the conversation.)

I also want to give you guys another figure:

Figure 2: Top WR Cap Hits for 21 Super Bowl Teams of the Salary Cap Era

Top WR Cap Hit (Super Bowl)

Of those 21 wide receivers, nine of them were the leading receivers on their teams that season: Jerry Rice, Michael Irvin, Isaac Bruce, Keyshawn Johnson, Hines Ward, Marvin Harrison, Hines Ward again, Marques Colston, and Anquan Boldin. As you’ll see, the average cap hit of these teams is 4.44%, which is 1.01% lower than the 5.45% that the 2014 teams spent on their top receivers.

Of the ten Super Bowl receivers who didn’t lead their team in receiving, excluding Donald Driver because 2010 was an uncapped year, they averaged 3.75% of the cap. The nine who led their team in receiver had average cap hit of 5.28%.

Of the nine receivers who were paid above that average of 4.44%, seven of them were the leading receivers on their team, Sidney Rice was injured and Amani Toomer had 760 yards that season. So Super Bowl winners that did spend a decent amount of money on their top receivers invested their money wisely, which I think is very important, wasting 5-6% of the cap on a player who underperforms makes things difficult.

Another important point is that only two receivers of the 21 champions are in their team’s Top 3 cap charges, Jerry and Sidney Rice. To be in the Top 3 cap charges for a team, that means that you typically need to make above 7-8% of the cap, which is a great indicator that you shouldn’t pay a wide receiver over that percentage because only 9.5% of Super Bowl teams have been able to have a receiver in their Top 3.

As with any other position, it’s important to not waste money and I think what’s above is some good information to think about in this discussion.

As more and more great receivers enter the league, teams need more than one good receiver for their offense, and receivers play into their thirties, there will be a larger supply of potential players to choose from, when supply increases, but demand stays the same, the cost of the product decreases. So, because of this, even as the NFL becomes more of a passing league, the cost of receivers will decrease.

As former Bucs GM Mark Dominik said, wide receiver is just to easy a position to replace. As much as it hurts, as a former receiver, it’s the truth. Watch the wide receiver market fall back to reality in the coming years.

A Note on Rutgers’ Legend Eric LeGrand and Joe DeFranco’s Industrial Strength Show

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Eric LeGrand talking with my entrepreneurial mentor and fitness legend, Joe DeFranco.

I want to close this out with something positive, we had the incredible Eric LeGrand on Joe DeFranco’s Indistrial Strength Show yesterday and the podcast will be out Thursday. If you want to subscribe to the podcast, so it’s downloaded straight to your phone or iTunes, you can go here.

More importantly, please go to AWalkToBelieve.org and donate to a great cause. Eric LeGrand is one of the most impressive people I’ve ever met. I’ve compared it like this, a guy like Brian Cushing has a path he can take to the NFL, he works hard, he’s gifted genetically, and he’s become one of the best players in the NFL, there is a protocol, a plan that he a gifted young kid can follow to become the next Brian Cushing.

There was no game plan to become what Eric LeGrand is today. There is no book he could have read, no podcast that he could have listened to, or even a person he could have spoken to and learned how to become the incredible young man that he is today.

If anyone deserves your love and support, it’s Eric LeGrand. So, go to AWalkToBelieve.org/Donate and just give $1. Tweet at @ZackMooreNFL, @EricLeGrand52 and @DeFrancosGym to let us know and spread the word!

And, if you want to get my book…!!!!

 

If you want to purchase The First Annual Caponomics: Understanding NFL Roster Building through Super Bowl Champion Salary Cap Analysis, which has analysis like this in it, please e-mail me at Caponomics@gmail.com, so that I can put you on our e-mail list for people interested in purchasing the book.

 

If you join our e-mail list, I will send you a chapter on the 2014 Lions and then the 2014 Patriots once they are completed. I will probably throw in a bonus chapter on the 2012 Ravens or 2013 Seahawks as those are coming along nicely.

 

I’m currently in the process of getting some legal stuff handled for the book and then I can put the pre-order up on Amazon, otherwise, it would already be up there. Thanks for your support and feel free to send me any questions or ideas to that e-mail address.

  • Kirk Vollmer

    I have noted that recent SB winners don’t seem to invest much in WR’s. Top receivers probably don’t help all that much in winning the game over mediocre receivers. They help your QB put up great stats, but great QB stats don’t win championships. It would be interesting if we could find a sort of formula to team success in the NFL… Mostly figuring out which positions besides QB does more talent lead to more winning over the long run. But there is no real objective way to measure talent. The percentage of cap can measure resources, but that only has a casual relationship to talent, not only because team’s often overpay but also because rookie deals skew it.

  • McGeorge

    Zack,
    I agree with the gist of what you are saying. You don’t win with 3 insanely high paid players.

    The way I’d value it is how much does the player bring me over a replacement player.
    Replacement QBs are awful, so the drop from Andy Dalton to … Geno Smith is huge, maybe 3-4 wins a year.
    The drop from Calvin Johnson to a replacement WR may be 2 wins a year.
    The drop from a good WR to a replacement may be 1 win.

    For each position look at how much the wins added costs and go from there.

    You can’t win with a bad QB, even if he plays for the vets minimum. But you can win with an average QB, if you have a very good team around them. You also need some luck. Having a key play go your way can tip the game. Drafting a couple of studs and having them on their rookie contract when the team peeks and makes it to teh super bowl allows them to invest more in other players.

    Since QBs have so much impact on the teams performance and there is a shortage of “average” (i.e. replacement level) QBs, I’m ok with overpaying them a bit, since the alternative is … Geno Smith. But for all other positions I’d be much firmer about paying a player what they are worth.

    One way to build a winning team is to have the players marry very wealthy or high earning wives, so there is less need for them to demand top dollar. If AJ Green or TY Hilton were married to a woman making north of 50MM/year they might be willing to take a few million less to play on a contender instead of …. Oakland.

    So my strategy for when I buy a football team 😉 is to get the players married right away to wealthy women, and get them large endorsements, so they wont need me to pay them top dollar.

    Then I’ll hire the following as consultants:
    former GMs of the Jets, Jags, Buccs, Titans, Browns – and ask them to evaluate the draft class. Then I’d do the opposite.

    • eddiea

      Don’t forget to draft/sign players that are team/championship oriented. Those players know, win one and the money (endorsement) will follow