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Mar 18

The Free Agency Salary Crash and Market Correction of 2013

One of the more interesting stories in the NFL Free Agency period this year has been the “market correction” that is killing players dreams of realizing the big payday they expected. It wasn’t long ago that D’Brickashaw Ferguson and Jordan Gross received deals worth close to $60 million. This year LT Jake Long signed for $36 million. Last season Jason McCourty and LaDarius Webb  signed deals in excess of $40 million dollars. This year Aqib Talib gets $5 million and Sean Smith $16.5 million over 3 years. Both were considered franchise tag candidates. Last year Mario Williams signed a record setting contract worth $96 million. This year DE Cliff Avril was lucky to grab a two year deal worth just over $13 million. What exactly is going on?  Some of have said collusion, but is it really?

You have to think of the salary cap in terms of a family budget. Think back to the way you have handled the financial crisis of recent years with rising gasoline costs, increased food prices, and relatively flat wages for most of us. At first some of us did not really adjust much. Maybe we thought it would simply get better in the future and made no changes. Others bought more on credit. Some immediately began to pull back on spending. By a year later most of us were trying to find ways to reduce costs on “luxury items”.  We have no choice, for the most part, to buy gasoline for our cars or buy food for the family but dining out or going on nice vacations may have been put on temporary hold. That is really what is happening here.

Under the prior CBA the salary cap grew from $109 million in 2007 to $123 million in 2009, a growth rate of over 6% per year. Under that model, which is what was being used to sign players and create a marketplace, the cap managers of a team were banking on a salary cap of close to $150 million in 2013. When the new CBA was signed in 2011 it was so late in the process that nobody had much time to consider the real salary cap ramifications of the new deal. The union proclaimed they got a great deal and while the cap number that was agreed to was low there were concessions made to boost it via the use of $3 million dollar veteran player credits in 2011 and $1.5 million in similar credits in 2012. The bill for those moves would not be due until years in the future.

When the salary cap in 2012 showed no growth I think there was panic among teams and players. If anything the cap should have fallen and rookie wages should have been reduced but some last second bargaining seemed to boost the numbers to at least the same levels as 2011. Certain teams wisely pulled back. The 49’ers for instance were using extra cap room not to sign players but to accelerate future dead money into the current league year to add more financial flexibility to their cap management. The Eagles were allocating huge chunks of unused cap room to carryover to the following year to offset their future payrolls. The Jets stopped spending. By 2013 almost all teams are pulling back realizing that this is not a fluke occurrence but a long term problem. I don’t think they really have a choice based on my projected cap from the old vs new CBA:

unadjusted cap

There is close to a $27 million dollar salary gap between where teams thought the cap would be versus where it is in 2013 and it is only getting wider by the year. The problem is further compounded by the continued growth of the salary for the Quarterback, a subject I touched on when discussing the over the top salary given to Joe Flacco because of the position he plays and fact he just won a Super Bowl. The QB is essentially our fixed costs in our household budget. Teams have decided that they can not win without the great QB and because of the great demand for them the price skyrockets. Even backup QB’s with “potential” like Chase Daniel are making millions while other players who play 16 games a year are struggling to get a contract.

In the final capped year of the old CBA Eli Manning was the top paid QB. His deal was set to average $16.25 million a year or about 13.2% of the cap in the year it was signed. Eventually his brother jumped his total with a $19 million dollar deal in 2011 signed during the early stages of the new CBA. That $19 million represented 15.8% of the 2011 unadjusted salary cap, which one would think would cap the marketplace at those figures- 13.2% for the up and coming star and around 15.8% for the established superstar. The Saints would jump the Manning figure the following year allocating 16.6% to Drew Brees and the Ravens then caved in big on Joe Flacco pushing him to 16.3% of this years cap.

It was really the Flacco deal that made it known the QB position is not slowing down in salary anytime soon. If we consider Aaron Rodgers to be the new Peyton Manning that likely means a deal around $23.9 million a year with the superstar QB cap allocation now jumping to a whopping 18.9% compared to just 15.8% in 2011.  That is $ 4 to 5 million a year that needs to be taken from other positions just because of the QB.

The wide receiver has now turned into a semi-fixed cost. Maybe its like choosing between the name brand or the generic in the store but it’s a necessity because of the high investment of the QB. When you see the deals signed by Mike Wallace and especially Percy Harvin it’s a growing market. Brandon Marshall received over $11 million in new money in 2010 when traded to Miami. Roddy White, less established at the time of signing, received just over $8.5 million in new money the year before. Wallace might compare to White. Harvin not really. Both eclipsed those contracts meaning a far greater percentage of cap allocation than planned before. It makes the Victor Cruz negotiation with the Giants very important because if they get him signed on a more slotted deal it may pull back the market a little next year. If he exceeds Harvin, which he should, then those two become the Flacco of the receivers.

Between those two positions you are looking at $6 to 8 million that teams have to pull from other spots and that doesn’t even include if the prices extend to the secondary player market. It already has with the backup QB for some teams and may hit WR2 starting soon. Then on top of that you have the overall lack of cap room and cap growth compared to a few years ago when deals were signed with rising caps in mind. So players are getting squeezed at positions the NFL is deeming less worthy. Why are they less worthy? Here are some thoughts.

The pass rusher and left tackle have always gone hand in hand in terms of importance and salary. The problem is that the NFL defenses have become so complex that pass rushes can come from anywhere on the field. It used  to be my left tackle takes on the right defensive end and that is that. Now players line up all over the field to rush the passer. If you look at the statistical breakdowns I have done in the past on my other site using some of the raw data from PFF you will actually see that a larger amount of negative plays occur because of pressures coming from the right rather than left side of the line. The Left tackle is being devalued against these defenses.

Likewise the great pass rusher is being somewhat neutralized by schemes that blitz from all angles and the fact that the defense has become so situational. Its not 11 guys every play. A pass rusher may get pulled entirely from a game on 1st downs. He probably doesn’t play on short yardage downs. He may be asked to drop into coverage occasionally. And of course you can’t discount the rookie wage scale and pass rushers. Many of our most productive pass rushers are on low cost rookie contracts. While they may not play much as a rookie they become fixtures later on. With the QB salary so high getting the young cheap player on the rise is far more enticing than overpaying an older player who will be on the decline in 2-3 years.

Cornerbacks are falling victim to the new spread offense which limits their effectiveness. Back in the 1990’s Deion Sanders could literally take a side of a field away. Teams played a great deal more of 21 and 22 personnel. Now most teams go empty backfield with multiple wideouts and Tight Ends who are masquerading as wide receivers. For as great as Darrelle Revis is at neutralizing WR1 what good is he against WR2, WR3, RB, and TE?  None.  It was why in 2011 the Jets would be great against the pass 90% of the time except when a team would target their safeties and linebackers in coverage gaining creating huge plays that turned games. Plus, even with the increased investment in the WR1, how many teams have a pure 1?  There are probably only 10 teams that have a WR that you want a grade A corner to bottleneck. Most likely you only face 4 or 5 in a year. It doesn’t pay to throw your salary all in one player. You need balance across the whole secondary to compete week in and week out.

There are some people who are of the opinion that players are accepting short term deals to hit free agency again. In some cases that may be true, but realistically this is not changing until either the salary cap starts to really grow or teams pull back on the QB spending. If Michael Bennett took a 1 year deal to “try it again” most likely he is not going to fare any better next season. Same goes for Aqib Talib.  Its not just an overcrowded market its an under-capitalized market. Teams don’t have the money to spend now and need to allocate the money to spend later on what are the prime positions in football.  Everyone else will just be left out in the cold taking whatever scraps teams are willing to dish out so they can continue playing football.