The Seahawks and Russell Wilson Contract Battle

Russell Wilson’s contract situation with the Seahawks gets more interesting by the day. His agent recently indicated that Wilson is prepared to play out his contract and not sign an extension with Seattle unless the contract is valued properly. It is a tricky negotiation between Wilson and the Seahawks for a number of reasons, so let’s discuss some of the issues at play.

The Issues Valuing Wilson

In today’s NFL I think there is a big push from agents to exceed numbers that are reported by the media. In the past that number was usually a total contract value and a signing bonus. Most recently it has been reporting of guaranteed value, which has led to contracts containing millions of “injury only” guarantees that are near worthless but makes for a nice headline on ESPN or another major sports outlet.

The most recent one has been three year payout, but with a twist. Traditionally when we view contracts we look at a three year metric based on new money, which, for an extended player would likely equal four years of cash flow minus the cash amount remaining in his old contract.  Recently that has been replaced by reporting three year numbers outright. Whether that has been from agents pushing new numbers, teams giving an internal view, or a lack of understanding, it is now something that is going to be an important total for a player. Here is the breakdown of the two three year pay metrics.

PlayerThree Year NewThree Year Pay
Rodgers$68,000,000$62,500,000
Roethlisberger$70,400,000$65,000,000
Ryan$68,750,000$63,000,000
Newton$68,000,000$67,660,000

For many player’s there is little difference between the two numbers because of how big their contract was at the time of signing, but Wilson is coming from a miniscule salary of just $1.542 million. A better way to look at this new metric is to really just look at the two year new money value:

PlayerTwo Year New
Rodgers$41,750,000
Roethlisberger$53,400,000
Ryan$53,000,000
Newton$53,000,000

This is very constant for the three extensions signed with one year remaining (Rodgers had two years remaining so its not comparing apples to apples) and is really the way teams are viewing the contracts which is consistent with the standard new money contract valuation regardless of how things are being reported.

Because Wilson is earning closer to $1 million than $10 million this leads to a three year pay of around $54.5 million which is well short of any of the top of the market players and that may be a big disconnect. For the Seahawks to bring Wilsons three year total to top of the market they would need to pay him around $67 million between 2015 and 2017, which is a number no team could consider.  The team could franchise tag him twice and it would cost them significantly less money.

The only way to make such a figure work would realistically require a monstrous signing bonus and probably an option bonus as well. Neither is something that Seattle has done in the past and it is unlikely they would consider it here. So if this is a hold up it is something that will not go away until after the season at which point the traditional three year and this overall three year metrics match.

Seattle also needs to decide how much they want to commit to Wilson. Wilson is likely going to argue about two players in particular that were past market setters despite never being considered best QB in the NFL. Those players were Eli Manning and Joe Flacco. Both players were signed primarily because of postseason success, which Wilson can lay claim to.

Manning’s contract represented a 16% increase from his brother Peyton’s contract annual value while Flacco’s deal was just a touch higher than Drew Brees’ contract.  They could also go back and look at Ben Roethlisbergers original extension which was slightly more than a 4% raise over the Peyton contract and really the first young player to “jump the market”. That sets a price between $22.1 and $25 million a season, with $23 million likely being the fair value point.

Does Seattle see that as a valid number?  I always thought they did, but signing such a contract does change the complexion of how they do business and severely limits the mistakes that they can make. With an affordable contract that can waste millions on a Percy Harvin or Sidney Rice and survive. With Wilson at $23 million that safety valve is gone. I’m sure it is not lost on the Seahawks that of the last 10 Super Bowls only three were won by teams with elite pay QB’s.

The other consideration for Seattle is the Q market of the future. When Manning signed his big contract extension in 2009 it was a given that Tom Brady and Peyton would exceed that in short order. Drew Brees and Aaron Rodgers were showing the potential to earn very lucrative extensions.  Jay Cutler was considered a high potential player at that time and Matt Ryan and Joe Flacco both looked solid. Top picks were still earning $13 M per year at the position without even playing a down. Quite frankly the Giants knew that Manning’s contract would not remain as the top deal and by the end of the contract term it is clearly a low end contract for a starter.

It is a different landscape now. There has been a lack of talent at the QB position in recent years. Many of the top picks have failed and those who have not are already signed for less money than what Wilson will be seeking. Rookies are now paid pennies for four years. It’s basically Wilson, Andrew Luck, Philip Rivers, and Manning who will set the new market and, other than maybe Luck, will all be very close. It will be a long time before we look at Wilsons contract as anything but a top market deal and that means no benefit for the Seahawks over the term of the deal the way the deals of the past worked out.

Wilson’s Options

I have heard some say that Wilson needs to hold out to maximize his value. I don’t see that as an option for him. Wilson only has three years in the NFL and if he fails to report to camp in a timely fashion he will not earn an accrued season towards free agency. If he fails to earn that season he will only be a restricted free agent in 2016. The Seahawks would likely tender him as a RFA rather than a franchise player, which would cost Wilson over $16 million in earnings. While it’s possible another team would sign him to a lucrative contract, I would be worried about collusion of sorts on the owners end, making an example of a player that tried to force the hand of the team and punishing for it.

Playing out the season is not a terrible option for Wilson. He would be given the franchise tag designation which should be somewhere between $19 and $20 million. If they used the exclusive franchise tag it would be as high as $25 million, though I think if they viewed him as being worth $25 million he would be signed to a contract already.

The franchise tag for a quarterback is not as devastating as it is for other positions. Quarterbacks have a long life cycle compared to other positions in the NFL.  Players are playing into their mid and late 30s on big money contracts. This is a major difference from other positions where making the turn past 28 begins a decrease in value and by 30 severely limits earning potential.

The QB position is more protected than any other position in the league from injury, and the lack of talent at the position leads teams to not even consider the injury as a major negative. When Manning signed with the Broncos in 2012 he came off major neck surgery and could have signed a contract worth far more than the $19 million per year deal he did in Denver. Teams overlook injuries at QB more than any other position in the NFL.

The salary is also higher than most others. It is doubtful that he would be tagged a second time and $20 million in 2016 followed by a free agent contract that matches the $40 million one year contract value and $53 million two year value of the top end QBs would give him a stronger three year package than any contract he could sign today. That would allow him to earn a total of $60 million in new money by 2017 and $73 million by 2018. That is more than the current standard two and three year metrics used to value the current top of the market contracts.

Playing the season out also gives him the benefit of playing with, what is on paper, a better set of receivers following the trade for tight end Jimmy Graham. Currently the biggest knock on Wilson is that he does not have the numbers to back up a top of the market contract. But Wilson also doesn’t get the same opportunities than a Luck gets to just fling the ball around the field. Early in their careers players like Brady and Brees didn’t fulfill their potential until the supporting casts improved on offense and the coaches trusted them to do more. A player like Graham fits it perfectly with Wilson’s strengths of big play production and should only improve those numbers.

If Wilson was very negative on the tag he could threaten a holdout next season and instead focus on his baseball career. I’d think the money left on the table would be far too much, but in my opinion this would be a more valid threat than a hold out. A franchise tag is not a valid contract and there is no punishment for not signing the tag and playing football. The Seahawks would be forced to carry Wilson on their accounting books for the 2016 season at a large figure even if Wilson has no intention of signing. If Seattle pulled the tag at any time he would become a free agent. Seattle would have the right to tag Wilson again in 2017, but he would no longer be held for two first round picks as compensation would drop to a 1st and 3rd round pick making it more reasonable to sign elsewhere.  Again I don’t see this as likely, but it could put more pressure on Seattle next season if they pursued the baseball option.

Points of Compromise?

What would worry me as a Seattle fan who wants Wilson to be the QB for the next 10 years is if a deal is not reached this summer does it mean the front office does not have a high opinion of the QB and view him more as an interchangeable piece? From an outsiders perspective like mine, Seattle has a very different valuation process for players than most other teams. Many of the big money contracts that they have signed have not really been rooted in past performances and current market conditions. It has been more about future visions and placing a price tag solely based on projections of how the player would fit in and how price cant get in the way of signing such players.

Their biggest success in that regard was with Marshawn Lynch. Lynch’s original contract extension with a large guarantee and close to top market price was overpriced based on his initial run in Seattle and last few years in Buffalo. But they saw something in him and made sure money wasn’t a factor even if the deal was a bit of a head scratcher. Things didn’t work so well when they did the same with Harvin. Harvin had almost no track record to justify the price of trade and contract other than being the lone bright spot, at times, on a bad offensive team.  Seattle felt he could be more and didn’t care about the price, they just wanted the player. They also gave top of the market contracts to Richard Sherman and Earl Thomas, and traded for a top line contract in Graham. Now these positions are less impactful on the cap than a QB contract, but it just seems odd that they are not heading there with Wilson.

One of the options that they could explore with Wilson is a four year, rather than five year, extension.  Depending on where Wilson was valued by the team would give the basis of a contract. The low end players, Ryan Tannehill and Colin Kaepernick, earn around $73 million in the first four years of their deal. The high end contracts see $84 million or more.

Splitting that number could be a compromise. From the perspective of annual value that contract would only hit $19.625 million, which would likely make the Seahawks happy. Despite the annual value not hitting the big mark, the four year payout might be considered reasonable. The team could fully guarantee the contract or guarantee a very large amount and remove any future franchise tag designations to make the contract more appealing to the player.

The benefit of a shorter term contract for Wilson is that it allows him to hit free agency again at the time when potentially the next wave of extensions would be hitting for players just drafted and the clock will re-start for the Ryan’s of the world. He can also tout a very high (or even fully) guaranteed percentage of the contract. The cap will have likely risen significantly in that time as well.

Perhaps most importantly it guarantees him free agency in 2020.  2020 is currently slated to be the final year of the current collective bargaining agreement. It would allow him to be signed to a contract under the current set of rules and framework established in the CBA. The NFL dramatically reduced player payouts, at least in the short term, in the last CBA negotiation. Extensions are also difficult because of the application of the 30% rules and teams at the end of the last CBA clearly reduced their spending. He would also get paid before any possible lockout or strike would put business on hold.

Essentially it’s a $7 million tradeoff (the difference between his total contract value and the 4 year deal of the biggest contracts) for guaranteed free agency in 2020 and maybe more security if he is worried about injury.  The more times a player can hit free agency the better and the short term of this contract should help in his overall career in regards to earning multiple extensions. Looking back at the 2004 class  those players will most likely sign three lucrative contracts in their lifetime- their rookie contract, their first extension in the late 2000’s and a final extension in 2015/2016.  Wilson can’t do anything about missing out on the big rookie contract, but doing the short term deals gives Wilson the chance to get three lucrative extensions in his career.

Wilson is already one of the most popular players in the NFL and taking this kind of contract should only help his status and marketability outside of the playing field. While that won’t make up $7 million, he’ll possibly be able to make it up over the long haul if he can continue to max out extension after extension.

But the solution here, unless there is a major change of opinion by Seattle, is probably going to require thinking outside of the constraints of annual contract values and looking at cash flows, percentages of contract guarantees and big picture possibilities if he wants to do an extension this seas

  • theowl

    Jason,
    Do you know what percentage of QB’s second contracts get played out to completion? It seems once a QB gets his second contract teams know what they are getting, so there really is no bust rate… and even with injuries, players probably lose only one year. It’s that third contract, for players like Rivers and E. Manning, that the three year total becomes quite important. Although, with the new protections QB’s are getting, those contracts are probably played out more often as well. Thanks

    • Im not sure of the exact number but I’d think its based on the conditions under which its signed. For example guys like Matt Cassel, Kevin Kolb, David Garrard, Derek Anderson, Matt flynn, Mark Sanchez, etc… didnt survive their second deals. Most were signed with limited sample sizes or poor decisions. Off the top of my head Id say the biggest name players who didnt make it were guys from yesteryear like Vick, Palmer, Pennington, and Culpepper. Vick went to jail, Culpepper was injured, and Pennington was always hurt. Palmer was the only guy who fell out of favor and that was a massive length contract, so he survived what would be a normal contract term for a player.

      At this point I would think Wilson is a sure bet. Hes started for three years and is effective as to what he does. Of the current group the players who are least likely to see the end of their deals are Kaepernick (way small sample when signed) and Tannehill (no real justification on deal). I know many lump Dalton into that category but I think they would need to fall way out of contention and have an option in the draft at a real good pick to dump him.

      • buk

        What franchise needing a QB and has the cap space would not give up 2 first rounds picks for Wilson if Seattle used non exlclusive tag? Seahawks would be wise to get Wilson signed because if they make him play out this year it will get personal

        • McGeorge

          In general I agree and wonder why Seattle didn’t work out a contract right after the season ended.
          But It depends for how much.

          Would the Sea Hawks be better off with:

          A – Russel Wilson at 25MM/year for 5 years

          or

          B) Two #1 picks, 25 Million in cap space for several years.

          If they can find a so-so Tier 2 QB, then #2 may be worth it.

          Imagine Andy Daltron at 600K/year for 3 years AND
          Two #1 picks AND
          $24.4 MM in cap space for 3 years

          It all depends on how good Russel Wilson is / how good Seattle thinks he is.

          • theowl

            Exactly. I think you nailed it.

            Here is an example I have used before…

            The Buccaneers traded a 1st and 3rd to the Jets to sign Revis to a 16 mil per year multi-year contract. After a year the Bucs didn’t want him (salary and/or system fit). No other team wanted him in trade, so they released him, getting no compensation in return.

            The Patriots signed Revis as a free agent for 16 mil for one year (spread over two years), let him go as a free agent, thus allowing them to get a 3rd round comp pick in return.

            Both teams paid Revis 16 mil for one year of service… One team gave up a 1st and 3rd round draft picks, while the other will receive a 3rd round comp pick. One of those teams annually contends for the Super Bowl, the other does not.

            Draft pick have value. Good teams know how to use them.

          • Cliff Baum

            theeowl,I completely agree with your “draft picks have value. Good teams know how to use them.” line, but I cannot agree with your analogy. We are not talking about a cornerback, we are talking about a franchise quarterback. Franchise QBs, unlike ANY OTHER POSITION can completely change the course of a team. When Aaron Rodgers gets hurt, vegas counts 7-10 points against the Packer’s line. When an elite RB/defender, etc goes down it affects the line by 1 point at most. You cannot compare Darrelle Revis’ situation with this one.

          • theowl

            Yes, QB is the most important position. But I wasn’t comparing Revis’ situation to Wilson’s. My point was that the the Patriots wouldn’t trade draft picks for Revis. They still paid him 16 mil. There is a limit to what a team values a player, and that limit includes draft pick compensation.

            But in comparing CBs and QBs… who do you value more, Revis or any of the following: Alex Smith, Dalton, Tannehill, Kaepernick, Stafford or Eli Manning?

          • Cliff Baum

            Those QBs are good choices for this–since I view them as all having non-elite celings. I would still take them over Revis since…what would my alternative be at QB? Josh McCown? Michael Vick? That’s a recipe for 4-12.

          • Cliff Baum

            I view this as a “lose-lose” scenario. My feel is–right now–the seahawks would have to agree to a contract extension that averages 22.5 million a year. However, as you note, this would go up to 25 mil a year after he reaches the end of his rookie contract.

            Option A is bad since Seattle would be forced to overpay by an additional 2.5 mil/year compared to if they signed him now

            Option B is really really bad because it would plunge them into QB purgatory for quite possibly a decade. Those draft picks and $25 mil per year savings won’t amount to any more super bowl appearances (just ask the Browns, Jags, Raiders, etc who still are continuing their endless search for another quarterback).

            By the way, as a seahawks fan, the thought of us having to rely on Andy Dalton makes me sick…

          • theowl

            Sounds like you want your cake and eat it too. You want the Seahawks to under pay Wilson so team is better. As a fan that is what I want for my favorite team too. The less a team pays it’s players per their value, the more talent the team has. Let’s see how the Seahawks compete when they are paying their players a market rate. That is a big test of a good GM. And I think Schneider is a good GM.

          • Cliff Baum

            I think my point is being misunderstood. I don’t actually think Seattle will UNDERpay for Wilson. My feeling is if they sign him now they can get him for 22.5 mil a year (making him the NFL’s highest paid QB). If they wait a year, the price tag very well could go up to 25 mil if he goes, say, 12-4 again. I’m simply calling it “lose-lose” if Seattle waits a year to resolve this.

          • theowl

            OK. I see that.

          • McGeorge

            Cliff,

            I used Any Dalton as a typical Tier 2 QB, but I share your sentiment.
            My “favorite” Andy Dalton play last year was a high throw to AJ Green, causing him to get hit in the back, and injured, requiring off season surgery.
            That doesn’t show up in the stats “# of passes thrown that result in receivers requiring surgery’.

            But at some point a Tier 2 player making 600K/year, plus two #1 picks is more valuable than a good QB making 25MM/year.

            How many wins does RW give you over Andy Dalton?
            Now throw in two #1 picks, and additional players worth 24.6MM/year
            Now it’s not so clear.

          • Cliff Baum

            I think Andy Dalton is actually a good example because I view the Bengals’ roster as very similar in talent to Seattle’s outside of the QB. The elite players on the Bengals may not quite be as good as Lynch/Sherman/Thomas, but there are still a lot of them. The thought of a player like Dalton holding the Hawks back makes me shudder as a Seattle fan. I don’t care who is on the team, Andy Dalton is NEVER going to win a playoff game. EVER. (well maybe they could have be the Cardinals last year)

            I would rather roll the dice and see if Wilson can continue to develop and lift a team on his back like Brees or Rodgers. That’s truly the only possible way Seattle would be able to have long-term sustained success. Otherwise the window would drop to 2 years max.

            Also, don’t forget, Seattle is horrible at picking players in the first round. I don’t think they would maximize the picks.

      • theowl

        Geez, you are better off the top of your head than I am. Larger group than I thought.

  • Cliff Baum

    Hi Jason, love the site! I’m wondering if you can expand on why you think Seattle would be willing to use the non-exclusive rights tag on Wilson? I can easily see a cash-rich team like the Browns offering a fortune to Wilson without being deterred by losing 2 first round picks. It seemed like they were more than willing to give up 2 first round picks for Mariota, for example, and Wilson is a much safer bet.

    • theowl

      Safer, definitely more expensive, and possibly too expensive… if you total picks with cash. Depends on what they think he is worth. Wilson might be hoping whoever values him the most gets him. As McGeorge said, If you were a GM would you pay Wilson 20 plus mil a year and give up two 1sts? Where do you draw the line? There is a line, right?

    • Its more than just the first round picks, though Cleveland would be a reasonable choice due to their cap situation. What teams will look at with Wilson, whether he is a RFA or non-exclusive is the Seahawks cap situation. There is really no contract a team could construct that Seattle could concievably not match since they will have the cap room to do it.

      The question then becomes do you want to waste the time essentially negotiating a contract for another team? The Browns are a good choice, but look at teams like the Jets or Washington. If they wanted to do it they would need to negotiate the deal, restructure a number of contracts to fit the offer sheet and then watch as the Seahawks matched. Now you are left with contract restructures you probably didnt want and you still have no QB. Free agency is probably dried up by then too.

      Situations like Flacco were going to be an exception because the team may not have had the cap space to match. The Saints were probably in the same boat with Drew Brees a few years back. But I dont think teams will go there with Wilson unless they are confident the Seahawks wont match.

      • Cliff Baum

        Thanks Jason, these are great points. Though knowing the Browns I still think they would be desperate enough to try! I agree Seattle would match just about any offer.

      • theowl

        The franchise tags really keep QBs to their teams. It is holding back inflation. In an open market, it wouldn’t surprise me to see players like Rogers and Luck get 30 mil a year.

      • Kirk Vollmer

        Just spit-balling here, but would it be possible for a team to so front end load a Wilson contract through the use of say a roster bonus that it would essentially make it impossible for the Seahawks to match due to salary cap? I mean they would really have to pack a lot of money into one year and it’s always possible the seahawks could cut a player in order to match. But wouldn’t it be possible or is there a rule about loading up too much money into one year?

        • Derek Lamarr

          Seattle has almost $34m in cap space in 2016 if the cap doesn’t increase. They also have a number of easy cuts they could make. Between those and the probable increase in cap for 2016, even after whatever they might spend on Wagner and others, they’re probably looking at close to $45-50m in cap space. Can you imagine a team front loading a contract that much? I can’t.

  • Dominik

    I have heard some say that Wilson needs to hold out to maximize his
    value. I don’t see that as an option for him. Wilson only has three
    years in the NFL and if he fails to report to camp in a timely fashion
    he will not earn an accrued season towards free agency. If he fails to
    earn that season he will only be a restricted free agent in 2016. The
    Seahawks would likely tender him as a RFA rather than a franchise
    player, which would cost Wilson over $16 million in earnings. While it’s
    possible another team would sign him to a lucrative contract, I would
    be worried about collusion of sorts on the owners end, making an example
    of a player that tried to force the hand of the team and punishing for
    it.

    Good article, Jason, but I disagree with the last sentence in that quote. While I do think it’s possible owners collectively “punishing” a player, I don’t think that would be possible for a very talented and young QB. Many owners are so desperate, if they would have a serious chance to get a guy like Wilson, they wouldn’t care about his hold out. They’d write a check and be happy to be finally competitive. Don’t forget: being competive helps your team value and therefore your investment in the long run.

    Especially when Wilson isn’t holding out after he made 50 million Dollars or so. He would be holding out because he earned very, very little so far (in relation to his play) and didn’t reach an extension in the summer.

    Now, do I think Wilson will hold out this summer? No. It just isn’t his personality and he doesn’t HAS to, for the reasons you argued. But I do think he would make a lot of money as an RFA next year, despite holding out, if he would chose to do so.

    • McGeorge

      If I was the Jets, and I could get Russel Wilson for 24MM/year, I’d do that in a heart beat. So would a few other teams liek teh Bills (with EJ Manuel).

      You ever see Geno Smith play?
      Remove Geno Smith, David Harris , Cromartie and Buster Skrine, and add Russel Wilson, and thats a net plus.

      Collusion is nice, but not when you get a chance for a franchise QB.

      • theowl

        I have noticed you really don’t think much of Geno Smith.

        • McGeorge

          Me not appreciate Geno Smiths skills as a QB? Whatever gave you that idea? 🙂

          For the record, I think Geno Smith is probably in the top 100 QBs in the world. He’s certainly better than me.

          He excels at:

          1 – running backwards when getting sacked, and taking a -19 yards, out of field goal range

          2 – waiting until the receiver has completed his route, then throwing

          3 – excellent decision making (just like Mark Sanchez) into tight coverge

          What I’m hoping (?praying for?) is that with a new coaching staff (and one that isn’t Rex Ryan influenced) he improves to cusp Tier 2.

          If Geno could become s good as Andy Dalton, I’d be thrilled.

      • Dominik

        Totally agree. And it’s not just Jets or Bills, imho. But they would be part of the bidding war, I agree. 🙂

  • richardfg7

    I always hear about what’s “fair” to the player in these multi-mega-buck contracts. When does what’s “fair” to the fans come into the picture ? A decent ticket to a game is several hundred dollars today. Taking the family can cost a couple thousand. That is insane.

    • McGeorge

      Ticket pricing is classical supply and demand. If 90% of the fans are priced out but there are enough doctors, dentists, lawyers, etc. willing to buy the tickets then the price is “fair”. If there is limited supply (tickets) then “fair price” is what the last person buying the ticket is willing to pay. In fact fair price is above that if by having N empty seats you raise the price even more and make extra profit.

      Having said that – I’ll never pay full price to go to a game. Last year I could have attended a jets game for $11 via tickets on StubHub.

  • emmasgirl

    As I understand it today, the real conflict is not money per se, but how the Seahawks and Carroll see the team’s structure. That is defense heavy, run first. The Seahawks and Carroll are not ready to structure the team around Wilson or any QB. Is Schneider really willing to let Wilson walk? Maybe. Regardless of how much the Seahawks know Wilson’s fair value, they may not be willing to pay that price going forward. I wonder what Rex Ryan or Todd Bowles think Wilson is worth.

    • McGeorge

      I don’t agree with your assessment. I think it is about money. How good is RW vs. How much he wants.

  • eddiea

    It seems the main problem in getting the numbers right is his $1.5M ’15 salary. But if he plays out/no extension happens wouldn’t that wreck things going forward,since they might have $30M-$35M in cap space next yr,using $20M-$25M just on Wilson would leave no room for other FAs or am i mistaken? Using a small ($15M-$25M)sb then guarranteed roster bonuses should be able to get him to salary he wants and keep S’Hawks cap were they want,unless I’m wrong on that too.

    • Derek Lamarr

      I don’t think there’s any advantage to paying him more money in 2015 to reduce what they have to pay him in 2016. If they have cap space in 2015 to do that, they might as well just roll it over to 2016 and pay it to him then.