Thoughts on Andre Johnson and the Lessons to be Learned from his Contract

Not unexpectedly Andre Johnson is expressing unhappiness with the Houston Texans according to Brian Smith of the Houston Chronicle. In the article Johnson questions whether Houston is the place for him to finish his career and stated he will not attend offseason activities.

At 32 years of age Johnson knows that his career is no longer rising and he is going to spend the declining years on what is a rebuilding team.  He can look around at older veterans like Reggie Wayne and Steve Smith and see the way their franchises played hardball with them and the lack of interest that may be on the market for aging players. This was his last opportunity to try to get a new deal to at least make it a financially strong reason to play his career out in Houston but the Texans looked to have turned down that idea leaving him unhappy on a team that looks to be looking towards the future rather than the present.

Johnson carries a salary cap charge in 2014 of $15,644,583 and a cash contract value of $11 million. If traded before June 1, Johnson’s cap charge for the Texans would be $11,964,166 representing a savings of $3,680,417 against the cap. If traded after June 1 the Texans would take a $4.644 million cap charge in 2014 and a $7.319 million charge in 2015. In either scenario the trade would help rather than hurt the Texans salary cap.

The more difficult aspect of the trade is to find a trade partner. Johnson has $34.5 million remaining on his contract, a huge number for a player that is about to turn 33 years old. While Johnson plays at a far higher level than his peers at that age, players like Anquan Boldin and Wes Welker are working for $6 million a season. To complicate matters Johnson would likely want an extension or some type of guarantee on his contract.

Only 12 potential destinations could absorb his $11 million salary without touching the contract. Of those 13 only the Bengals, Eagles, Packers , and Colts would be considered sure fire contenders and most of those squads are set at the WR position. Fringe playoff teams with the room would include the Jets, Dolphins, and Bills. Buffalo would certainly have no interest and Miami is already overspent at the position.

Johnson does risk money in a hold out. This was not the first time that Johnson had been unhappy with the Texans. Back in 2010 Johnson made it known he was unhappy with a contract extension that had multiple years left on it as lesser players began earning more money as the salary cap and importance of the wide receiver position grew. The Texans gave in that time, but in a very minimal way, which I’ll discuss below. To further protect themselves from a holdout threat they tied $250,000 in salary escalators and another $1 million in week 1 roster bonuses to offseason attendance.

There is no arguing the fact that Johnson has always been underpaid. He had been as productive as any of the top paid receivers in the NFL but never reached those financial thresholds. For players considering representing themselves in contract negotiations Johnson’s career should be studied closely and perhaps a warning sign for either not looking for an agent or at least consulting with someone well versed in the NFL contracts and the salary cap.

Johnson represented himself in 2007 when he signed a 6 year extension with the Texans. Johnson had two years remaining on his rookie contract at the time so this extension would take him to the age of 33, meaning it would be the only big contract of his career. Johnson had been scheduled to earn $15.7 million in the 2007 and 2008 seasons of his rookie contract and would have likely increased that number to $16.7 million via escalators.

In his negotiated extension he received a raise of just $3.325 million, none of which would be paid until 2008. He was guaranteed next to nothing and the contract structure was such that he never carried a cap hit in the extension years that would exceed $8.65 million. In addition the signing bonus was so small that he could have been released very quickly had he been injured or ineffective. For that tiny guarantee and raise he was locked in at a price of $7.468 million per year for the next 8 years.

The following season Larry Fitzgerald received a contract extension from the Arizona Cardinals that was worth $10 million a year and only added another two years onto Fitzgerald’s contract. Fitzgerald received $20 million in real guarantees and millions more in injury protection. Fitzgerald played on a better team and had better numbers but the contract terms were a major difference.

After back to back 1,500 yard seasons in 2008 and 2009, Johnson made it known he needed a new deal. The problem for Johnson was that the contract he negotiated for himself in 2007 was so bad that he had destroyed any leverage possible. This go around Johnson hired an agent but there is only so much that could be done. The Texans basically eased the situation adding another two years onto his contract to make him happy. In terms of base contract value Johnson only received a small raise. Originally set to earn $13 million in 2010 and 2011, Johnson would now earn $17 million, a $4 million raise. His 2012 through 2014 seasons remained identical.

Unlike other high end receivers Johnson’s contract contained escalator clauses that, if earned, would push his average contract value over the first five years of the deal to $50 million, thus matching Fitzgerald’s annual value of $10 million a season.  To reach the full numbers Johnson would be required to finish in the top 5 in any of a number of receiving categories. Johnson ended up earning all but $2.2 million of the escalators. In addition Johnson stood to lose at least $1 million a season in the 2012 to 2014 seasons if he held out his services.

While the contract did earn Johnson some added guarantees they paled in comparison to other players and Johnson could still have easily been released after the 2011 or 2012 seasons.  He was one of the best bargains in the NFL- a top quality player with almost no ability to hold out and playing under reasonable salary cap allocations. The Texans would make a mess of his contract over the years with constant restructures (his contract was reworked every year for cap relief), but the base deal was extremely team friendly.

While the deal would be a slight victory for Johnson it was short lived. Fitzgerald would put about 100 less receiving yards than Johnson in 2010 and 500 less yards than Johnson’s 2009 season he used as leverage for his contract, but would be rewarded with a monster contract in 2011 that averaged over $16 million a season with $45 million in various guarantees. Since that time Johnson has caught 21 more passes for 334 more yards than Fitzgerald. On a per game basis it’s no contest as Johnson averages 89.5 yards a game to just 66 yards a game for Fitzgerald. Despite that Johnson was paid just $36.8 million compared to $51.65 million for Fitzgerald from 2010 to 2013.

Since that time Johnson’s contract has been surpassed by the likes of Percy Harvin, Mike Wallace, and Dwayne Bowe, who have a total of five 1,000 yard seasons between the three of them. Johnson has seven. Of those seven, four are for more than 1,400 yards. It’s a travesty that Johnson has been paid the way he has, but these were mistakes or miscalculations that were made back in 2007 and more or less compromised his entire earning potential. Now he is left staring at a rebuilding team with no QB to throw him the ball. He knows odds are he’ll be released following the season but with the likes of Ryan Fitzpatrick throwing him the football his stats stand to suffer and as a 34 year old free agent teams are going to say that it was age related more than team related and he’ll finish his career as a bargain player for some other organization. He probably deserved better but the NFL is a tough business and players should beware of what one bad decision can do to your financial future.


 

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  • NW86

    Regarding Johnson’s history, he might have missed out on some guarantees (which is moot now since he wasn’t released), but I wouldn’t exactly call his contracts a “travesty”. He will have earned close to $100M by the end of 2014, so he isn’t exactly destitute. ;-) Also, in the article you compare him against Fitzgerald – an understandable comparison when you look at their careers, but consider also the fact that AZ has paid Fitzgerald WAY beyond what the market was for any other WR at the time. If you were comparing him to any other WR over that time period, Johnson’s numbers wouldn’t look so bad.

    It will be interesting to see what happens with him. He is not really worth at trade for most other teams at this point (other than maybe the Browns, but I don’t see him wanting to jump out of the frying pan and into the fire). Considering the dead money, he is worth hanging onto at this price for another year for the Texans, but not if he’s going to become a distraction. And either way he will be renegotiating his contract sooner or later.

    • Jim

      I too have a hard time sympathizing with someone who will *only* 1/5 less than what he could/should have when we’re talking over $100 mil. And like you said, comparing him to Fitzgerald isn’t that straightforward, because Fitz has signed such cap-busting contracts in his career.

      Its hard to see Johnson anywhere else right now, because Houston would get little to nothing in a trade considering the cap numbers for the next three years and expected decline for a WR at his age. Think of it this way, if Johnson was a FA right now, would he be able to sign for the numbers has left on his contract on the open market? I think not, though in a trade scenario, none of the remainder of contract would be guaranteed. Houston would have to outright release him, swallow the cap hit, lose all that productivity and the most popular player in franchise history only slightly beyond his peak… for nothing. That’s hard to imagine.

      So unless Johnson retires, (ala Barry Sanders), I see him a Texan next season.

      • http://www.nyjetscap.com/ Jason Fitzgerald

        The Texans best upside in trading him would be to keep their fingers crossed that someone gets injured in training camp and the team becomes desperate for help. I think that is where you might get something for him.

        • jack_sprat2

          Haslam to the rescue?

    • http://www.nyjetscap.com/ Jason Fitzgerald

      But his numbers really should not trail anybody. At one point (before reaching his escalators) he trailed Roddy White, Santonio Holmes, Brandon Marshall, Chad Johnson, TJ Houshmanzadeh, Miles Austin, etc…At the least he should have been earning in the $11 million plus category that Marshall received when he landed with the Dolphins.

      The other point about Fitzgerald, and Im sure an agent would have mentioned this, is that Fitzgerald’s rookie deal was so insane (both sides threw out the last two years in the first extension) he had to be extended in 2008. They should have either benchmarked against a possible extension or threatened to wait until Fitzgerald signed to begin negotiations. Its not like they offered such a huge guarantee that Johnson was protected against injury anyway by waiting. Its like watching the game that went on last year with Harvin, Wallace, and Bowe or the one this year with Sherman, Haden, and eventually Peterson.

      If he holds out I dont think the Texans will resist trading him nor will they give in on an extension. Im always of the belief that if the old vet wants out on a rebuilding team you are far better off getting something in return than having a miserable player wear thin on a new locker room.

  • johnstone185 .

    Great piece. One technical nit – I like to sometimes print off the articles and carry them around with me and read them later when I am killing time picking up a kid at band practice or whatever. Any way I can talk you into putting up a print version button for the posts? Thanks as always for the great work here.

    • http://www.nyjetscap.com/ Jason Fitzgerald

      Im not exactly sure how to do that but Ill try to look into it sometime over the summer.

      • johnstone185 .

        I guess to clarify, I can print the screen, but it prints a whole bunch of other pages (sidebars and such) and the format is crappy. Again, a minor nit and thanks.

        • http://www.nyjetscap.com/ Jason Fitzgerald

          I know what you mean as it goes crazy with the frames. In the past when I used to print things from other sites where the same occurred I used to select the text in the frame and use a print select option to do it. But Ill try to see if there is a way to do a “print view” type thing.

  • ThenAtlasSpoke

    Your argument seems to be in conflict with itself. On the one hand you say it will be hard to trade Johnson because he makes more than he should, but then you argue that he isn’t getting compensated fairly and that lesser receivers are making more, then you’re back to him not wanting to get cut because he would never make what he’s currently making, on the open market. So which is it? Did he benefit himself in his past negotiations or did he screw himself?

    • http://www.nyjetscap.com/ Jason Fitzgerald

      With contracts you always want to be able to frontload your deals and make decision points along the way that force the teams hand when you are still a viable player (i.e. age 31). In order to boost the value of his deal he took $23.5 million at the ages of 34 and 35 and a relatively team friendly cap structure before that, numbers that will never happen in a million years. His 2010 through 2013 seasons (29-32 years old) he played at $9.2 million per year after nearly maxing out his incentives.

      For Johnson his missed opportunities came during those prime seasons of his career. If both he and Fitzgerald play in 2014 on their current deals, Fitzgerald will make $17 million more for his career and that is with one less season in the books. Fitzgerald never had to consistently be a top 5 player to max his deal the way Johnson did. He also will likely receive another decent contract next season due to the deal structure. Both are comparable draft picks and Johnson has overall been more productive his team just never had the highlight seasons Arizona did with Kurt Warner.

      Johnson should have trended right along with Fitzgerald and later Calvin Johnson . Instead he lagged behind.

      • ThenAtlasSpoke

        Feel free to list the receivers that have made more money than Andre Johnson over the past 5 years. I’ll start you out…Larry Fitzgerald. Cal Johnson? Nope, he didn’t even make as much last year, nor this coming year. Reggie Wayne? Nope. Steve Smith? Nope. Mike Wallace? Nope. Percy Harvin? Nope. A.J. Green? Nope. Julio Jones? Nope. The only other two I can think MIGHT come close are Vincent Jackson and Brandon Marshall, but over 5 years I think they likely haven’t either.

        The fact is the only receiver he didn’t trend with is Larry Fitzgerald — one guy — and that’s because Arizona gave him a ridiculous contract. This article could be just as much about how idiotic Arizona was.

        Andre HAS however trended with Cal Johnson, contrary to your assertion. You should probably look at Cal’s contract, because it’s every bit as back-loaded as Andre’s…even more so. Cal made less than $5 million in cash value last year — putting him below Andre — and less than $10 million this year — again putting him below Andre. It’s not until next year that Cal’s money surpasses Andre’s and then it starts skyrocketing, leaving Cal on the proverbial chopping block with Andre.

        And again, the argument that he’s behind the trend — because he’s not making as much in salary as Wallace or Harvin is today — conflicts with your other arguments that teams won’t trade for him because they think he makes too much…especially considering any team (other than the Texans) could cut him any time they felt he was’t worth the money, with absolutely no cap ramifications. Since the Texans will have rolled up and absorbed any signing bonuses, any other team would have a dollar-for-dollar cap savings if they cut him.

        • http://www.nyjetscap.com/ Jason Fitzgerald

          Where are you getting those numbers on Johnson? Those are not even close to correct. Calvin made $25 million last season. In 2012 he made $21.75 million. From 2009 to 2013 he made $76.2 million in cash, which is far and away the highest in the NFL. He has a $5 million cash value this season before jumping back to $12.5 million next season. His deal is a bit bogus in terms of the stated guarantees and overall value being well in excess of $100 million due to the length of the deal but its a pretty crazy contract with big time money up front.

          Its hard to compare the deals the way you are asking because you are looking at actual earned cash flows versus potential cash flows and over a finite period of time. In 2009 Marshall was still on his rookie contract with Denver. Vincent Jackson still on a rookie deal with San Diego plus he held out as a RFA in 2010 that damaged his earnings. FWIW, Marshall with one rookie year attached earned about $2 million less and Jackson about the same, if we disregard the holdout. Marshall is also lined up for one last relatively lucrative contract.

          If other players had played as well as Johnson they would have earned almost every penny of their deals. If Johnson doesnt get docked any pay his 5 year salary from 2010 to 14 will be $47,8 million and its only that high because he was a top 5 player that allowed him to earn his incentives. If VIncent Jackson is effective he’ll earn $55.5 million from Tampa. Santonio Holmes would have earned $45 million. None of these players compare to Johnson. The only veteran contract players who do are Larry and Calvin.

          The point on Wallace and Harvin is that perceived talent pushes prices. Johnson never did that. He didnt take a short term extension worth big bucks like Steve Smith, which was a current contract at the time. He couldnt match someone like Terrell Owens at $9 million a season. He chose a long term team friendly deal that locked him up way behind his peers and left him always playing catch up. Thats why he wanted to redo his deal so soon in 2010 and was hoping for a new deal next year. Johnson is a better player at 33 than Wallace at 28 (or however old Wallace is) but teams are always wary of paying big bucks at that age because of rapid declines (Smith, Ochocinco) or injury possibilities. Do you want to pay $11 million and give up a 2nd round pick for an older player that might crash a few games into the year? Do you want to do an extension that lowers the cap charge but locks you in for more years? Those are difficult questions that teams dont really ask themselves when a player is between the ages of 27 and 31.

          • Kaedwon

            Very cogently and concisely put. “Perceived talent” is something that Andre Johnson (or his agent) could have capitalized on but didn’t. Thanks.

          • ThenAtlasSpoke

            I stand corrected on Cal. As you can see, the numbers here (http://www.spotrac.com/nfl/detroit-lions/calvin-johnson/) give somewhat of a false impression of the option bonus, spreading it out over 5 years. I incorrectly thought they were handled like roster bonuses for cap purposes and were applied as they happened. My apologies.

            As for Wallace and Harvin making more now, that happens with nearly anybody that signs a long term extension. They get the financial security of bigger bonuses and guaranteed money now, in exchange for the risk that the market will reset. And markets continually reset. In fact Johnson himself reset the market in 2010, becoming the highest paid receiver in the NFL at that time (http://www.sbnation.com/2010/8/5/1607451/andre-johnson-contract-texans-highest-paid-receiver-nfl).

            All a player or agent can do is make his best guess at how much the market will reset by in the future without overshooting and ensuring the player will be cut well before his contract runs its course.Johnson’s problem is the market has reset two or three times, in that short four-year span since Andre extended. I’m not sure he or anybody else could have predicted just how much the market would move though. I mean seriously, name one other position in which the top end of the market virtually DOUBLED in annual compensation in two or three short years (although it does fall back over the next couple years, if the market doesn’t reset yet again).

            I think Johnson’s strategy was to maximize guaranteed money with the idea that he could always renegotiate and/or extend later, getting more guaranteed money. At some point you can’t continue to do that though.

            The reality is the bigger hang-up for any team trading for Andre will be player compensation, not the money. After all, with virtually all of his bonus money having been taken care of by Houston, if he doesn’t perform, the new team can just cut him and realize dollar-for-dollar cap and cash savings. If you notice his play has deteriorated in camp release him before the season starts…easy as that. There is absolutely no inherent financial risk for the new team other than in-season injury and he’s been one of the sturdiest receivers in the NFL over the past 7 years. Then they also have to consider the upside of a Tony Gonzalez to Atlanta type of situation, which I think correlates well here (much better than Ochocinco who’s baseline explosiveness was marginal to begin with and dropped off from there and Smith who’s ONLY attribute was his explosiveness due to his diminutive size).

          • http://www.nyjetscap.com/ Jason Fitzgerald

            If you need cap and cash figures you should just use the charts here. They are generally more accurate and Spotrac sources much of their data from OTC to begin with. Here is Johnsons cash page which puts the prorated bonus money into cash terms

            http://overthecap.com/player-cash.php?Name=Calvin%20Johnson&Position=WR&Team=Lions

            The SB Nation article is incorrect. That was agent speak on the deal. The contract would have made him the highest player at that time if he played all 7 years and finished in the top 5 in a number of receiving categories between 2010 and 2013. The actual annual value of the contract was in the $7 million range, which is how the contract was truly valued at the time. It lagged far behind Steve Smith in annual value ($10.9M on short term extension) and Larry Fitzgerald in terms of real values ($10 million straight per year not incentive based).

            Remember at the time when he did his first deal there were also other high end comparables like TO making $9 million a season. He also never got big guarantees on any deals he did. His problem was that 2007 contract. It compromised anything he could do. IF you gave the Texans GM truth serum hed tell you that ran to sign that contract with him when he agreed to it. Most agents would all say it was a terrible decision by Johnson.

            If a team thinks Johnson is willing to go year by year sure they can execute a trade. I think the difficult things for them becomes if Johnson wants an extension which I tend to think he will. It just adds more to it. Plus only a handful of teams can take on his deal without having to prorate more money to the future. If a team is more desperate (i.e. Patriots wth Revis) they wont worry so much but its hard to find those teams sometimes

  • woody219

    I remember them always converting his contract to a bonus or guaranteed money. We should look at all in all what cash he has received in his contracts. I’m sure it’s compatible with the other top receivers. If not, we wouldn’t be getting such a cap hit.

    • http://www.nyjetscap.com/ Jason Fitzgerald

      Its compatible because hes been so good that he actually earned the contract. If lesser players were effective they would have earned more. Thats really the point. He left millions at the table. He put himself in a position where not only did he have to be good but he had to be great to maximize his contract value. His performance leading into his contracts should have never had that happen unless you were talking Fitzgerald money.

  • LordByron07

    Really interesting article. Andre Johnson really did mess up by not getting an agent that first go-around. He’s always been in that discussion of best WR with Larry Fitzgerald and Calvin Johnson…..