Thoughts on Rams $24.5 Million Extension with Nick Foles

Late last week  the Rams announced that they had extended the contract of quarterback Nick Foles and today we finally have more details on the contract. Per Jason La Canfora, Foles will get a bump in salary to about $6 million this year and contains nearly $14 million in guaranteed salaries plus additional incentives. Foles’ contract can potentially void in 2017 based on playing time and his and/or the team’s performance. With an average annual value of just $12.25 million per year, the Rams have carved out a nice little niche in the QB market in which they will have a potential bargain at the position over a two year period without the added risk of monster contract for an unknown player while Foles will maintain his earning potential if he builds on his career. So let’s examine the ways in which this contract works for both sides. 

Doing any kind of contract for a player like Foles I think is difficult. Foles has a relatively small sample size to draw from with just 24 starts in three seasons and under 900 total pass attempts. He also plays at the most expensive position in the NFL and at times all it takes is one good season to reach the upper echelon contract level. So to get a deal done now really requires a bit of give and take on both sides.

Foles had three outcomes that could have come from this season. One is the flame out in which he struggles to play well outside the Eagles offense and the spin will need to begin from his side about the negatives of playing with the Rams. At that point his upside value is likely in the ballpark of a Brian Hoyer type at just over $5 million a season. The second outcome is that he does well enough to keep next season but there are still questions which would lead to a franchise tag which would probably pay him in the realm of $20 million for one year.  Finally having a good season on a very good team would likely result in the Andy Dalton or Colin Kaepernick style contract with upside escalators and a value between $16 and $18 million and a $24-25 million payout next season.

The current contract more or less splits the first two options with the base value of over $12 million with both sides taking on some of the risk. If Foles fails then the Rams end up paying a $5 million QB, $12.25 million. If he plays well there is a good chance that Foles loses out on the $8 million he would have received on the franchise tag. I don’t worry about the third year of the deal because odds are it will likely void or be removed from the contract entirely.

The Rams, in my opinion, made two concessions in the deal, both mainly related to upside value. These were probably needed in order to get Foles to give up the chance of an extension following the season. The Rams inluded $9 million in incentives over the first two years of the contract. If earned those would allow Foles to essentially earn what he would get on the franchise tag. The second is that the team put in what looks to be a relatively easily reachable void year in 2017 that allows Foles to hit free agency if he was great in 2015 and 2016. Basiclally the contract works nearly identical to the franchise tag.

By avoiding the long term contract the Rams avoid the big outlay of cash up front on the contract.  Even if they accepted him as a Dalton type player that would have required cash payments this year in the ballpark of $16 million rather than $6 million this year and $25 million over these next two years, rather than $13 million and change. Even if the incentives are reached that provides a discount on that value and allows the team to hold off on $4.5 million in payments until the end of each season

By taking advantage of the very low cap charges Foles had this season as part of his rookie contract the Rams will mitigate the cap charges over these first two seasons. In 2016 he will likely have a cap charge of just $8.075 million and $12.5 million if he hits all his incentives. The Rams mainly used roster bonuses and base guarantees to fund the contract, which contains about $13.8 million guaranteed. The guarantee is basically one years salary plus his original $1.52 million salary.

The team only used $3 million in signing bonus money, which will leave them little to account for on their cap if his contract does void, is terminated or modified in 2017. That also reduces the leverage he could have in looking for a new deal in 2017 and is much more team friendly than say the Matt Stafford or Carson Palmer type of contract with huge prorated bonuses putting the teams in a negative position. On a longer term deal this would have been difficult to avoid.

I think this is important for the Rams who have just commited large sums of money to a player in Sam Bradford who was rarely healthy and not very effective when he was healthy. Teams need to be aware of players like a Kevin Kolb or Derek Anderson who landed nice size longer term deals off small samples and left teams in the same position the Rams were in for years with Bradford where it becomes difficult to justify moving on. Long term that can put a team in a difficult spot and any longer term deal here probably would have put the Rams in the same spot. Now they get a moderate cost two year audition for a long term job.

I don’t consider the lack of a long term deal a negative for the Rams by any stretch the way some might if Foles plays incredibly well. The fact that Russell Wilson failed, off two Super Bowl appearances, to advance the QB market makes me pretty certain that it will not dramatically change over the next two seasons. While Andrew Luck will set the market, the fact is he is the only young player capable of doing that. The Ryan Tannehill’s of the world will still be playing at $19 million a season. All the Rams did was delay what would likely be the same complete contract by a year or two. That works out as a benefit to the Rams.

So in the end both sides take on some risk and should both be happy with the deal. Here is how I believe the contract shakes out over the next three seasons:

  • ksperfect

    For Jeff Fischer if Nick Foles doesn’t work out this season he will be fired, so for Fischer if Foles struggles it doesn’t matter if he was given an extension or not, but if Foles plays well it helps by a lower cap than if he played well and was set to be a free-agent. The downside to Fischer of an extension doesn’t exist. The GM likely would get fired as well.