The full details today came out on Ryan Tannehill’s new contract extension, originally from Joel Corry of CBS Sports, which allows us to get a better understanding of the contract. The important numbers I want to look at here are the timing of the cash flows associated with the contract to determine where this contract truly ranks among the current group of young quarterbacks in the NFL. Despite the bloated contract total, I would say that Miami did a pretty strong job in securing this contract.
Tannehill’s contract is a bit more difficult to value than others at the position because of the inclusion of the 5th year option from his rookie deal. Tannehill was scheduled to earn $16.155 million in salary in 2016 and usually when we consider new money in a contract, and this deal is valued using such standards, but from the team perspective my guess is they looked at the option year as an un-signed franchise tender and not really valid in their analysis. In general the option year that they held was really no different the unapplied but franchise leverage that was held by the Bengals, Falcons, and 49ers when they signed their quarterbacks to new extensions.
So when we compare the cash earned on the contract we want to value Tannehill’s contract as a five year contract. This better allows us to compare the various recent contracts signed at the position. The year of signing is considered “Year 0” (with the exception of Joe Flacco) since it occurs while the player is still under contract to the organization.
These numbers paint a very strong contract structure in terms of cash paid for the Dolphins. The first thing to consider here is the Tannehill vs Dalton numbers. Most people, myself included, felt that Tannehill at best was a candidate for a Dalton type of contract rather than one that pays him near $20 million. Both have shown limitations and neither has shown the ability to pick up a team beyond their expectation level.
Over the term of the contract Tannehill will earn significantly more than Dalton (who can increase his take by being successful in the playoffs), but the Year 0 and Year 1 numbers are the important ones. With both players considered a question mark there is a possibility that neither would make it beyond the first extension year of their contract. In 2017 Tannehill will carry a $20.3 million cap charge but cost just $10.4 million against the cap to release. Part of this is a contractual guarantee, but at just $3.5 million Miami would likely not be liable for any of the salary since it does not seem to be protected with “no offset clauses”, unless Tannehill was so bad that he Josh Freemaned himself out of the NFL. Dalton in 2016 (his “Year 1”) would only cost $7.2 million against the cap to release.
So Miami is pretty well protected here in the event of a disaster which leads to Tannehills release. Of all he young quarterbacks in the NFL he will earn the least even if we include the additional $3.5 million guaranteed future salary to his Year 1 cumulative cash flow. In that manner this is a stronger contract for the team than Daltons for ultimate protection.
Kaepernick’s contract is loaded with incentives and escalators that don’t apply in this valuation, but in general Tannehill would need to reach the 4th extension year to out-earn Kaepernick. Tannehill also did not receive the bonus possibilities that Kaepernick has. None of the players are really even close to the first wave of young quarterbacks (Flacco and Ryan) who signed contracts.
Perhaps we best can illustrate the strength of the contract when we look at percentage of the five year contract value earned each season.
I’d consider these very low numbers for Tannehill. This is where a discrepancy in valuation would likely come from the player side versus team side since the player will argue that the $16.155 million option year was already in place, but the reality is Tannehill will earn just 10.8% of his adjusted 5 year total this season and 20.8% through the first extension year. This pales in comparison to the other players who received a much larger percentage of their contract by the first extension year.
It would seem as if the going rather would be close to 30% in the first year, 45% by year 2, 61% by year 3, and 79% by year 4. It takes Tannehill 4 years to be on par with his peers in terms of the way the cash is earned. That makes this a more backloaded contract than the ones received by the other players he is being compared with around the NFL.
The one thing that probably does not work in the Dolphins favor in the deal is the cap charges associated with the contract. Since the team has cap issues in 2016 they decided to defer more money to the back end seasons. If a player like Dalton continues to be a mediocre player his cap charges generally reflect that outcome. If Tannehill continues to be a mediocre player the organization faces the same difficult decision that confronts so many NFL teams- do they devote significant cap charges to a known, but limited, player that will drag resources away from the rest of the team or do they go with the lower cost unknown? That decision is made easier if the team suffers a 4 win season, but it incredibly difficult when the team continues to be a 7 to 9 win team. Here is the average cap charge that the teams face with the players after the first new year.
|Player||Avg. Year 2-5 Cap|
Miami did give up some upside in this contract in the event Tannehill does justify and exceed the $20.17M average cap in the body of the contract. The Bengals, 49ers, and Ravens all received a potential extra year of service from their players. Only the Falcons and Dolphins were willing to give the earlier free agency.
I do believe it is clear that the Tannehill contract will become a baseline number that is used for the negotiations of the young group of quarterbacks who are eligible for new contracts, but the way the contract is structured I think will tell a bit of a different story. Will a player like Cam Newton be willing to take less at the start of his contract and gamble on himself a bit before the bigger money kicks in towards the later year? That looks like it might be a question that will be popping up in these negotiations sooner, rather than later.