According to Pro Football Talk, Colts general manager Ryan Grigson made the rounds over the past few days and indicated that Andrew Luck’s record breaking contract has forced the Colts to “tighten up” and that it will take some time to be able to build up the defense. Essentially Grigson is attempting to say that because the team has invested so much in the offense they can’t really do the same at other positions. Perhaps Grigson is just trying to hit on a few talking points that the general media will buy into, but if he truly believes what he is saying then the Colts may have an even bigger problem on their hands.
While Andrew Luck is the highest paid player in the NFL, he, by no means, signed a team breaking contract. There are outlier contracts in the NFL and I call them “position busters”. A “position buster” is someone whose contract is so much larger than the 5th highest paid player at the position that the decision to sign that contract is going to lead to sacrifices elsewhere.
Ndamukong Suh’s $19 million contract is a position buster. Its $9 million higher per year than Kyle Williams. Adrian Peterson’s $14 million contract is about $7 million higher per year than the 5th highest paid. These teams are forced to make sacrifices because they over invested in one player. Andrew Lucks contract is just $2.69 million more per year than Russell Wilson’s. That’s not a game changer. That’s the cost of basically a lower level veteran starter/situational player. Maybe it’s the cost of sacrificing two low level veteran depth guys for younger talent. But it should not change the top level composition of the team.
The other way we can look at this, and a team should be looking at it, is by determining the true future cost on the salary cap. Once a contract is signed the amount is set in stone, but the salary cap is rising. While you can restructure contracts to push more cap into the future, as of today Grigson should be able to look at Luck’s contract and determine just how much of his cap is going to impact that cap each year. If we assume a $10 million a year growth in the cap here is how Luck’s contract will play out as a percentage of cap.
So the team will commit anywhere from 10 to 15% of their cap in any given season to Luck. Is that out of the ordinary? Here is Peyton Manning’s breakdowns of his various extensions:
Is there that big of a difference between what you see with Manning and what exists with Luck? Not really and the Broncos had no problem building and investing in defense in those last few years of Manning’s career. That doesn’t mean Luck’s contract is cheap, but there are other players who were in the same range as him and did not use the cap as an excuse.
There does come a point where excessive roster spending can impact your spending. For example the Eagles have spent a mini-fortune in free agency. That makes it more difficult for them to go out in free agency and improve the team. Are the Colts at that stage? Not even close.
The Colts rank just 19th in total contract value per year, about $30 million less than the Eagles and $18 and $12 million less than the Packers and Seahawks, who are a teams with a high priced QBs. The Colts currently rank 8th in potential carryover space in 2016 and 5th in cap space for 2017. So there should be the capability to spend if the team structures their contracts properly.
Maybe the Colts haven’t really put the Luck deal in context and are spooked by the magnitude of Luck’s contract but if that’s the case they only have themselves to blame. This is one of my pet peeves in the NFL, in particular when it comes to quarterback contracts.
The quarterback position should be looked at as a fixed cost in today’s NFL for most teams. Of the top 20 contracted quarterbacks, 19 were signed to contract extensions, the lone exception being Brock Osweiler who left Denver as a free agent and signed in Houston this year. Of those 20 names, 15 are on the same team they started their careers with, and only Drew Brees, Tyrod Taylor, and Osweiler were available in free agency. The Cardinals traded for Carson Palmer and the Bears traded for Jay Cutler.
The bottom line is once you have a quarterback with a pulse you already know you are locked into that player for a minimum of $19.5 million a season once his rookie contract expires. The NFL CBA allows you to renegotiate a contract after a player completes their third season in the NFL. What is the purpose in waiting to extend? There is none.
The Colts could have extended Luck last season and had an extra year to prorate contract money. It would have eliminated any prorations in the 2020 season as well making it far easier for the Colts to push money into the future if an immediate need for cap relief arose. A move like that would drive the effective cap per year down from $23.2 million a year to $20.9 million a year. The cost of that move would have simply meant not signing one of the old age brigade that the Colts decided was the way to win in 2015. This is the move that teams like the Packers and Seahawks have used to drive down the impact of the big contracts on their salary cap. The Colts should have done the same but failed to do it.
The Panthers made the same mistake with Cam Newton the year before and it’s mind boggling to see teams do this. The Colts signed Luck to the biggest contract in NFL history. What did Luck do in 2015 to earn that? Play poorly and get injured? It was made clear by the fact when the Colts gave him a $24.5 million a year contract that nothing his did, positive or negative, was going to really move the needle. They were locked in on a price. Yet they waited. It makes no sense. Waiting to proactively address a contract you know you are going to sign just to play some negotiating game is not only pointless, but damaging to a team.
That’s not to say that this is all Grigson’s fault. The team often played the waiting game with Manning and that predated Grigson. Ownership can certainly have an input in these big contracts and perhaps that is something that occurred here. Still it’s an organizational mistake and you can’t make that mistake and then cry that you have empty pockets a year later when the team is playing poorly.
Unfortunately for Indianapolis they wasted their easiest opportunity which was when Luck was on that rookie contract. During that period the Colts had a competitive advantage because Luck’s contract was so cheap compared to the value of his production. It was the opposite of Suh. Rather than a contract causing you to shrink at other spots you might be able to take some chances elsewhere. But it never worked for them.
Rather than aiming high they overspent on lower cost players like Gosder Cherilus, LaRon Landry, and Greg Toler. Their drafting was poor. They have yet to draft a pro bowler post 2012 and they whiffed on back to back 1st round picks. One of those picks was used on Bjoern Werner and the other used in an ill advised trade for Trent Richardson. Their obsession with offense at times has probably hurt them. They locked in to TY Hilton, had two capable tight ends drafted that same year, and drafted Donte Moncrief in 2014. Yet with all the holes they drafted another received with a 1st round pick in 2015. Phillip Dorsett may well be a very good player, but when you keep drafting into a position of strength you are wasting resources that could fix real poor areas. They topped off the bad decision making with the investments in Andre Johnson, Trent Cole, and Frank Gore in 2015.
In fact if you want to see why a team like the Colts has such little talent on defense look at the drafting. Since Grigson was hired as GM in 2012 the team has used 10 picks in the first three rounds of the draft on offense and just 4 on defense. The Colts drafting issues have also pre-dated Grigson’s hire, but its also pretty clear where the priorities have been. You cant blame a contract for lack of talent on one side of the field when your team simply refuses to invest draft capital in that aspect of the game. Once you realize you are going to have to spend money on younger players on offense, which they should have known when they had decent hits in the QB, WR, LT, and TE spots, start to invest the draft in defense to balance things out, not on more wide receivers and centers.
So don’t blame Luck and his contract for the Colt’s woes and their lack of defensive talent. His contract isn’t making them sign bad players or avoid drafting defensive players. Blame the decision makers and the decision making process. This team had the competitive advantage needed to advance to a Super Bowl and never could make it come together. They still have enough in financial reserves to build a quality team around Luck, but if they are now gun shy about using it and cant fix their drafting , don’t expect the Colts to get any better any time soon.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.