Beginning next week, I will be pursuing a salary cap related opportunity within the industry. As a result, I will no longer be writing or podcasting on Over The Cap or tweeting on Twitter. I owe many thanks to Jason for providing me with the opportunity to be involved with Over The Cap, and I am also very appreciative of everyone who has reached out with feedback or questions regarding my ideas over the last two years. Jason has created an amazing tool and a powerful platform, and I am excited to watch from afar as he and others continue to build OTC into a leading online NFL resource.
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Members of the NFL media will analyze this contract from a number of perspectives, each stressing that the face value of the contract is not determinative of the amount of money Cox will receive or the strength of the contract relative to other contracts, while at the same time highlighting certain pertinent contract characteristics. Many will note the amount of “total guarantees”, while others will focus on the “full guarantees at signing”. Others may highlight the amount of money that will be fully guaranteed as of a certain point in time (such as March 2017), while others will stress the annual cash flows. The analysis may include phrases such as “virtually guaranteed” or “practically guaranteed”, and the observations may note that “the contract is really $X over Y years, followed by Z team options.”
I do not disagree with any of this analysis. All of these contract characteristics are important to varying degrees and should be weighted in the analysis as appropriate. However, the degree of nuance in the contract makes it exceedingly difficult for any one person to synthesize all of the relevant information and articulate analysis that does not over-emphasize any particular characteristic. The best approach is to establish a framework for analysis that incorporates all of the considerations that one deems to be important to contract analysis, and to then apply that framework to all new contracts such that each is analyzed in a holistic, objective and consistent manner. This is the goal of Expected Contract Value:
Given the recent comments made by Deadspin and Pro Football Talk as to the inadequacy of the current convention for reporting and discussing NFL contracts, I thought it would make sense to post the entirety of the research paper that Nick and I submitted to the MIT Sloan Sports Analytics Conference. The paper can be downloaded as a PDF via the link below:
Harrison Smith signed a five-year extension with the Vikings reportedly worth a face value of $56,528,000, of which $51.25 million is considered “new money” and $15.278 million is guaranteed at the time of signing. The Expected Contract Value of the deal is $37,370,859 (66% of the face value):
Allen Hurns signed a four-year extension with the Jaguars reportedly worth a face value of $40,650,000, of which $40.05 million is considered “new money” and $16 million is guaranteed at the time of signing. The Expected Contract Value of the deal is $29,261,110 (72% of face value):
On Thursday, Allen Hurns and the Jaguars reached an agreement on a four-year contract extension that covers Hurns’ restricted free agent season (2017) and buys out three potential unrestricted free agent seasons (2018-2020). While the contract details have not yet been published, the extension was initially reported as worth $10 million per year on the basis of $40 million worth of new money and 4 extension seasons. One other way to look at this report is that the contract is worth $8.12 million per year on the basis of $40.6 million worth of total money over 5 total contract seasons. Jason has pointed out that the extension is worth $12.4 million per year over just three extension seasons once the potential 2017 RFA tag is taken into consideration when determining new money and new years. I think it does not matter which view of APY one takes, because APY-based contract analysis is based on a flawed premise.
Shawn Williams signed a four-year extension with the Bengals reportedly worth a stated value of $20,870,000, of which $20.185 million is considered “new money” and $4 million is guaranteed at the time of signing. The Expected Contract Value of the deal is $16,082,691 (77% of the stated value):