Jordan Reed signed a five-year extension with Washington reportedly worth a stated value of $48,389,750, of which $46.75 million is considered “new money” and $14 million is guaranteed at the time of signing. The Expected Contract Value of the deal is $30,118,560 (62% of the stated value):
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Cordy Glenn signed a five-year contract with the Bills that replaces his franchise tag and is reportedly worth a stated value of $36,000,000, of which $36 million is guaranteed at the time of signing. The Expected Contract Value of the deal is $52,362,561 (87% of the stated value):
Terron Armstead signed a five year extension with the Saints worth a reported stated value of $66,671,000 over six seasons, of which $65 million is considered “new money” and $20.88 million is guaranteed at the time of signing. The Expected Contract Value of the deal is $52,605,849 (79% of the stated value):
The draft represents an avenue for NFL teams to acquire talent at a fixed price below the market value of similarly talented free agents. Drafting effectively is imperative for success, as no team can afford to pay the free agent market price for all 53 players on the roster. Teams who draft effectively are potentially able to release veteran players with large contracts, thereby freeing up cap space to reallocate to positions where no recently drafted player is prepared to fill a need in the roster. The draft decisions made in the early rounds of the 2016 draft may therefore have an impact on contract termination decisions made during 2016 training camp and the 2017 offseason. I have identified below a number of such draft picks and the veterans potentially affected by their selection, accompanied by the relevant Expected Contract Value calculations.
Each offseason a number of players agree to simple restructures of their contracts designed to free up cap room for their respective teams in the present year. These cap-driven restructures involve converting base salary (or roster bonus) to signing bonus, with the converted amount then prorated over the remaining years on the contract (up to a maximum of five years). These restructures only involve changing the nature of contract payments, as opposed to the amount of those payments, and are therefore distinguished from pay cuts, raises or extensions. There is clearly no downside to the player agreeing to do this, as he immediately receives money scheduled for payment more than six months in the future (and which is often not guaranteed). But what may be overlooked is that these cap-driven restructures typically increase expected earnings in future seasons without in any way changing the payment terms in those future season.
Josh Norman signed a five-year contract with Washington for a reported stated value of $75 million, of which $36.5 million is guaranteed (using any common sense definition of the word “guarantee”). The Expected Contract Value of the deal is $54,848,581 (73% of the stated value):
The chart below compares the Expected Contract Value with the stated contract value for each contract of $10 million or more signed during the 2016 offseason. Expected Contract Value 1.1 is applied at the time of signing. Expected Contract Value 1.1 takes into account the nature and timing of contract amounts, the resulting relationship between dead money and APY in each year of the contract, the length of the contract, and the position and age of the player. Expected Contract Value 1.1 is therefore a performance-neutral measurement of expected contract earnings. As a result, the primary way a player can exceed or fall short of his Expected Contract Value is to perform better or worse than the performance expectations implied by his contract.