Hardik Sanghavi


Recent Posts by Hardik

Forecasting an Extension for David Johnson

The Arizona Cardinals have been in a retooling mode over the last two seasons, evident by the team’s high roster turnover and mediocre 7-8-1 and 8-8 record in 2016 and 2017 respectively. With the team drafting Josh Rosen 10th overall, the front office should now focus on developing and retaining young talent to surround the young QB. One player who fits this mold is Running Back, David Johnson.  Johnson was drafted in the 3rd round of the 2015 draft and had a solid rookie season before breaking out in 2016 with 2,100 all-purpose yards, 20 Touchdowns, and Pro-bowl and All-Pro accolades. After suffering a season-ending wrist injury the following season, he now enters the last year of his rookie deal and is looking for an extension. The Cardinals have publicly stated Johnson is a core player and look forward to rewarding him, so it’s clear both sides are motivated to hammer out a deal. The question will be at what number?

Key Points

Before determining a fair value for Johnson, there are a few points I want to discuss. The first relates to what Jason Fitzgerald wrote in his recent article, where the multiple franchise tag isn’t a good option for Johnson and the best way to maximize his earnings is by doing an extension with the Cardinals. If Johnson were to go the multiple franchise tag route, the Cardinals would have him under his current $1.907M salary and likely apply the franchise tag in 2019. During his tagged year, Johnson would be incurring injury risk while having no long-term financial commitment from the team, which is a crucial need for Running Backs given their short career span. After Johnson would play out his first franchise tag, he would either hit free agency in 2020 or be tagged for the 2nd time. If he were to hit free agency, he’d be 28 years old and teams probably wouldn’t value him the same given his age. Being tagged a 2nd time would put Johnson in similar circumstances during his first tag, where he’d have nothing guaranteed past the tag year. One might point to Johnson’s peer, Le’Veon Bell, as a RB who seems to be doing well with the multiple-franchise tag option; however, the key difference is Bell will be hitting free agency at 27, an age where teams are more likely to show the money for a Running Back vs Johnson who would be 29 after his 2nd tag. My second point relates to the Cardinals usage of Johnson. During negotiations, Johnson’s camp should look for him to be paid like a true 3-down back. During the 2016 season, his first season as the entrenched starter, Johnson had 373 total touches, which was more than any other RB that season. I would expect Johnson to continue to be the work-horse, as he’s arguably the most dynamic player on the offense and the ability of new OC, Mike McCoy, to build a system around his players. Johnson can also further his case on his value by pointing out he had the second most targets on the team in 2016, with 120 targets. The Cardinals rushing offense also struggled when Johnson wasn’t on the field, dropping from 18th to 30th from 2016 to 2017. My last point relates to the timeline of a deal. I would expect Johnson’s camp and the Cardinals to set a deadline of exactly one month before the start of the 2018 season. The CBA doesn’t credit a player with an accrued season if their holdout extends to anything less than a month before the regular season. This has huge financial consequences as a player is eligible only for Restricted Free Agency if they have less than 4 accrued seasons. Johnson would only have 3 accrued seasons with an extended holdout.

Comps

Below is a list of some of the recent RB deals and each player’s performance 2 years leading up to the deal:

One thing to note from the table above is that I’ve included Le’Veon Bell. Although he rejected the Steelers’ offer last year, it’s important to reference the offer in determining an appropriate APY for Johnson. I would expect the Cardinals’ offer to be lower as Johnson doesn’t have the same leverage that Bell did.  Bell was already tagged at a $12.12M APY figure with a second tag valued at $14.544M, with no team control thereafter. In Johnson’s case, the Cardinals theoretically have him under control for the next 3 years at roughly $27.207M, whereas the Steelers had Bell for 2 years at $26.664M at the time of their offer. In addition, when a team like the Steelers don’t guarantee anything past the first year, they need to compensate with a higher APY.  Considering the points above, below is my estimate for Johnson’s extension and how it compares to his peers:

  • 5 Year Extension worth $48.75M in new money ($9.75M APY)
  • Signing Bonus: $10M
  • Fully Guaranteed: $19.5M ($10M SB + $3.5M 2018 Base Salary + $6M 2019 Base Salary)
  • Total Guaranteed: $25.5M (Fully Guaranteed Amount + $6M 2020 Base Salary which vests on 3rd day of 2020 league year)
  • 1 Year Cash Flow: $17.593M
  • 3 Year Cash Flow: $29M

I would expect Devonta Freeman’s APY to be the starting point as Johnson is used more when healthy and has more upside. In regards to cash flow, I believe the only way the Cardinals will agree to a 3 year cash flow higher than $27.207M, the sum of Johnson’s current salary and estimates of the next 2 tag values, is if they can get more years of control. In addition, the Cardinals will likely look to do a vesting guarantee in the third year, which gives them the flexibility to move on from Johnson for any reason after just 2 seasons. This structure was also used on Tyrann Mathieu as he was cut two years into his extension before additional guarantees in his deal triggered.

Team Impact

   The table below illustrates the cap hits each year of Johnson’s deal and the cost/benefit if the Cardinals were to release him any given year. The Cardinals are approx. $14M under the cap, with a projected $44.9M next year, so I don’t anticipate Johnson’s extension causing any salary cap constraints. In addition, if the Cardinals structure Johnson’s deal as below, Johnson’s cap hit % through 2020 will never exceed 4.21%, which is a very reasonable rate for a player of Johnson’s caliber.

Final Thoughts

It’ll be interesting to see whether Johnson and the Cardinals will be able to reach an agreement in the next month. If Johnson is realistic about his value and not asking to be in the range of Le’Veon Bell’s offer from last year, I would expect a deal in the next few weeks. Assuming Johnson signs an extension in the neighborhood of what I’ve projected, he’d trade in this year’s $1.907M salary and either a shot at free agency next year or approx. an $11.5M Franchise Tag for a deal totaling $50.632M over 6 years. At signing, Johnson would be guaranteed $19.5M, which would be paid over 2 years and then the Cardinals would decide in March 2020 whether they want to continue to employ the RB or let him walk.

Hardik Sanghavi graduated from DePaul University in 2016 with a major in finance and minor in accounting. During his time at DePaul, Hardik interned with ESPN Chicago and Priority Sports & Entertainment. He now works as a Commercial Underwriter in the Insurance Industry and is a contributor on sportsagentblog.com. You can follow him on twitter at @hardiks94

Forecasting an Extension for Zack Martin

Historically, Offensive Guard has been one of the least recognized positions in football. However, over the last two seasons, the Guard Market in the NFL has been “Boomin’.” Per Jason Fitzgerald’s article in March detailing Market Movement, six contracts signed by Guards in 2017 were high enough to be valued in the top 10 at the position and the top 20 average APY for Guards increased by 23% this year. The next player that will continue to contribute to the growth of the Guard Market is Dallas Cowboys Right Guard, Zack Martin.

Current Deal

Martin signed a 4 year, $8.967M deal with the Cowboys after being selected 16th overall in the 2014 NFL Draft. His deal includes a 5th year team option, similar to all first round draft picks under the current collective bargaining agreement, which the Cowboys had no reluctance to exercise last March. Martin’s 5th year option, currently guaranteed for injury, becomes fully guaranteed on the 1st day of the 2018 league year and will pay out $9.341M in P5 Salary. However, when a player of Martin’s caliber has less than 2 years on his deal, it is smart for teams to start considering an extension as it prevents the player from testing the open market. The player benefits as he gains long-term financial security and transfers injury risk to the team.

Key Points

Before forecasting an extension for Martin there are a few points to consider. In determining an appropriate value for a player, teams and agents typically pull a list of comparable players from the player’s respective position. However, in Martin’s case, because he is regarded as one of the best Offensive Lineman, his comps should include Guards and Left Tackles as Left Tackles dominate the top of the Offensive Line Market. Second, the Cowboys have a precedent of signing their first round Offensive Lineman to long term, top of the market deals, exemplified by Tyron Smith’s and Travis Frederick’s extensions. Looking at their contract structures will be important in determining the appropriate structure for Martin. Lastly, ESPN’s Todd Archer reported Martin’s camp and the Cowboys halted contract talks in September and will resume again next off-season.  That being said, Martin will be only one year from free agency when negotiations resume, so the cash flow in Martin’s first new year should be, at minimum, the 2019 franchise tag number for Offensive Line, which is forecasted at approx. $14.2M. In addition, Martin’s APY should be based off the 2018 NFL Salary Cap. For the purpose of this article, I’m assuming it will grow at its average growth rate of 5.71% per year since 2011. That would bring the 2018 Salary Cap number to $176.54M.

Comps

Below is a list of recently signed deals in the Tackle and Guard market and each player’s performance 2 years leading up to his new deal:

Not only has Martin shown incredible toughness and durability as he has only missed 2.5% of snaps the last two years, but Martin has also earned 1st and 2nd Team All-Pro Recognition from the highly regarded football analytic site, Pro Football Focus. That being said, the $12M mark set by Kevin Zeitler in the Guard Market should be the floor in negotiations for Martin’s extension. The Cowboys could argue against this as Zeitler’s deal was done in Free Agency, where he had more leverage. However, Martin is regarded as the better player and, as previously mentioned, the Cowboys have set a precedent for their First Round Offensive Lineman, Tyron Smith and Travis Frederick, by making them the highest paid players at their position at time of signing.

Considering the points above, I project Martin’s extension:

  • 6 Year Extension worth $84.6M in new money ($14.1M APY)
  • $38M Total Guaranteed (includes signing bonus, 2018-2019 base salaries, and $6.459M of 2020 base salary guaranteed for injury.)
  • $31.541M Guaranteed at Signing (includes signing bonus, 2018-2019 base salaries)
  • $8M Signing Bonus
  • 1st Year Cash Flow: $17.341M
  • 3 Year Cash Flow: $44.541M

The table above illustrates Martin’s key metrics against his comps. As I believe Zeitler’s $12M mark should be the floor for Martin’s negotiations, the next question would be where he fits among the three highest paid Tackles. Martin is a far better player than Okung, so it should not be a surprise for Martin to get the better deal. Then comes Trent Williams and Terron Armstead, who are also better than Okung and played at elite levels leading up to their deals. That being said, I would expect Martin’s numbers to be more in line with Williams’ and Armstead’s figures. If the Cowboys aren’t willing to sign Martin to the $14.1 APY figure that I’m projecting, Martin’s side should use the argument that a $14.1M APY would only be 7.99% of the 2018 projected cap. Williams’ and Armstead’s APY were 9.21% and 8.37% of the salary cap at time of signing. Regarding Martin’s guarantee structure, although his dollar figures are higher than most of his comps, the % of guarantees to his total contract value will be lower than his peers as that would be tradeoff for having the highest APY dollar figure. However, Offensive lineman typically have longer career spans and are more likely to play out their entire deal, so compromising with a lower % guarantee for a higher APY is the route Martin should take.

Team Impact

Now that we’ve looked at Martin’s projections, it is important to see how his numbers align with his counterparts on the Cowboys Oline.

Looking at APY as % of Cap, Martin’s 7.99% is only lower than Tyron Smith’s 9.17%. The reason Smith’s number is so high relates to his deal being team friendly as illustrated by guaranteed % and the length of the extension. That being said, Dallas had to compromise by inflating Smith’s APY. The only other outlier on the table above is La’el Collins % Guaranteed and Signing Bonus percentages. This is because Collins’ recent extension reflects what he would have approximately earned on his rookie deal had he not fallen out of the draft.

In looking at Martin’s Cap Numbers throughout the deal, his cap hit will be at its peak in 2019 at a whopping $15.8M. This could lead Dallas to restructure Martin’s deal by converting a large chunk of his P5 into a signing bonus. As a result, Dallas would free up cap space in 2019, but Martin’s Dead Money figures would increase in the later years of his deal. This would make it more difficult for Dallas to release Martin later in his career.

Final Thoughts

Since entering the league in 2014, Martin has played at a high level, consistently. His first round status, dominance in the trenches, and being one year from free agency will give Martin leverage in negotiations with Cowboys Brass. This leverage should not only be used to make Martin the highest paid Guard, but the highest paid Offensive lineman by APY. The tradeoff for Martin will be to have a lower % of his deal guaranteed. However, with Martin playing a position with a longer career span, he is more likely to play his entire deal so going for a higher APY is worth the tradeoff for lower guaranteed %. I would expect both sides to reach an extension by the beginning of the 2018 League Year.

Hardik Sanghavi graduated from DePaul University in 2016 with a major in finance and minor in accounting. During his time at DePaul, Hardik interned with ESPN Chicago and Priority Sports & Entertainment. He now works as a Commercial Underwriter in the Insurance Industry and is a guest contributor on sportsagentblog.com. You can follow him on twitter at @hardiks94.

Forecasting an Extension for Devonta Freeman

The Atlanta Falcons’ accomplishments this season were a testament to their success in drafts over the last few years. From Devonta Freeman and Jake Mathews to Desmond Trufant and Vic Beasley, General Manager Thomas Dimitrioff and his staff have done a solid job under the draft-and-develop philosophy. As the Falcons now attempt to move past their devastating Super Bowl defeat and continue to build through the draft, it will be imperative for the front office to also extend some of their key players. With Desmond Trufant recently signed to a 5 year extension, Devonta Freeman will be the next priority.

Justifying an Extension

   The Falcons drafted Devonta Freeman in the 4th round of the 2014 NFL draft. During his rookie season, Freeman saw limited action as Steven Jackson was the lead back. The following season, after age caught up to Jackson and the Falcons released him, Freeman earned a starting role and has rushed for over a 1,000 yards and averaged over 500 receiving yards in each of the last two seasons. In addition, Freeman’s durability during this time has been quite remarkable as he has only missed 3% of games. That being said, as Freeman enters the last year of his 4 year rookie deal and is due $1.8M, it will be in the best interest for the Falcons and Freeman to work out an extension. A new deal by training camp will provide Freeman with injury protection and financial stability while the Falcons will avoid entering a bidding war if Freeman were to test free agency next year.

The Running Back Market

Before I forecast an extension for Freeman, it is important to have an understanding of the current Running Back Market. Over the last few years, as NFL offenses have become pass-heavy, the demand for Running Backs has diminished. This is not only evident through the lack of Running Backs selected in the first round, but also the mediocre salary teams are willing to commit to the position. For example, the average APY for the 10 highest paid Running Backs is $6.99M. When comparing this metric to other positional groups, only Fullbacks, Kickers, and Punters have a lower figure as seen in the graph below.

I also want to point out that the current highest paid RB, by average salary, is Le’Veon Bell at $12.12M. Second on the list, at $8.01M, is LeSean McCoy. The reason Bell’s salary is so much higher than McCoy’s and the rest of the RB market is because he is on the franchise tag. If the Steelers and Bell can reach a long term extension, Bell’s APY will likely drop to an APY that is more reflective of the current market. However, this is not to say that there can’t be outliers in the RB market. When a RB is a once-in-a-generation type player, like Adrian Peterson or Marshawn Lynch, teams are willing to shock the market as the Vikings and Seahawks did a few years ago when they gave Peterson and Lynch a $14M APY and $12M APY respectively.

Circling back to Devonta Freeman, to project an extension we will need to analyze recently signed deals in the RB Market and understand the performance that warranted the deals. This will allow us to identify a few comparable players which will help in determining a benchmark for Freeman’s extension. That being said, the table below compares key performance metrics for Freeman and RBs who have recently signed new deals. One point to mention here is that the stats below are reflective of each RB’s performance two seasons leading up to his respective deal.

Running Back Performance for New Contract

After analyzing the table above, it is clear that Devonta Freeman’s performance has justified a top of the market salary. As I wouldn’t put him in the same category as Le’Veon Bell, I believe Freeman’s production is similar to LeSean McCoy’s, Doug Martin’s, and DeMarco Murray’s production prior to their respective deals. That being said, I would expect the Falcons and Freeman’s agent to use the preceding three RBs as comparables during negotiations.

Projecting Devonta Freeman’s Extension

Below, I estimate Freeman’s extension:

  • 4-year extension worth $31M in new money ($7.75M APY)
  • $19M Total Guaranteed; $12.5M Fully Guaranteed which includes a $5M signing bonus
  • 2019 Base Salary of $6.5M guaranteed for injury at signing. Salary becomes Fully Guaranteed after 3rd day of 2018 league year
  • 1st Year Cash Flow: $5M
  • 3-Year Cash Flow: $19M

In addition, the table below illustrates how Freeman’s extension racks up against his comparables. As you can see, I am projecting Freeman’s APY to exceed Doug Martin’s $7.15M and DeMarco Murray’s $6.375M figures while falling short of LeSean McCoy’s $8.01M figure.

Devonta Freeman Contract Projection

Freeman and Martin

I am projecting Freeman’s APY to be higher than Martin’s APY as I believe Freeman has been more durable and consistent than Martin. Although Martin may have more upside in the ground game as he has had two seasons with over 1,400 rushing yards, Freeman’s success in the passing game and goal line situations are hard to overlook.

Freeman and Murray

I would be surprised if Freeman’s APY doesn’t clear Murray’s $6.375M figure. When Murray signed his deal with the Titans in 2016, he was 28 years old and had 1,127 career rushing attempts. On the other hand, Freeman is 25 years old and has half the rushing attempts and less wear and tear than Murray.

Freeman and McCoy

Days before the start of the 2015 NFL League Year, the Buffalo Bills traded for LeSean McCoy and signed him to a $40.05M deal over 5 years. His contract not only has the highest 1st year Cash Flow in the RB market at $16M, but also the second highest APY at $8.01M. While McCoy’s performance justified a top of the market deal, I believe the Bills overvalued his deal with player-friendly cash flows and bonuses. I would not anticipate the Falcons making the same mistake with Freeman. In addition, I also consider McCoy as the more talented RB.

Salary Cap Impact

The table below illustrates the impact of Freeman’s extension on the Falcon’s salary cap:

Devonta Freeman Salary Cap Projection

One thing I want to point out is that the Falcons will have approx. $1.7M in cap room after signing their 2017 draft picks. With such low cap space, I am projecting Freeman’s extension to have $0 roster bonus and a low 1st year cap hit. In addition, I want to point out in the later years of Freeman’s deal, his cap number slightly drop off. This would be beneficial for Freeman as it would increase his chance of playing out his entire deal.

Final Thoughts

Similar to any negotiation, there will certainly be a give-and-take between both parties. For example, if Freeman’s priority is to be recognized as one of the highest paid Running Backs by APY, the Atlanta Falcons will pay less guaranteed money for the higher APY or vice-versa. Furthermore, I believe one argument that could work in favor of the Falcons during negotiations relates to the fact that Freeman has not shown the huge upside year as Martin did during his two 1,400 yard seasons or as Murray did during his 1,800 yard season. To counter that, Freeman’s agent could argue that this is because Freeman has not had as many carries as he shares time with Tevin Coleman, as well as the fact that the Falcons have primarily been a passing offense the last two seasons. Ultimately, Freeman’s versatility, durability, and overall commitment to his team will certainly be difficult for the Falcons to pass up, and I would expect an extension before training camp.

Hardik Sanghavi graduated from DePaul University in 2016 with a major in finance and minor in accounting. During his time at DePaul, Hardik interned with ESPN Chicago and Priority Sports & Entertainment. He now works as a Commercial Underwriter in the Insurance Industry. You can follow him on twitter at @hardiks94.

Extensions vs Free Agent Signings: Wide Receivers

Each year, teams across the NFL invest a large portion of their salary cap in Contract Extensions and Free Agent Deals for players who seemingly perform well. Once a team strikes a deal with a player, it is not only important to analyze the performance that justified the new deal, but it is also critical to monitor a team’s return on investment once the player has signed.  That being said, I have conducted a breakdown of the Wide Receiver Market to highlight some trends in relation to the performance of a WR before and after signing a deal and to present a risk analysis between a team signing a WR from the open market or via extension. (more…)