Jason Fitzgerald

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.

Recent Posts by Jason

OTC Podcast: April 2, 2022

In this week’s OTC Podcast

  • Net gains in free agency
  • Baker Mayfield’s contract situation
  • All of your questions for the week

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Some Thoughts on Baker Mayfield and the Browns

Recently there has been more speculation about the Browns situation with QB Baker Mayfield. Josina Anderson had a good tidbit on the Browns line of thinking that they can slow play the situation

Many seem to imply that Mayfield has leverage over the Browns here because of the presence of Deshaun Watson and the fact that Mayfield has a fully guaranteed $18.858 million salary that they need to get off the books. The feeling is that Mayfield can somehow control his destiny somewhat because his presence will make for too many distractions for the Browns.

One of the things to keep in mind, however, is that time is actually on the Browns side. The salary is already guaranteed so it’s not as if cutting him lets them escape it. They are not pressed for salary cap space and his money is already in that number. It is not like the Matt Ryan situation in Atlanta where there is a looming date that forces a decision.

The Browns already know what trade market does and does not exist for Mayfield and they should have a strong idea as to how much of the salary teams are willing to pick up in a trade.  As teams get further into training camp sometimes they get more desperate especially if an injury occurs (see the Vikings spending a high draft pick on Sam Bradford a few years ago). Because teams also discount future picks so much they may be able to justify sending a higher 2023 pick versus a higher 2022 pick for Mayfield.

The other important thing to consider is that Mayfield can not just go out there and blow the team up in an effort to get traded or released, unless he wants to risk losing his salary in the process. Guaranteed salary is guaranteed until a player does something that would allow a team to void the guarantee. Just because a player is on a guaranteed option year doesn’t mean that the void provisions vanish in a contract. Per the CBA:

Upon exercise of the Option, the above-described guarantees shall be subject to the terms and conditions of any pre-existing individually negotiated non-compensation term in year four of the player’s contract relating to the forfeiture of guarantees (also referred to as “void provisions” in this Subsection for the sake of convenience), to the extent permitted in 43 Article 4, Section 9(g) (“Voiding of Guarantees”). In addition to applying to the previously non-guaranteed amount in the fourth League Year of the player’s contract, the year-four guarantee void provision shall be carried forward to, and shall be applicable to, the player’s Paragraph 5 Salary in the fifth League Year of his contract (the “option year”) unchanged except to the extent necessary to effect the enforceability of such provisions (e.g., without limitation, changes regarding the applicable contract year of such provisions and the amount of the year-five guarantee). Any such changes shall be deemed to have been automatically made effective upon the Club’s exercise of the Option.

While I do not have the particulars of Mayfield’s contract language, standard blanket language would generally void guarantees include refusing to practice and suspension for conduct detrimental.  Many often have clauses related to being publicly critical of a team that can void a guarantee. In addition Mayfield can rack up hefty fines were he to not show up to camp this year- $40,000 per day missed and $1.048 million for every preseason game missed.  

The point is Mayfield likely has to be a model citizen if he wants his $18.8 million salary to remain guaranteed and he likely needs that salary to be guaranteed if he wants to receive it. Right now he is not a player that can go the scorched earth route taken by an Aaron Rodgers type of player. Those players will get paid from another team the minute they were released. Mayfield likely fall in the range of Mitchell Trubisky and Marcus Mariota which means he would be putting somewhere in the ballpark of $10-12 million at risk if he was thinking of just breaking up with the Browns.

Any type of breach would give the Browns a get out of jail free card with Mayfield especially if they know the trade compensation is going to be low and/or require them to eat millions in salary. All it requires is a bit of patience on the Browns part to wait and see how the situation plays out if they can not find a trade partner leading up to this year’s draft.

OTC Podcast: March 26, 2022

In this week’s OTC Podcast

  • The Falcons mess
  • The Browns handling of Deshaun Watson
  • Tyreek Hill, inflated contracts, and the Chiefs
  • All of your questions for the week

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Reassessing the Value of Contracts

A recent run of signings in the NFL this March is going to bring into question the way in which we are valuing contracts. Usually, one of the first things we look at when valuing the contract of a player is the average per year (APY) of the contract. While it certainly is not a perfect way to gauge the true intention or strength of the contract it at least gives a pretty reasonable way to look at the market for a particular position. There are usually a handful of red flag type deals but Tyreek Hill signing a “$30 million a year” contract yesterday is really making me question how we should be looking at really assessing the annual value of a contract in the future.

Hill’s contract, for those unfamiliar with it, carries a monster salary in the final year of the contract- $45 million to be exact- and it’s only purpose is to inflate the annual contract value from a pretty impressive $25 million a year to a stunning $30 million a year. From a practical standpoint it is simply functioning as a void year for the Dolphins and if a year like that were included in a lesser player’s contract we would simply value it as a void season.

This concept is by no means new in the NFL but it has been more or less dormant for many years. Back in the earlier days of the salary cap contracts often ran for 7+ years. At the time there was far more of a focus on total contract values than the actually important things for a player- how much will they earn in one year, how much in two years, what are the odds of being cut- and that inflated values for many players. As the NFL cut down on the number of years allowed for salary cap proration and as teams started to realize the benefits of playing younger players those balloon salaries disappeared from contracts. Now it is back and it makes it very difficult to compare apples to apples especially within the wide receiver market.

The first contract where this concept seemed to come back for the receivers was actually the contract of Keenan Allen. The Chargers used a bloated, but at least somewhat realistic, salary in the final year of the contract to move his deal from $19 million a year to over $20 million a year. While clearly a year that is unlikely to be earned you can’t look at it and say that is a bogus year. The Davante Adams and Hill contracts completely changed that dynamic.

Here is how Hill’s and Davante Adams’ yearly “new money” cash flows line up with the rest of the market.

PlayerAPY1st Year Cash2nd Year Cash3rd Year Cash4th Year Cash5th Year Cash
Tyreek Hill$30,000,000$32,300,000$52,065,000$75,000,000$120,000,000
Davante Adams$28,000,000$23,350,000$50,020,000$67,510,000$103,750,000$140,000,000
Deandre Hopkins$27,250,000$39,585,000$54,500,000
Julio Jones$22,000,000$42,974,000$54,487,000$66,000,000
DJ Moore$20,628,000$29,784,000$45,834,000$61,884,000
Keenan Allen$20,025,000$21,500,000$38,000,000$57,000,000$80,100,000
Mike Williams$20,000,000$28,000,000$40,000,000$60,000,000
Amari Cooper$20,000,000$20,000,000$40,000,000$60,000,000

Clearly these are strong contracts. but the APY clearly misrepresents the way they compare. As an easier way to compare let’s look at the yearly APY for each contract. I also included the averages for the bloated contracts at the top and the smaller ones at the bottom.

PlayerAPY1Y APY2Y APY3Y APY4Y APY5YAPY
Tyreek Hill$30,000,000$32,300,000$26,032,500$25,000,000$30,000,000
Davante Adams$28,000,000$23,350,000$25,010,000$22,503,333$25,937,500$28,000,000
Deandre Hopkins$27,250,000$39,585,000$27,250,000
Julio Jones$22,000,000$42,974,000$27,243,500$22,000,000
DJ Moore$20,628,000$29,784,000$22,917,000$20,628,000
Keenan Allen$20,025,000$21,500,000$19,000,000$19,000,000$20,025,000
Mike Williams$20,000,000$28,000,000$20,000,000$20,000,000
Amari Cooper$20,000,000$20,000,000$20,000,000$20,000,000
Hill, Adams, Hopkins$28,416,667$31,745,000$26,097,500$23,751,667
Jones, Moore, etc…$20,530,600$28,451,600$21,832,100$20,325,600
% Difference38.4%11.6%19.5%16.9%

The stated APY indicates that the upper tier is worth nearly 40% more than the lower part of the elite level contracts in the NFL, but the real numbers indicate a much narrower spread, basically somewhere between 15 and 20%. 

This is also why when we hear the overused phrase “this is a gamechanger” (and I am as guilty as anyone of using it) it probably doesn’t mean much. Hill and Adams are two of the best receivers in the NFL and should be the highest paid. Earning 20% or so over the other top players is basically to be expected. Really the only movement at all that could represent a shift at all would be Hill’s third year reaching $25 million per year.

The real reason we got to this spot with this position also comes from another difficult area- how do we value a trade in player contract?  The first time I really remember thinking about this was when the Seahawks traded for Percy Harvin years ago and immediately extended him to a regrettable contract. If we value the contract by new money the way we would a normal extension, Harvin was worth $12.84 million a year. If we look at it as an entirely new contract he would have been worth $11.2 million a year. Trades were so rare then it didn’t really make a difference but as they become more prevalent that also poses a problem.

When a team trades for a player they have no “skin in the game” so to speak with the contract. In Harvin’s case it seemed clear that Seattle was negotiating a six year $67 million contract not a five year extension worth $64.217 million. In Miami’s case with Hill, though, the numbers were clearly designed to fit the model of a traditional extension.

From the player’s perspective the new money is what they do care about but the absurdity of the Hopkins contract is really what has led to the need to do these funny money years at the end. The Cardinals fleeced the Texans in a trade for Hopkins back in 2020 in large part because the Texans did not want to add salary to Hopkins existing contract. The contract had three years remaining at the time.

Arizona was more than happy to negotiate the contract with Hopkins. They would never have access to a player at that talent level in free agency and this was essentially a brand new contract for them.  They gave him his big raise and valued as “new money” it was about a 25% raise over the rest of the market. Because that was the number that was touted when signed it became a number that Adams had to beat. No team in the NFL could come up with a real structure to beat it because in their mind that contract doesn’t exist. If we value Hopkins and Hill from a team perspective the numbers change dramatically.

PlayerAPY1st Year Cash2nd Year Cash3rd Year Cash4th Year Cash5th Year Cash
Tyreek Hill$23,858,750$26,635,000$52,735,000$72,500,000$95,435,000$140,435,000
Deandre Hopkins$18,883,000$29,000,000$42,750,000$60,050,000$79,500,000$94,415,000

Hopkins is worth about $18.9 million per year which is exactly in line with the market at the time. His $60 million three year number just tops $20 million a season and then his value slowly comes down on the back end. That is a traditional contract structure.

Hill’s contract carries a four year annual value of about $24 million. These are really strong numbers throughout and a logical increase from the Jones contract which had been the top contract at $22 million per year.

The question is how many teams will follow suit in the future with this structure. For teams like the Dolphins and Raiders it doesn’t matter. Adams and Hill are third contract players and likely would not see the end of a traditional four year contract so who cares what that salary is since the outcome is going to be a release.

However, for teams extending players or signing a young free agent there are negative consequences. The massive salary prevents the team from being able to use a franchise tag if the player were to still be productive towards the end of his contract. It also forces a cut rather than letting the player go to free agency and potentially get you a compensatory pick. While those players who make it to the end of a contract are rare it does happen.

It presents a challenge for teams, agents, and players alike depending on the situation. I don’t know the best way to handle it, but this is definitely something we need to give more thought to if it spreads more around the NFL in the coming year or two.

OTC Podcast: March 19, 2022

In this week’s OTC Podcast

  • Deshaun Watson to the Browns
  • Aaron Rodgers contract and the QB market
  • Quick free agency thoughts
  • All of your questions for the week

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Deshaun Watson to the Browns

In a stunning turn of events the Browns went from being out of the Deshaun Watson trade discussion to landing the superstar quarterback via trade with the Texans. As part of the trade Watson secured a new contract that is worth $230 million over five years and is fully guaranteed. I guess as they say “money talks” and the Browns put up a great offer.

The cost is nothing short of stunning and an amazing win for his agency, Athletes First. Watson originally had been schedule to earn $136 million over the next four seasons. Effectively the Browns just threw him a $94 million franchise tag for the rights to the 2026 season. It is an absurd amount of money which I would guess no team in the NFL would come close to matching, especially give the costs of the trade. According to Albert Breer the Browns will give up three first round picks and two other high draft picks in addition to forking over the major contract.

Watson’s new contract will average $46 million per year which will make him the highest paid player in the NFL, depending on how one views Aaron Rodgers recent contract extension which can be valued as high as $50 million per year or in the sub $40 million per year range.

You could arguably value Watson’s number at $50 million per year. Watson never technically played a down that extended into his non-rookie contract years for the Texans under the terms of his extension he signed in 2020. The Texans paid him $20 million in new money for those years. His “veteran” years technically were to begin with the 2022 season. So if we add that raise to this new contract you get $250 million for five seasons, all of which was guaranteed. This might be the greatest job securing money for a player in NFL history.

The Texans will carry $16.2 million in dead money for Watson which will open up $24.2 million in cap room for the Texans. How they will use that is anyone’s guess. Given their recent history they will probably sign 8 players making $3 million a year. That aspect is really unimportant for them as they need to use these pieces to rebuild a franchise that was devastated by bad trades and bad contract decisions.

The Browns will need $35 million in cap space to execute this trade. We currently estimate that they have about $16 million. If they can not unload Baker Mayfield and his $18.828 million salary as part of this trade they will either have to quickly find a trade partner for him or make some other adjustments. They can open up around $15 million in a max restructure of Amari Cooper’s contract and beyond that would likely have to get Denzel Ward to tack void years onto his contract. Another option would be to release Case Keenum with the intent of signing him once Watson’s new contract and lower cap number are finalized. The Browns will open up $9.5 million in cap room on June 2nd so they have plenty of cap room coming in the future.

This trade should open up to discussion the concept of including no trade clauses in NFL contracts. For the most part these were clauses only in the contracts of quarterbacks because there was a feeling that teams would not move their franchise players. However we are now seeing a number of players demanding trades which puts teams in a very difficult spot. When a player can also dictate his destination you lose leverage in the trade talks. The Texans did something unique in that they would not allow teams to talk with Watson until they presented an offer to Houston that would be acceptable, which gave Houston more leverage, but in the future I would expect these clauses to either be gone or teams to go back to the days of using salary advances to try to recover money along with the picks as part of a trade.

Eagles Designate Fletcher Cox a June 1 Cut

The Eagles designed Fletcher Cox a June 1 cut today and I want to explain how I believe his contract works on the salary cap. Cox restructured his deal last year in what was one of the more complex contracts Ive seen in the NFL, since at least the days of the old rookie system. The Eagles essentially maximized their options with Cox by giving them an out on a massive contract while also maintaining their ability to extend or trade him without having a salary cap disaster.

What the team did was convert a bunch of Cox’ 2021 and 2022 salary into two bonuses that would prorate on the salary cap. In return Cox also got a large guarantee on his 2022 compensation that would kick in tomorrow in essence forcing the Eagles to make a move in early March rather than dragging him into the summer and then cutting him late if he refused a pay cut. The 2022 bonus, which is factored into his 2022 cap charge and dead money you see on OTC, was an option that did not have to be picked up until much later this year.  

For the time being Cox’ 2022 salary cap charge will remain the same as if he was on the roster. I believe that the number is $14,946,820. On June 2nd the only salary cap charge that will remain with the Eagles is the prorated portion of Cox’ salary. I am not 100% sure what that will be. It will either be $12,826,820 or $9,641,409. The difference is the option proration for the option that was not exercised. I can never pinpoint the NFL’s treatment of this. In many cases the credit usually comes the following year but this may be more unique with a June 1. In any event if it is the larger number they will get a cap credit of $3,185,411 in 2023.

For 2023 the dead money should now be $15,359,292. The reason this is much lower than what is shown on OTC is because the option was not exercised and we are in a different league year than when the player was cut. So all that acceleration that is attributable to the bonus should now be gone.

The new contract gave the Eagles plenty of flexibility with Cox. Originally Cox would have counted for $23.88 million on the 2022 salary cap with over $20 million in dead money if cut. With such a high salary the June 1 possibility likely did not exist because they would have had to carry him on the 2022 salary cap at that high figure. Basically this allowed them to drop his 2021 and 2022 salary cap numbers and push the charges out to 2023 which never could have happened on the original contract.