Recent Posts by

New Orleans Saints Cap Maneuverings for 2021

With the 2021 salary cap expected to come in much lower than initially contemplated due to lost revenues attributable to the COVID-19 pandemic, a handful of NFL teams appear to be in serious trouble for next season.  Among those teams, the New Orleans Saints serve as the poster child for organizations residing in salary cap hell.  The Saints currently have approximately $276 million on the books for the 2021 season, prior to any salaries allocated for free agency, the draft, practice squad, injury contingencies, etc.  Meanwhile, the league and the NFLPA have negotiated a salary cap floor of $175 million for 2021, with the hope being that 2020 revenues will come in better than expected, pushing the cap higher.  A reasonable optimist would project an NFL cap number in the $185 – $190 million range.  Even in an optimistic scenario, the Saints sit north of $85 million over the projected salary cap.  So, how will the Saints slash this unprecedented amount off of their cap for next season?  Let’s take a look at how they can do it.

The main tools at the Saints’ disposal are 1) player cuts, 2) contract restructurings, 3) extensions that lower the 2021 cap hit, and 4) trades.  The Saints will likely need to utilize all four tactics in order to stay within the confines of the 2021 cap.  Note that for this article, we’ll focus only on moves that significantly impact the salary cap, as opposed to diving too far in the weeds. With a goal of slashing approximately $90 million off the Saints’ 2021 cap number, let’s get to work.

Player Cuts

QB Drew Brees

The Saints will likely have a change at quarterback, with future Hall of Famer Drew Brees expected to retire at the end of the 2020 season.  We’ll start there for our first transaction.  Brees currently has a $36.15 million cap number for 2021, comprised of a $25 million P5 salary (P5 meaning base) and $11.15 million in prorated bonus.  While the resulting dead money from Brees’ contract will be vast, we will need to save what we can off the 2021 cap.  Brees also has two voidable years attached to his contract, so solely for cap purposes, his contract runs through 2023.  If the Saints were to cut Brees in 2021 in connection with his retirement, the team would incur $22.65 million in dead money, while saving $13.5 million. For the purposes of this article, we’ll presume the Saints will go ahead with this move and save a much needed $13.5 million from their 2021 cap.

The Saints do have another tool to be used at their disposal, albeit one with complications – a post-June 1 cut.  If designated as a post-June 1 cut, then from June 2 and forward, the $22.65 million in dead money would be spread out over multiple years, with the Saints incurring $11.15 million in dead money on the 2021 cap, with the remaining $11.5 million in dead money (attributable to the bonus dollars for his 2022 and 2023 seasons) hitting the 2022 cap.  The key issue here is that in order for the Saints to make Brees a post-June 1 cut, the team will have to carry his full $36.15 million cap number up through June 1. Given that the team has to be under the 2021 salary cap at the start of the league year in March, this becomes an extremely difficult proposition for the Saints to pull off. Not impossible, but very complex.  So for our purposes here, we’ll designate Brees a pre-June 1 cut.

LB Kwon Alexander

            The Saints traded for linebacker Kwon Alexander mid-way through the 2020 season, nabbing him from the San Francisco 49ers for another player and a conditional pick.  As a result of the trade, Alexander’s remaining bonus payments accelerated to the 49ers’ cap, making Alexander easy to cut by the Saints since no dead money remains.  Alexander has a $13.4 million cap charge in 2021, pursuant to which the Saints can cut Alexander and save…$13.4 million off their cap.  Let’s not overthink this here.  That’s another $13.4 million saved.

CB Janoris Jenkins

            We next move to cornerback Janoris Jenkins, who has been a solid starter for the Saints over the past few seasons.  Unfortunately for Jenkins, he has a whopping $14.2 million cap hit for 2021, with $7 million to be saved if the Saints release him. While far from ideal to be saddled with $7.2 million in dead money for 2021, the team needs the $7 million in savings.

WR Emmanuel Sanders

            Wide receiver Emmanuel Sanders joined the Saints in free agency prior to the 2020 season, with the team hoping to solidify the its number two receiver spot.  The signing made sense on paper, but the result has been mixed.  Sanders currently has a $10 million cap number for 2021, which makes him another strong candidate to be released for savings.  As a pre-June 1 cut, the Saints take a $6 million cap hit while saving $4 million.  That’s not a substantial amount to save, but it’s necessary given the team’s situation.  The Saints will save $4 million off their 2021 cap by cutting Sanders, and let’s go ahead and make this move.

DL Malcom Brown

            Veteran interior defensive lineman Malcom Brown has been a solid member of the team’s rotation.  Unfortunately, the team needs to save cap space where it can, and Brown is expendable due to his contract.  Brown has a $6.5 million cap number for 2021, with $5 million of that amount to be saved by the Saints if they cut him, resulting in only $1.5 million of dead money.  Not much more to explain here, but unfortunately Brown needs to go.  The Saints save $5 million off their 2021 cap by cutting Brown.

G Nick Easton

            Veteran guard Nick Easton has been with the Saints since 2019, starting several games for the team. He’s been a steady performer, but he’s also got a $7 million cap number for 2021.  The bad news for Easton is that the Saints save $6 million by cutting him.  Not much to think about here – Easton will have to go, and there’s $6 million trimmed off the cap.

The players mentioned above will not be the team’s only cuts.  But for purposes of this exercise, they are identified as the team’s primary cuts in order to reach the goal of slashing nearly $90 million.  Through the player cuts mentioned above, the team saves $48.9 million off their 2021 cap.  This gets us over half way to the goal, but more work remains.

Contract Restructures

            Teams frequently restructure contracts, which frees up immediate cap room, but at the expense of incurring larger cap charges over the coming seasons.  In a sense, think of it as using a credit card – you defer payment now, but the bill will eventually be due later.  The Saints will need to utilize this approach as they work to come in line with the 2021 salary cap.  Unfortunately, a large reason that they are in this financial mess to begin with is due to restructuring veteran contracts, including repeatedly re-doing Drew Brees’ contract.  In any event, the Saints don’t have much choice here given how much money needs to be shaved.  As for which players make strong restructure candidates, you need three main components – 1) players with a high P5 salary for the season in question (so 2021 in this case), 2) players who the team strongly expects to be around for years to come, and 3) sufficient duration of contract remaining, or to be added, in order to absorb the future increase in cap charges.  Conversely, players who you expect to cut within the next year or two are terrible restructure candidates, because the pain you will endure when cutting them will be ruinous to your cap.  With that said, let’s take a look at four players who the Saints could elect to restructure.

DE Cameron Jordan

            While Drew Brees has been the franchise cornerstone on offense, it’s defensive end Cameron Jordan who has played the same role for the defense. Jordan has been with the Saints for ten seasons, and he remains a fixture for the next few years at a minimum.  Looking at Jordan’s contract status, he has a 2021 cap number of $18.9 million, and his contract runs through 2024 (including voidable years).  Jordan makes the ideal restructure candidate, given his stature with the team, his high P5 salary and his contractual status running for four more years.  Taking a closer look at Jordan’s contract, he has a P5 salary of $11.9 million in 2021, together with a signing bonus allocation of $5 million, a roster bonus of $1.9 million and a workout bonus of $100,000, thus adding up to a cap charge of $18.9 million.  Focusing on the P5 salary, let’s lower this by paying Jordan the NFL minimum salary for 2021, while converting the rest of the salary to an additional signing bonus.  The expected 2021 minimum NFL salary for veterans will be in the $1.1 million range, so let’s lower his 2021 P5 salary to $1.1 million, while paying Jordan out an additional $10.8 million as a signing bonus.  With Jordan’s contract running through 2024, the new $10.8 million signing bonus gets split over 4 years for cap purposes, providing an additional $2.7 million cap charge via signing bonus over the aforementioned four year period.  This will reduce Jordan’s 2021 cap number to $10.8 million, resulting from his new P5 salary of $1.1 million, $2.7 million attributable to the new signing bonus, plus $7 million in previous bonuses (initial signing bonus, roster bonus and workout bonus).  Importantly for our exercise, the Saints will save $8.1 million off their 2021 cap, while $2.7 million will also be added to their cap in each of the 2022, 2023 and 2024 seasons.

WR Michael Thomas

            Prior to the 2021 season, any notion that top wide receiver Michael Thomas would wear a uniform other than that of the Saints would have been ridiculed.  While there has been some tumult between the player and the team in 2020, the smart money here is that Thomas will remain a fixture for the Saints – he’s just too important to the team to trade away.  As the Saints still need to unlock more savings, Thomas makes for another great restructure candidate.  Looking at Thomas’ contract, he has a 2021 cap charge of $18.8 million, with a $12.6 million P5 salary, $6 million in prorated bonus and $200,000 for a workout bonus.  His contract runs through 2024 as well, so we have plenty of room to lower his 2021 cap number.  Let’s take the same approach with Thomas as we did with Jordan, reducing his P5 salary to the NFL veteran’s minimum and converting the remainder to a signing bonus to be spread over four years.  Doing the math, we convert $11.5 million of salary to signing bonus, resulting in a $2.875 cap charge over each of the remaining four years.  As a result, Thomas’ cap charge for 2021 reduces to $10.175 million ($1.1 million P5 salary, $6.2 million in existing bonuses and $2.875 million for the new signing bonus), providing a savings of $8.625 million for the 2021 season.  Of course $2.875 million in additional cap charges also hit the 2022, 2023 and 2024 seasons, but we are concerned with 2021 here, and we did our job by saving the team $8.625 million in cap charges for the 2021 season. 

LT Terron Armstead

            For the last few years, the Saints have boasted one of the top offensive lines in the game, with left tackle Terron Armstead playing a leading role in the unit’s success.  The Saints will need to keep Armstead to protect their likely post-Brees successor at QB in 2021, so we’ll get to work in restructuring his salary as well.  Armstead has a cap charge of $16.2875 million for 2021, comprised of a P5 salary of $10.15 million, with a multitude of other bonuses totaling $6.1375 million.  Armstead’s contract runs through 2023 due to two voidable years tacked onto the end of his deal.  We’re going to use those years to help us alleviate some of his 2021 cap charge.  So taking his $10.15 million P5 salary, and for simplicity’s sake, reducing him to a new P5 salary of $1.15 million for 2021, we convert $9 million of his P5 to a signing bonus.  This results in $3 million in additional cap charges for each year from 2021 through 2023, while resulting in an ultimate savings of $6 million for the Saints’ 2021 cap.  Armstead’s new 2021 cap charge becomes $10.2875 ($1.15 million P5 salary, $6.1375 million in existing bonuses and $3 million for the new signing bonus).

LG Andrus Peat

The Saints view left guard Andrus Peat as a building block, as evidenced by the team locking him up through 2024 with a rich extension.  Peat’s cap number for 2021 is $11.6 million, with a $9 million base salary and $2.6 from a prorated signing bonus. In other words, he’s an excellent restructure candidate as well. Let’s convert all but $1.1 million of his 2021 P5 salary into a signing bonus, which spreads the new $7.9 signing bonus in equal charges over four years on the cap. As a result, Peat’s new 2021 cap number is $5.675 million, consisting of his $1.1 million P5 salary, existing $2.6 million signing bonus proration and $1.975 million new signing bonus proration. The Saints save $5.925 million off their 2021 cap as a result.

We’re done restructuring contracts, with some immediate relief granted to the Saints in exchange for longer-term cap pain.  But again, the Saints don’t have much choice here.  The team saves a collective $28.65 million off their 2021 cap with these restructures.  We are almost done assisting the Saints with the heavy lifting in their 2021 cap endeavors, but we need to make a few more moves.

Contract Extension

The Saints believe that their long term successor at QB currently resides on their roster.  Taysom Hill has filled in admirably as the team’s starter while Brees recovers from injury, even if Hill hasn’t quite silenced the doubters outside of the Saints’ organization.  Assuming the team wants to commit to Hill for the longer term, then it makes sense to sign him to an extension, while also lowering his 2021 cap number.  As it currently stands, Hill has a $16.159 million cap number for 2021, comprised of a $10.72 million P5 salary plus $5.439 million in bonuses.  While Hill has shown some promise at quarterback, he still hasn’t quite shown that he’s a safe bet as a franchise signal caller. As such, let’s give him a modest extension, somewhere in the range of $2 years, $50 million, which ties Hill to the Saints through the 2023 season. As for the contract itself, let’s go with a $10 million signing bonus, with two years at $20 million each, with the 2022 P5 salary fully guaranteed.  Given the timing of the extension, leaving three years on Hill’s deal, the bonus is spread on the cap over three years at $3.33 million each year.  Next, the Saints can earn more relief for 2021 by converting Hill’s 2021 P5 salary into a signing bonus, excluding the minimum salary amount.  After doing so, Hill has a $1.1 million P5 salary for 2021, together with an additional signing bonus of $9.62 million, which hits the cap over three years at approximately $3.21 million per season.  After the smoke clears here, Hill’s new 2021 salary cap number is $13.079 million, which consists of his $1.1 million P5 salary, $5.439 in current bonuses, plus $6.54 million attributable to the two new signing bonuses.  The Saints ultimately save $3.08 million off the 2021 cap, while also gaining some years with Hill under contract.

Trade

Along with some difficult player cuts and salary restructures, the Saints will need to make some tough decisions among players that they want to keep.  As such, what will be proposed here may ruffle some feathers, but slashing $90 million off a team’s cap does not leave for easy choices.

CB Marshon Lattimore

            The Saints drafted exceptionally well in 2017, which re-opened their Super Bowl window over the last few seasons.  The only downside to drafting exceptionally well in one season…the bill comes due for that draft group at the same time.  Cornerback Marshon Lattimore has been outstanding for the team, arguably serving as the team’s best player in the secondary over the past few years.  As a former first round pick, Lattimore has a fifth year option in 2021, which the Saints picked up in a no brainer move after the 2019 season.  The fifth year option is for $10.244 million in P5 salary, with no bonuses attached.  As such, the cap charge matches the P5 salary, with no cap penalties to be incurred by the Saints for trading or cutting the player.  While the Saints could make it work to keep Lattimore for 2021 and beyond, the reality is that it will take a very lucrative extension (think $18 million per year or more) to keep Lattimore in the fold over the long term.  With stud right tackle Ryan Ramczyk also needing an extension, not to mention the team needing to fill a whole host of other needs (addressing holes from roster attrition via free agency and otherwise, the 2021 draft class, practice squad and contingencies, etc.), the Saints can’t keep everyone.  The team may, however, be able to get a first round pick or equivalent compensation for Lattimore, which will help usher in the next era while also providing important cap relief and a cost controlled player for four plus years.  Under this proposed plan, the Saints trade Lattimore away for a first round pick and save $10.244 million off their 2021 cap in the process.

Conclusion

            We took on the task of reducing the Saints’ salary cap charges by approximately $90 million for 2021, and here’s where we landed as a result of the cuts, restructurings, extension and the trade referenced above:

ActionSavings
Player Cuts$48.9 million
Restructurings$28.65 million
Extension Lowering 2021 Cap Hit$3.08 million
Trade$10.244 million
Total$90.874 million

            So there you have it, more than $90 million has been slashed off the team’s 2021 salary cap.  It’s actually amazing how $90 million can disappear off a team’s salary cap, albeit with a lot of moves.  And just as a reminder, this is far from an exhaustive list of moves the team will need to make, but the transactions above will lead the Saints most of the way towards 2021 cap compliance.  The team will inevitably need to make several tough decisions, some of which will be unpopular with Who Dat Nation.  But the result of continuously punting cap decisions into the future will finally come due in 2021.  The good news for Saints fans – after making the moves above, the team will still remain formidable. But there’s no question that the 2020 season will be the team’s best shot at a Super Bowl ring, at least for the next few years. 

Looking at a Contract for Russell Wilson

With the Legion of Boom no longer patrolling the Seahawks’ secondary and Marshawn Lynch years removed from playing in the Pacific Northwest, the Hawks have inarguably become Russell Wilson’s franchise…at least for now.  Rumors have swirled for months with respect to Wilson’s future with the team, as the star quarterback’s contract expires after the upcoming 2019 season.  With Wilson’s camp making it clear that they want a new deal done now or otherwise to put talks on the shelf until the next offseason, let’s work out contract extension terms that should work for both sides. Block out all the noise, and the teams have a reasonable path to getting an agreement done.

(more…)

Looking at a Potential Extension for Aaron Donald

The Los Angeles Rams suffered a rough homecoming on the field in 2016, finishing up the season with a 4-12 record.  That being said, the team has a few key building blocks, starting with stud defensive tackle Aaron Donald.  The two-time NFL All Pro selection has not only achieved league-wide consensus as the top defensive tackle in the NFL, but Donald also garners consideration as the overall top football player in the league.  To that point, respected football site Pro Football Focus ranked Donald as its #1 overall player for 2017.  So it’s fair to assert that the Rams will not allow Donald to leave anytime soon, and the team will be rewarding him with a lucrative extension.  Donald skipped the OTA’s this year, sending a clear message to the Rams’ brass that he desires a contract extension prior to the start of the 2017 season.  The Rams want to keep their franchise player happy, and it’s a strong bet that he will receive said extension prior to week 1.

As a former first round pick entering his fourth year in 2017, Donald’s contract is subject to a fifth year team option for 2018.  In a move that surprised no one, the Rams have already picked up his fifth year option, which will pay Donald $6.892 million in 2018 (guaranteed for injury only).  So Donald’s salaries are set for the next two years, but both the team and the player can benefit here by entering into a long term extension that will tie Donald to the Rams for years to come.

Before we move forward with constructing a contract extension for Aaron Donald, note that we have precedent with respect to the Rams extending their first round draft picks prior to the start of their fourth year, and doing so on lucrative terms.  First, defensive end (now outside linebacker) Robert Quinn signed a four year, $57 million extension with the team in 2014, just as he was about to play his fourth season with the team.  More recently, gadget receiver Tavon Austin signed a four year, $42 million extension with the Rams in 2016, also entering into his fourth season.  Both contracts were viewed around the league as overpays, albeit Austin’s contract substantially more so than Quinn’s deal.  The takeaways here – the Rams have a history of entering into extensions during a first round pick’s fourth year with the team, and they pay towards the top of the market.  Remember this as we move forward.

Now let’s return to the task at hand.  When projecting a new contract for a quarterback, you need to look at the contracts of other comparable quarterbacks as the point of reference, and the same deal with wide receivers, cornerbacks, etc.  So the next step here is to review recent contracts for top defensive tackles and use those deals as the starting point for Donald – with one caveat.  With a generational talent such as Donald, merely looking at the top defensive tackle contracts doesn’t by itself provide you with the information necessary to reach a deal. In this case, Donald’s proper comps are the deals for the top defensive lineman, with the inclusion of the league’s highest paid non-lineman defensive player (Von Miller) as well, since we’re talking about potentially the league’s best player in Donald.  Certainly Donald’s negotiating team will take this approach, and it’s not an unfair position.  With that said, we’ll take a look at the contracts for the following three defensive linemen – Ndamukong Suh, JJ Watt and Fletcher Cox – and the aforementioned linebacker Von Miller.  The key terms of the contracts for each player are as follows:

PlayerContractAdditional Details
Ndamukong Suh, Miami Dolphins defensive tackle

6 years, $114.375M signed in 2015

AAV: $19.0625

2015 Salary cap: $143.28M

% of cap: 13.30%

$59.995 million fully guaranteed upon signing, including a $25.5 million signing bonus and his base salaries from 2015 through 2017 guaranteed.
JJ Watt, Houston Texans defensive end

6 years, $100M extension signed in 2014 (kicked in for 2016)

AAV: $16.67M

2014 Salary cap: $133M

% of cap: 12.53%

$20.876 million fully guaranteed, including a $10 million signing bonus and guaranteed salaries in 2014 and 2015. Also at time of signing, was expected to achieve (1) $10 million roster bonus and (2) 2016 and 2017 base salaries becoming fully guaranteed
Fletcher Cox, Philadelphia Eagles defensive tackle

6 years, $102.6M extension signed in 2016 (kicked in for 2017)

AAV: $17.1M

2016 Salary cap: $155.27

% of cap: $9.08%

$36.299 million fully guaranteed, including $26 million signing bonus and $6 million option bonus; $63.299 million is guaranteed for injury

Von Miller, Denver Broncos outside linebacker (3-4)

6 years, $114.5M signed in 2016

AAV: $19.08M

2016 Salary cap: $155.27M

% of cap: 12.29%

$36.5 million fully guaranteed, including $17.5 million signing bonus, $6 million roster bonus, and base salaries in 2016 and 2017; up to $70 million total guarantees

Looking at the key terms of the contracts above, we have Ndamukong Suh and Von Miller setting the goal posts with AAVs of just over $19M per season, with Suh’s contract also setting the mark with the highest percentage of cap at time of signing (13.30%).  JJ Watt’s deal comes in a bit lower than Suh and Miller, but it’s important to note that Watt never hit free agent status, unlike Suh, nor did he complete his contract as Miller did (albeit with Miller receiving the franchise tag prior to negotiating his new deal). Watt entering into an extension prior to hitting free agency explains why his contract numbers are lower, despite universally being considered the league’s best defensive player as recently as two years ago.  Fletcher Cox is an outstanding player in his own right, but he trails a bit in league standing in comparison to the other three players here.  This, plus the fact that he also entered into an extension, explains why Cox’s contract lags behind the rest of the group.

Now assuming Donald enters into an extension this year, we know that he will not be hitting free agency at the time he receives his second contract, as he has (i) the last base year of his rookie contract in 2017, (ii) the team option in 2018 and (iii) the franchise tag hovering over him for 2019.  This means that Donald’s bargaining power, while powerful, is not unlimited.  We’ll take a closer look at what exactly this means in the next paragraph.  On the flip side, Donald has no less cache than Suh, Watt and Miller had when signing their deals, so it’s safe to expect that his numbers will comfortably surpass Cox’s contract and slot in closer to Suh and Miller.  Donald’s contract status most closely resembles Watt’s, and as such, Watt’s contract remains highly relevant with respect to the cap percentage and deal structure, just with a slightly outdated AAV with the extension having been signed three years ago.

Let’s take a close look at the one key piece of leverage for the Rams – who need whatever leverage they have to keep extension terms within the stratosphere. Donald remains subject to his rookie contract, and thereby under Rams control, for at least the next three years per the terms of the collective bargaining agreement.  Specifically, Donald’s subject to the following salaries:

2017 salary:               $1,802,250
2018 salary:               $6,892,000 (fifth year team option)
2019 salary (est.):     $16,000,000 (estimated defensive tackle franchise tag value for 2019)*

The Rams could actually control Donald’s salary for 2020 as well by slapping the franchise tag on him for a second year in a row, which would come at 120% of the 2019 value.  However, for purposes of this article, we’ll keep it simple and consider Donald’s contract subject to Rams’ control for the next three years.  What this means is that the Rams can hardwire Donald’s cost for the next three years at a total fixed amount equaling roughly $24 million.  This point likely will, or at least should, keep Donald from eclipsing Ndamukong Suh’s numbers, even though Donald is by most accounts considered the superior player.

Having considered the Rams’ period of contractual control, along with Donald’s comps around the league and his status as a generational player, let’s move ahead and work out an extension for Donald.  Factoring in the collective points, reasonable terms for Donald’s extension would be as follows:

Aaron Donald, Los Angeles Rams

5 years, $100M extension; to be signed in 2017 and kick in for 2019

AAV: $20.0M

2017 Salary cap: $167M

% of cap: 12.57%

$41 million fully guaranteed, comprising of $10 million signing bonus, $2 million 2017 roster bonus, $12 million 2018 roster bonus and $17 million in base salary, all guaranteed; $4 million March roster bonus for 2021 (not guaranteed); $70 million guaranteed for injury

Donald’s proposed numbers don’t match the cap percentage or fully guaranteed dollars for Suh, but as explained above, that’s to be expected since Donald is years away from free agency.  However, his AAV exceeds that of Suh, since the cap has gone up substantially since Suh signed his deal.  Donald’s deal compares closely to that of Von Miller, slightly ahead on AAV and cap percentage. Cox’s deals is left in the rear view mirror by Donald’s extension terms, which is to be expected – no disrespect to Cox.  We’ll explore how Donald’s contract compares to JJ Watt momentarily.

First, Donald’s cash flow through 2023, with his existing deal plus the proposed contract extension in hand would be as follows:

YearBase Salary (Gtd.)SBRBCapDeadSavedRunning Cash
2017

$1,802,250

($1,802,250)*

$3,423,000$2,000,000 ($2,000,000)****$7,225,250$44,225,250-$37,000,000$13,802,250
2018$6,892,000$2,000,000$12,000,000 ($12,000,000)****$20,892,000$37,000,000-$16,108,000$34,694,250
2019

$10,000,000

($10,000,000)**

$2,000,000$0$12,000,000$23,000,000-$11,000,000$44,694,250
2020

$12,000,000

($7,000,000)**

$2,000,000$0$14,000,000$11,000,000$3,000,000$56,694,250
2021$15,000,000***$2,000,000$2,000,000$19,000,000$2,000,000$17,000,000$73,694,250
2022$18,000,000***$0$0$18,000,000$0$18,000,000$91,694,250
2023$19,000,000$0$0$19,000,000$0$19,000,000$110,694,250

* Fully guaranteed base salary from rookie contract

** Fully guaranteed base salary from contract extension

*** Full 2021 base salary and $14 million of 2022 base salary guaranteed for injury

**** Full 2017 and 2018 roster bonuses guaranteed

This deal puts $12 million into Donald’s bank account immediately via the signing bonus ($10 million) and roster bonus ($2 million), and the extension portion of the contract elevates him to the throne for highest non-QB AAV.  Note that with respect to 2017, the prorated signing bonus from the extension ($2 million) has been added to the carryover signing bonus amount from Donald’s rookie deal.  In addition, be aware that the signing bonus can only be prorated a maximum of five years, so 2022 and 2013 won’t be subject to signing bonus proration.  Donald’s base salaries from 2017 and 2018 remain intact, but with a running cash flow of more than $30 million even before the extension years kick in.  Both the base salary guarantees and the resulting dead money charges make this a de facto guaranteed contract through 2020, and then a pay-as-you-go structure for the last three years.  The $2 million roster bonus in 2021, in this case to be due in March, should cause the Rams to make an early decision on whether or not to keep Donald for the 2021 season.  This helps protect Donald from having to look for another team post-free agency, when most teams have already spent their cap allotments.

JJ Watt’s contract is the most relevant comparison to Donald’s pact, as the extension would come at the same juncture of Donald’s career with respect to the collective bargaining agreement (fourth year to be played, fifth year team option to be applied, etc.), and Watt carried the moniker or “best defensive player in NFL” during negotiation time, as Donald does now.  Under this proposed deal, the cap percentage for the players’ deals are nearly identical, with Watt’s deal at 12.53% and Donald’s at 12.57%.  And as you can see below with the cash flow, strictly with respect to money from the extensions (i.e. no carryover from the first NFL contracts), Watt and Donald get paid as follows:

PlayerYear 0*Year 1Year 2Year 3Year 4Year 5Year 6
JJ Watt$22,000,000$32,500,000$43,000,000$54,000,000$67,000,000$82,500,000$100,000,000
Aaron Donald$24,000,000$34,000,000$46,000,000$63,000,000$81,000,000$100,000,000

*In each case, encompasses the two years prior to the start of the extensions.

Comparing the cash numbers, Watts actually has the more favorable numbers up through Year 2, once you factor in the difference in cap percentage from 2014 versus 2017.  Donald’s payout wins from Year 3 on, and especially so if he gets to see the last two years of his deal.  This deal actually works out nicely for both Donald and the Rams – Donald can rightly claim that his yearly payout exceeded that of Watt, while the team can take solace in the fact that they’re paying less from a cap percentage standpoint to Donald in the early years, with the ability to cut Donald with minimal problems in the last three years of the deal.

One quick but important point to note with long term extensions such as this one is the necessity to comply with the final league year rule.  The relevant provision in the CBA essentially states that for any player under contract in the final league year (in this case 2020) and whose contract extends beyond that season, the player cannot earn a salary increase of more than 30% of his 2020 salary.  This especially becomes a factor with superstar players such as Donald, where the deals stretch out for several years, and the last few years of such deals often contain large salaries.  Looking at the proposed terms above, this contract is in compliance with the final league year rule, since 1) Donald’s 2021 salary of $15 million is within 30% of his 2020 salary of $12 million, 2) Donald’s 2022 salary of $18 million is within 30% of his 2021 salary, and 3) Donald’s 2023 salary of $19 million is within 30% of his 2022 salary.  This provision does make it much harder to backload salaries in the last few years of the deal (where in many cases it’s not expected for the player to earn such salaries).  The final league year rule is an important side issue to be aware of with NFL contracts, and in this case the proposed terms are compliant with the rule.

There you have it – this deal represents a fair pact for both Donald and the Rams.  Donald will be set for life with top of the market terms, which is great considering he’s still years away before he can hit unrestricted free agency.  For the Rams, the team receives cost certainty and pays out on a fair contract that also accounts for the team’s control of Donald’s contract through the next three years.  Also, .  As the Rams prepare to rebuild their fan base in Los Angeles before moving into the new Inglewood palace in 2020, it’s imperative that Donald’s tenure be set with the team for years to come.  This extension benefits all parties involved.

Desmond Trufant’s Potential Contract Extension

The Atlanta Falcons have rebounded quite nicely from a disappointing 2015 season, with the Super Bowl within reach.  While the offense has led the charge for the turnaround, the Falcons’ secondary has served as the backbone of the defensive effort. As to the leader of this unit, look no further than fourth year cornerback Desmond Trufant. While Trufant suffered a season ending torn pectoral muscle, the standout player from the University of Washington has been the Falcons’ best player in the secondary over the past four years. As such, the team needs to lock this core member up for the long haul, and will look to do so this offseason with a lucrative contract extension. (more…)

Looking at a Potential Extension for Derek Carr

With Derek Carr eligible for a contract extension upon completion of this season, his third in the NFL, the Oakland Raiders and Carr’s representatives will likely sit down this offseason and try to hammer out a deal.  The Raiders have managed their salary cap in fantastic fashion and are poised to extend Carr without too much difficulty.  What will the extension terms look like?  Much depends on how this season finishes out for Carr, but if he continues to play at a high level, he will be one of the highest paid players in the NFL.

(more…)