Recently I had been doing some additional work on receiving and I wanted to dig a bit deeper into what might be more optimum ways to construct a receiving room by looking at performance of veterans and rookies and comparing some of the cost savings.
First, I broke down the veteran spending that currently exists in the NFL. Here is the allocation of vertan contracts across the NFL.
|Salary Range||% of WRs|
Not surprisingly nearly 35% of veteran wide receivers are in the low salary range, but more surprising to me was that 28% of the receivers earn at least $15M a year, the second highest percentage of veteran players. The distribution dips considerably and the middle class of wide receivers has basically been wiped out this year.
Most teams in the NFL are investing in at least one receiver who earns $10 million a year. The only teams who failed to invest in one player at that figure are the Falcons, Colts, Bears, Packers, and Ravens. Most teams opt for just one high priced player (56% of the team) and just one has three high priced receivers (the Bucs).
The following is a breakdown of all drafted players by round.
Clearly this is a position where most players are being selected high in the draft with 46% of all rookie draft picks coming in the first or second round. Much like the way teams invest in veterans teams take a similar approach here. 44% of all teams have just one player drafted in the 1st or 2nd round. 28% have two and 9% have three. The teams with no top picks still on a rookie contract are the Raiders, Bills Browns, Jaguars, Chargers and Buccaneers.
Here is how every team breaks down their roster based on high draft capital (1st/2nd round players) and high salary players ($10-$15M).
|High Draft Picks||High Priced Vets||Pct of teams|
A quarter of the league goes with the 1 and 1 approach and another 15% go with the two top picks with 1 vet strategy. Surprisingly teams with just 1 high draft pick and no high priced vets or 1 high priced player with no draft picks each make up 9.4% of the league.
I think the question is are teams setting themselves up for the best long term approach with this type of roster construction or not?
I went back and looked at every multi year contract signed by a veteran wide receiver and compared his production two years prior to signing a contract to the performance two years after the new contract begins (for extensions this would mean when the extension technically starts not the year signed).
Here are some summary statistics when grouped by salary range.
|Salary Level||Avg. Yds prior||Avg. Yds post||Change||Improve||Decline by 30%||Improve by 30%|
We certainly seem to have a situation here where clearly teams are somewhat paying for past performance as only a minor percentage improve over expectations and most decline. The lone exception are the players who typically have earned between $10 and $15 million a season where nearly 50% show improvement and the percent than have a major drop is no different than the $15M+ category.
Here is the full breakdown by salary range and performance
|Salary Level||0-200 yds||200-500 yds||500-750 yds||750-1,000 yds||1,000-1,500 yds||1,500-2,000 yds||2,000+ yds|
In general, I think that signing a multi year deal with any player who is valued under $5 million is probably a waste unless he is someone who is mainly supposed to play special teams. The expensive players are an interesting decision. About 43% will perform at a strong enough level to where a team is going to at least be happy with them for one, if not two, years. Still, that means about 57% have disappointed whether due to injury, ineffectiveness, or both. Though they carry slight less high end upside the next tier of wide receiver has probably been the safer bet. The mid range players are those who we probably should consider two but not three year contracts for.
The difficulty teams have parting with the veteran prior to signing is that teams often are not proactive enough in trying to protect themselves from the massive contract. Over 60% of the teams in the NFL do not have more than one 1st or 2nd round rookie contract player currently on the team. If that player is a hit it would indicate that there are no alternative options to consider on the team, unless they were one of the teams who hit on one of the later draft picks.
Teams invested in the veteran do not have a huge pipeline coming in either. 53% of those teams have no more than one higher selected draft pick. If the veteran is a declining investment that likely means many do not have a pipeline to sustain the receiver production when the veteran begins his decline.
While I believe one of the fears of rookie investment is that it takes them too long to develop and you fear losing the star. The data would certainly back that up as here is the 1st and 2nd year performance of draft picks.
|Draft round||0-200 yds||200-500 yds||500-750 yds||750-1,000 yds||1,000-1,500 yds||1,500-2,000 yds||2,000+ yds|
These numbers will improve over time since rookie performance is generally the lowest level of play but you are going to need the added year or two to evaluate if the rookie has it or does not. I think given the push for contract extensions after just three seasons in the NFL teams would be best suited to try to draft a receiver in those first two rounds every other season to maintain that pipeline of talent and help in making the extension or trade decision. Waiting until the veteran player is about to decline or has begun his decline is too late to begin to address the position.
If you are one of those rare teams with minimal investments on the veteran side of the spectrum by no means should you let the presence of a decent lower priced receiver impact your decision to draft a receiver in the first two rounds because the return may take an extra year to realize. The upside of those lower cost players is not there to bypass the draft simply because there are more glaring immediate needs and the current veteran may be “good enough for now”.
When you draft a player you also gain a massive salary cap advantage when you hit. Right now the going price for a dominant player is $25 million a year. If you find one of those players in the 1st or 2nd round you are looking at an annual investment of $9 million a year for a top pick, $4 million a year for a mid first rounder and under $3 million a year for a second rounder. To illustrate the advantage here is the performance of the first two years of a rookie player vs the first two years of a veteran contract player plotted against their annual contract value.
The distance from left to right is the salary spread and the massive advantage you get at this position. Salaries are much higher now for veterans than this data set due to the wide receiver market explosion so the disparity is even larger than what is here. Rookie salaries are pegged to the salary cap and are very steady year over year. The point is if you can duplicate the performance of the $18 million a year receiver for $2 million a season, you can use that $16 million to address many other needs on the team or even as a hedge against your rookie by finding a more affordable receiver in free agency to pair with a rookie.
Of course this is easier said than done. One of the challenges with team building comes from the fact that the draft occurs after free agency. Even if you have a receiver heavy draft you can’t guarantee you can draft a player. This is another reason why being proactive helps and addressing the need when available rather than as a necessity pick, but still it makes it hard to let a star walk away when you do not even know if you can draft a rookie.
With that in mind I think more and more teams should consider approaching the veteran wide receiver as a franchise tag commodity rather than a long term commitment. Going back to the performances of players in extension seasons, teams are probably disappointed in the veteran about 60% of the time and absolutely regret the decision 40% of the time. While salary disputes are never easy, utilizing the franchise tag does give a team two years of control at a slightly lower cost with no long term commitment. It also maintains a trade window which can be used to get more draft assets if the decision is made to move on. The other option is to aim for a short term extension that keeps your trade window and minimizes any commitment to the player beyond two seasons.
While we are also going to be highly disappointed in many rookies that disappointment comes at a much lower cost. The salary is so low that in most cases they only have to match the performance of a $2.5 million per year or lower cost player to justify the salary.
If you look at the charts above I think what you can extrapolate from it is that the expected return on a 1st or 2nd round pick is in line with the production of the $7.5-$10M receiver and with some additional upside. A 3rd round pick is probably going to match the class of player below that. Even if they just hit those levels it still more than justifies the actual contract even if the overall results are less than expected.
There is probably zero reason to do a third massive veteran contract with a receiver. If they have beaten the odds and made it through a few years of their second contract, deciding to give a raise for a few additional years is not worth it unless you are just trying to be the good guy for the locker room. Clearly there are going to be exceptions but the goal is that you don’t worry about those exceptions because you had a pipeline ready to replace him or just got incredibly lucky by drafting Justin Jefferson when you trade a Stefon Diggs away.
The current Chiefs path for example is probably a safer and more cost effective way to build a team even if Tyreek Hill is still such a good player. Hill was signed to a short term rather than long term contract (it was a 3 year rather than 4 or 5 year extension), with a backloaded salary in the final year, maximizing their trade window without the crazy long term that some players would get. They essentially then replaced his salary with two lower cost free agent veterans and still had money to spend elsewhere as well as more draft picks to use to hopefully find the next player to be similar to Hill. The Chiefs are not over-committed to these receivers either and can bolt after the season if need be. The Dolphins on the other hand are locked in through the 2024 season at an average of $24.2 million a season.
Ideally the safest route would seem to be to focus on talent that may be available in the 2nd round of the draft and pair them with at least one other player who is in his 3rd and/or 4th year in the NFL and perhaps a solid second tier salaried veteran. That should give you some evaluation time to determine if it is feasible to trade away the older rookie, tag him and ride out his best years, or decide to do an extension. If there are years when decent free agents are available, signing players in the second tier salary range should also give a team a solid option for optimizing their salary cap situation while having similar results on the field from the veteran player. Any other signings should just be used to fill in the gaps and offer protection from the rookie players underperforming. But bypassing receivers in the draft because of your current receiver room is short sighted and will likely leave a team in trouble sooner rather than later with the long term prospects of the offense.
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.