Thoughts on Le’Veon Bell’s Contract Offer

Yesterday we looked at Kirk Cousins contract offer and today we’ll take a look at Le’Veon Bell’s basics which were reported on today by Tom Pelissero. Per Pelissero the offer included $30 million in the first two years of the contract and $42 million across three years. Unlike the Cousins offer, which was pretty weak by any standard, this seemed pretty strong and it is hard to see how Bell turned this one down so lets explore.

As a pure new contract the numbers would put Bell at $12+ million a year over a five year timeframe. That would be the largest APY for a running back since Adrian Peterson’s $14 million and change contract a few years back.  From a new money standpoint the Bell metrics would surpass Peterson’s on the frontend numbers. They would also obliterate any recent veteran contract. Here are the 2 and 3 year comps:

Player2 Year3 year
Bell$30,000,000$42,000,000
Peterson$29,280,000$41,280,000
McCoy$21,050,000$27,300,000
Martin$15,000,000$21,750,000
Miller$14,000,000$19,750,000
Ivory$12,500,000$18,500,000

So not only is this offer pretty incredible by today’s standards, but historically it’s also pretty solid.

Like with Cousins we can also factor out the fact that he was set to already earn $12.1 million on the year to determine what he is earning purely in new money in the first two years of a new contract. Again these numbers would paint things in a pretty solid light and represent a small raise over Peterson’s numbers, which seem to be a baseline used in the offer.

Player1 Year2 Year
Bell$17,880,000$29,880,000
Peterson$17,780,000$29,280,000
McCoy$16,000,000$21,050,000
Martin$8,000,000$15,000,000
Miller$8,500,000$14,000,000
Ivory$7,500,000$12,500,000

Unlike Cousins, who is in a position to break the bank next year, it is hard to imagine Bell making over $18 million next season to justify passing this contract up. First of all the running back market is simply stagnant. Bell is far and away the best of the bunch, but we don’t have any players in the NFL making over $8.01 million a year.  The high point year 1 payment in the NFL is McCoy at $16 million but he falls way short of Bell’s proposed two year “new money” earnings. So at best I would guess that Bell would break even if he hit free agency and his earnings between now and 2019 would probably fail to reach these proposed numbers.

Not only that but if the Steelers tag him again his salary next year will be just $14.52 million, well short of the number needed to break even. Again this was very different than Cousins. The Cousins offer basically built in the value of a transition tag and shortchanged him on the franchise tag. The two year offered to Bell is stronger than two tags and is the more traditional way things work when  trying to make a sincere offer.

Secondly Bell is an injury risk and a suspension risk. Cousins’ position is more or less injury and age proof for a second contract. Bell’s is a high risk position and his history is terrible. He’s had multiple knee injuries  and been suspended twice. Another injury and suspension is just going to hurt his value. From the standpoint of a suspension he would also stand to lose 1/17 ($712,941) for each week suspended. If he signed a long term deal with a signing bonus he would lose 1/17 of a much lower base salary and just 1/17th of 1/5th of his overall bonus paid in 2017.

So why would he turn this contract down?  That is hard to say. About the only things that could really be at hand here are the issue of guarantees and payment timings.  The Steelers organization offers very large signing bonuses relative to the majority of the NFL, but they don’t guarantee salary beyond that. For example Antonio Brown received $19 million as a signing bonus but not a penny more guaranteed.  That’s simply doing business with the Steelers and you need to accept that when you sign with them.

Pittsburgh is also one of the stronger organizations when it comes to honoring contracts regardless of guarantees. The only team that is probably better in this regard is the Bengals, who often have even less favorable payment terms. The contract structure in Pittsburgh also helps since the cost to cut is high early on. This is how the league used to operate and Pittsburgh is one of the few who still does this way.

Pittsburgh’s standard contract also often contains a second year roster bonus earned in March. I guess it is possible, given Bell’s suspension potential, that they did not want to use that mechanism and preferred a full base salary which would be more open to recovery in the event of a long suspension.

Might the first year payment have been a little light?  That is also possible, though Id imagine under any scenario it was going to not only be greater than what he is currently scheduled to earn but also bigger than McCoy’s $16 million. In any event the number was going to be more than he is set to earn now.

Obviously we aren’t privy to the entire offer but based on what is out there it is really hard to see why this contract did not work for Bell. It is highly doubtful that he will top it by signing next year and if guarantees are the issue well his best offer is going to come from the Steelers anyway next year and that will not include any fancy guarantees like we see elsewhere. I don’t really see the reward here for Bell but I guess we’ll have to wait and see.

Cousins and Redskins Fail to Reach New Deal

As expected the Redskins and Kirk Cousins did not come to an agreement on a new contract so he will play out the season on a one year franchise tag. Washington released a statement following the passing of the deadline which outlined the parameters of their offer.

“On May 2nd, right after the draft, we made Kirk an offer that included the highest fully guaranteed amount upon signing for a quarterback in NFL history ($53 million) and guaranteed a total of $72 million for injury. The deal would have made him at least the second highest-paid player by average per year in NFL history.”

The statement, which goes on to say that the team never received a counter offer from Cousins agents is obviously damage control for Washington, who has handled the situation pretty poorly. I think the numbers above likely paint a picture as to why this is a relationship that is simply not working.

The May 2nd date means two things. One is that the framework that we have to value this contract goes back to making an offer prior to the Derek Carr extension being complete. Since many NFL extensions don’t get done until July I would say there is a good chance Washington’s front office simply assumed no new contracts would pop up until after the July 17 franchise deadline.

The second thing the date tells me is that Washington continued to drag their feet on any contract talks. To wait until the draft to make an offer meant they were either shopping Cousins or were waiting until a few spots he maybe had in mind in 2018 selected in hopes they would pick a QB. Either way I don’t believe it shows the proactive approach that was probably needed to help the relationship. It certainly sounds like they didn’t make another offer either, which is not a great sign for anyone.

The fact that Washington failed to disclose the APY while giving the guaranteed numbers probably means that the offer was not as great, especially in light of the Carr contract, as they want to make it seem. There are a number of different ways to value contracts in the NFL and technically as of May 2nd the second highest paid player by APY was Drew Brees at $24.25 million. That said Brees was on a one year extension and the two year value on his contract is $22.125 million, which is right below Joe Flacco’s $22.13 million extension. I would say that it is likely that Cousins offer was in the $22.2 million per year range.

One my pet peeves with contract extensions is when people make a big deal out of the guaranteed numbers without taking into account any guarantees. The $53M number sounds wonderful, except Cousins is already guaranteed $24 million on the season. That is not even a paper figure….its an actual guarantee. So Washington is offering to guarantee Cousins another $29 million to sign this contract.

FWIW that $29M is about the cost that it would take Washington to transition tag him next year and is less than if they franchise tagged him for a third time. Every major recent contract for a QB, other than Carr (and that’s unique because of the Raiders), sees the player get a signing bonus of at least $30M and 1st year new money over $40 million.

So what benefit is there to taking $29M to lock yourself into what’s quickly going to be an undermarket contract when you stand to make at least that much or more next year. Just to put it in perspective in the event Cousins falls off a cliff Brock Osweiler earned $21 million in first year cash and $37 million fully guaranteed as a free agent. So as long as Cousins in passable his full guarantee on a new contract needed to be at least $61 million to even put Cousins in the break even range.

The $72 million injury guarantee also falls into the same trap. That represents about $48 million in newly guaranteed salary. That is well below Luck at $70 million and Wilson at $60 million.  Sure he is coming from a higher starting point but the Redskins only have themselves to blame for that. This is actually a more valid number than the full guarantee (only Eli Manning comes close in  a new guarantee) but they are not the blow away numbers that Washington is attempting to portray in their letter.

Cousins, because of the position he plays, is in a very unique spot which the Redskins don’t seem to realize. QBs have a much longer life than the average NFL player so losing seasons to the tag doesn’t have the same impact as it would to a wide receiver or defensive end who will likely be removed from his prime after two tags. The injury rates impacting financial earning power are really low as is the loss of power because of a bad season. And if Washington is successful this year it puts Cousins in a scenario to break the bank. More quarterbacks should be following this path.

Washington really needed to take this all into account with any offer they made him, but it seems they failed to do that. The numbers they released simply fall short of making him an offer he cant refuse, which is what they needed to do.

Rookies, the 2011 CBA, and Veteran Salaries

So there has been a great deal of talk this week about rookies being underpaid. I think it came out from a really good article by Mike Freeman and later our buddy Chase Stuart chimed in on the topic as well with some good input.  Ive written about the benefits derived from the draft before and how at the least it should be used to revalue trade charts since the benefit is potentially great for teams. That said I do think there has been some misstating of the cause and effect here.

The prevailing thought is that the cause of this imbalance is from the 2011 CBA which instituted a firm wage scale on drafted rookies. Prior to this CBA there were a large number of loopholes that agents found to drive the prices of rookies through the roof, primarily at the top of the draft. For example players like Ndamukong Suh, Gerald McCoy, Aaron Curry, Trent Williams and others became among the highest paid at their positions before they ever stepped foot on the field. Almost all became the highest guaranteed players.  Many justified the cost but plenty did not. In the new system only running backs really still hit those marks.

The league let it get away from them in my opinion during that timeframe because in general the top of the draft is dominated by bad front offices. Such teams often did some very crazy things to get players into camp and the better teams, all of whom end up in the top 10 at some point, couldn’t avoid doing the same. About the best they could do was avoid certain players or agents because of the cost involved. Hence the new system was meant to be dummy proof and prevented the worst teams from doing deals that set the league on fire. But outside of the top picks that wage scale was almost always in place. That’s not a popular opinion but I think we can back that up.

So what Im going to do here is look back at the top 20 players from the 2011 and 2012 draft and try to find a reasonable comparable from the old draft system and see how the dollars and cents work out over the first six contract years. To be a bit fairer we will inflate the older player’s salaries based on their pay as a percentage of the cap over the first 6 years of their contract. Here is the list I selected (if there is a NA it means that there was no notable player drafted at that slot)

PickPlayerEarningsCompComp EarningsComp InflatedGain/Loss
1Newton$76,025,498Stafford$84,000,000$90,126,299-$14,100,801
2V. Miller$55,448,214Suh$90,959,706$94,994,103-$39,545,889
3Dareus$61,521,947Mccoy$76,205,000$79,584,972-$18,063,025
4Green$56,438,098C. Johnson$68,250,000$76,424,430-$19,986,332
5Peterson$53,510,500J. Haden$64,456,742$67,315,635-$13,805,135
6J. Jones$51,683,750C. Johnson$68,250,000$76,424,430-$24,740,680
7NANANANANANA
8Tannehill$50,050,979Sanchez$64,725,000$73,550,342-$23,499,363
9T. Smith$51,260,098Clady$30,365,500$33,345,018$17,915,080
10Gilmore$46,166,150Revis$56,661,500$63,447,953-$17,281,803
11Watt$50,706,498Ngata$39,000,000$43,955,847$6,750,651
12Cox$46,540,198Ngata$39,000,000$46,554,004-$13,806
13Fairley$17,889,000Graham$25,908,000$27,057,115-$9,168,115
14Quinn$39,248,224Pierre-Paul$22,434,002$23,429,032$15,819,192
15Brockers$28,918,000Carriker$16,845,000$19,977,492$8,940,508
16Kerrigan$33,008,294Timmons$29,622,250$35,130,795-$2,122,501
17Solder$28,978,242Albert$24,168,000$26,539,408$2,438,834
18Liuget$30,792,744Hali$25,500,000$28,740,361$2,052,383
19Amukamara$24,516,938Rodgers-Cromartie$18,313,750$20,110,728$4,406,210
20NANANANANANA

All in all I think this is a pretty fair representation of what the rookie wage scale was designed to do. The top 8 picks saw their salaries significantly stunted, primarily because of earnings lost in the first four or five years of their contract and potential leverage lost regarding their extension. Von Miller was probably the most impacted by the changes since the system effectively tied the extension year values to the position whereas Suh was simply paid on a scale where all number 2 picks earned a pretty big number. I’d also say that Patrick Peterson was hit very hard as I didn’t have a good comparable for him due to position. Had I used Eric Berry the disparity would have been even bigger. Julio Jones and Ryan Tannehill are a bit overstated since I used slightly higher selected comps for them.

But once you get outside the top 10 (and Gilmore vs Revis is a stretch there since Revis was so great and renegotiated his rookie deal after 3 years following a holdout not some CBA rule) in general the numbers balance out or favor the players in the current CBA. A good deal of this, IMO, again deals with positional valuation. In the old CBA 5th year salaries were more or less negotiated based on draft slot. Under the new system they were tied to position with no distinction being made between the 11th and 32nd pick. If we went further out and started looking at Chandler Jones, Muhammad Wilkerson, etc… the numbers would be more in favor of the current system.

I think the real takeaway is that the new system saw a transfer of wealth between good players in the first round with less money being paid to the top 7-10 players and more going to 11-32.Obviously there is a big savings from the bust prospects. For example Darrius Heyward-Bey had earned nearly $37 million over his entire career while someone like Jake Locker was under $13 million. For weak drafts like 2013 that is a major cash savings for the league.

It certainly doesn’t balance out (my guess is if we run out to 32 there is probably $72 million in savings on good players and more on busts even factoring in possible raises for those outside the top 10) but I don’t think it’s going to veterans either. The NFLPA, in the last negotiation, failed to differentiate veterans and rookie salaries on a percentile basis. While minimum salaried vets should fairly be priced between $2 and $3 million with somewhere between $250 and $350K in guaranteed salary they remain stuck at $855K and $80K in guarantees.  That doesn’t put the team in a position to have a real decision in front of them nor pay a reasonable salary for older players who play a valuable role on the team.

But the inequality in rookie salary vs actual performance has almost always existed in the draft. It’s not exclusive to the current CBA; it has been something that owners have continuously used to keep wages for players down and that is being lost in the shuffle.  In the past the first few picks were overvalued unless the player was a bonafide stud, but the benefits almost always rested with the teams. It’s a bit moreso now but its not new to the current CBA regardless of how blind we would get to some of the massive numbers being floated for those top 10 players.

One of the problems with the negotiation of the CBA is the fact that the union seemed to miss the fact that this really should not be about veterans vs rookies, regardless of who was doing the voting on the new CBA. We all have a tendency to look at every player in the NFL for four years or less as a “rookie” but that is doing a disservice to all players. A rookie generally proves his worth by his second or at the latest his third year in the NFL. The union needs to be looking at any player beyond 2 years in the NFL as a veteran because that is when the money should come in. They failed to do that when they continued the same four and five year contractual system that has always been in place.

In some ways they made it worse because they stripped agents of their ability to use bad teams to drive prices for the NFL league wide. They also eliminated the RFA system almost entirely by demanding four year contracts which eliminated agents abilities to gain higher fourth year salaries for players either through workout based escalators or simple RFA contract procedures. The NFL sold it as veteran aid and the union bought it hook, line, and sinker. It was more of the same.

The NFL is very different than any other sport because the players prime years generally end around the same time as a players rookie contract. In the NBA we see plenty of players productive in their 30s even as their 20 year old athleticism leaves them. Baseball players last forever. By 30 the average NFL player is about as useful to most teams as I would be, yet the system in place still holds so many rookies onto their rookie contracts until they are 28 years old.

If you want to fight for veteran rights you have to understand that once a player proves his worth in the NFL they need to get paid. Whether that is through built in options, negotiated by agents not based on some old Jimmy Johnson draft chart, or short term contracts the path to veteran benefits comes from the right to get real raises and commitments at the age of 25 and 26.

But this isn’t exclusive to that 2011 CBA. It has been in place for ages and has become accepted practice by the league. The NFL, in my opinion, does a great job of riding on public sentiment and using it to mold negotiations. More guaranteed salaries, less practice time, more concussion protection, less power for the commissioner are all going to be ideas floated by the league to avoid any discussion about ways for players to get paid at a younger age. The rookies of today are the veterans of tomorrow and to do the best by them means to focus on rookie rights and freedoms. Nobody has done it yet and Im not sure enough people realize it.

Will Anyone Sign at the Franchise Tag Deadline?

The deadline to extend Franchise players is Monday which leaves Kirk Cousins, Le’Veon Bell, and Trumaine Johnson just a few more days to gain that added job security for the season. While none are reportedly close to a deal these contracts can often come out of nowhere at the last second (think Muhammad Wilkerson who signed so late it was reported he didn’t get an extension) despite whatever posturing there is on both sides. Let’s take a quick look at the three players.

Kirk Cousins

I can’t help but think that the Redskins have completely botched this contract. Last year I think it made all the sense in the world to not sign Cousins long term. He came off a good year after three seasons of relatively non-descript play. The odds were against Cousins being a long term viable starter off what could have been a fluke season and the investment in light of the Brock Osweiler contract would have been $18-$20 million a season with close to $40 million in guarantees, so Id argue that rolling the dice on one year for $19.95 million was worth it.

But after another relatively good year the Redskins really needed to make a firm decision on his status. Either he stays long term on say a $23 million a year contract or he goes via trade to a team like the 49ers. Instead they tagged him at $24 million and have allowed him to sit and stew about his future. He is already beyond the Osweiler and Tannehill two year salary levels and if they tag him again next year he would be in the Andrew Luck region. The price should have gone up in light of the Derek Carr $25 million contract extension and I can’t see any reason that Cousins would sign for less than that.

Washington’s front office was in such turmoil that its hard to make a prediction here. Id say if this was any other team in the league Cousins would sign a new contract on Monday, but Washington has taken an odd hardline stance on his value while at the same time being happy enough to keep him around at $24 million for the season. I’d guess a contract won’t get done.

Le’Veon Bell

This is a rare case where the positional price of running back likely plays a role. Running backs are the cheapest positional players in the league and the top of the market is just over $8 million a season. Bell’s tag value already pushes him past $12 million. There have been two recent running backs to jump over the $10 million a year hurdle. One was Adrian Peterson who signed a generation ago and nearly played out his contract while the other was Marshawn Lynch on a shorter term $12 million a year extension that saw him retire after just one year.

Bell also has some red flags due to multiple injuries and some off the field stuff, but I don’t think that will be a concern for the Steelers who would more or less be able to recover signing bonus money anyway and those are the only guarantees they do in contracts.

Given the market for the position, Bell has reason to get a deal done rather than play the year out. Unlike Cousins there is not going to be a better offer next year if the Steelers come in at $10 million a season. The risk of injury at the position is so big that anything above $9 million a year he has to probably consider even if his goal is much higher. His threshold number should be to increase his salary this year to $18-$20 million which would blow McCoy’s $16 million year one salary out and that would be fair for both sides. Given the way the Steelers often treat their own players it would be a bit of a surprise if they could not come to an agreement.

Trumaine Johnson

I’m not really sure what the Rams were thinking with Johnson. When they tagged him last year he basically ran to lock in that close to $14 million salary because the odds were against him earning much more than in free agency anyway. When they did it a second time at nearly $17 million he ran even quicker to sign it before the Rams came to their senses.

To put the numbers in some kind or perspective his $30.6 million he will earn on the tag will be above Janoris Jenkins $29 million, well above AJ Bouye and Darius Slay at $27 and $25 million and close to the 2 year payout of Stefon Gilmore at $32 million and Desmond Trufant at $33 million.

Johnson will still be a free agent next year and likely earn anywhere from $13 to $15 million in cash in 2018, whether with the Rams of someone else. Assuming he does that it would put his 3 year salary at $43 to $45 million which is putting him in the Richard Sherman and Joe Haden class of contract.  Would anyone have given him that kind of contract last year?  I think the answer is a clear no.

Either way that this works out I think the Rams don’t look good. If you use the tag on a player like Johnson you are using it to make a long term deal. If they call your bluff in year one you probably just need to make whatever deal you can. Doing it two years in a row just seems crazy, but at this point his asking price from the Rams should be significantly higher than his market value. It just seems like a lose-lose proposition for the team and Johnson probably has little incentive to give in much which makes it unlikely a contract gets done.

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.

Guaranteed Salaries and the NFL

I actually wrote this up a few weeks ago when Tom Brady’s wife mentioned him playing with concussions and there was talk on the prospect of players hiding injuries because contracts are not guaranteed. I’m not sure why I never got around to publishing it, but it kind of fell by the wayside. With the NBA free agent deals in the news guarantees have become a hot topic so I figured I could post this now and just give some thoughts as to why the guaranteed system won’t really work in the NFL.

The major issue at play is the basic lifecycle of the NFL player. For even the best players at most positons the cycle is pretty similar- development year or two on a rookie contract, peak in years 3-5, begin noticeable decline in year 7, keep fighting for a job until no teams want you anymore.

The way current contracts are primarily negotiated is that teams pay a large premium on the frontend of a contract in hopes of receiving a benefit on the backend of the contract if the player breaks out from the cycle mentioned above and is still playing at a really high level in year 8 and 9.

For example look at the Patriots contract with Stephon Gilmore. The Patriots are paying him $32 million in the first two years of his contract and guaranteed him $40 million across three years with the hope to gain a benefit on the backend of salaries of $11 and $12 million at a time when cornerbacks will likely be earning $17-18 million a year. If Gilmore flops terribly the Patriots will have overpaid him by millions but at least be free in years 4 and 5. If he does well they have a great deal.

Once you move to a fully guaranteed structure teams are going to adjust accordingly. Once you remove the benefit of the backend teams aren’t going to pay as much up front because there won’t be a year four or five in the contract. As they absorb more risk they are going to be less likely to inflate the front end of the contract. The contract will only go as far as the current guaranteed deal likely goes (the exception being the QB position).

Right now we can look at Gilmore as being paid about 7.9% of the projected cap in the first three years of the deal for the possible benefit of paying him just 5.7% of the cap at the end of the contract. Remove the benefit and the team is going to cut the first three year’s salary from $42 million to $36 or $37 million to limit their risk and eliminate years 4 and 5.

How much would a team pay on a 5 year contract in that situation?  Well we knew the Patriots were willing to take on an effective $42 million of risk to invoke those final two year options so at least $42 million. But beyond that they will probably use the cost of a replacement level talent which for that position is in the ballpark of $3 million a season. So lets call it a five year contract worth $48 million.

What is better for the player?  $42 million guaranteed with the potential to earn $65 million over 5 years or a straight five year contract with $48 million fully guaranteed at signing?  Or is the player better off taking the $36 million over three years with the potential of free agency awaiting?

Those are all really interesting questions for someone to answer but the NFL is not going to just take the current contract structure and ever just make them guaranteed. Might a few teams go for broke and not care about the future like the Redskins and Cowboys?  Anything is possible, but when those teams falter due to age you can guarantee they wont do it again.

If contracts were fully guaranteed the following players would still be on the Jets this upcoming season- Darrelle Revis, D’Brickashaw Ferguson, Antonio Cromartie, Brandon Marshall, Nick Mangold, Marcus Gilchrist, Breno Giacomini, and Jeremy Kerley. Most of those players aren’t even in the NFL right now. And oh yeah, Mark Sanchez would have been the Jets QB last season.  The Jets stink as it is but it would have been completely hopeless if the contracts were guaranteed at signing.

For fun I decided to actually put together a group of starters based on contracts who would still be in the NFL this season around the league if contracts were guaranteed. Most would have high cap charges along with the salary.

QBRyan FitzpatrickBills
RBAdrian PetersonVikings
WRPercy HarvinJets
WRGreg JenningsVikings
WRDwayne BoweChiefs
LTRyan CladyBroncos
RTGosder CherilusLions
CNick MangoldJets
RGDavin JosephBuccaneers
LGBen GrubbsChiefs
TEOwen DanielsBroncos
DEJason HatcherRedskins
DEJunior GaletteSaints
DTArthur JonesColts
DTJay RatliffCowboys
LBJerod MayoPatriots
LBPaul KrugerBrowns
LBPhilip WheelerDolphins
CBDarrelle RevisBuccaneers
CBAntonio CromartieJets
SJairus ByrdSaints
SDashon GoldsonBuccaneers

That would also be a lot of money tied up in players who either do not belong in the NFL or at best belong as backups and it would be coming out of the pockets of players who did deserve raises.

If the goal is to find more injury protection for players there are other ways to do that, in my opinion.  The NFLPA has already made movement in this regard with their injury protection benefit that they negotiated into the CBA. This was a real win for the union which somehow never gets any attention. It basically protects up to $1 million of salary for players on multi year contracts with a chance at a smaller second year payment as well.

The NFLPA could probably look into lowering some of the other benefits such as the performance based pay pool and using that money to help fund insurance policies for their players that cover loss of job due to injury.

There are probably ways to manipulate the salary cap to eliminate the massive carryovers and force teams into using more signing bonus money and functionally guaranteeing 3 years of most contracts or to lower the cap limits and taking that unused money to fund players whose contracts were terminated for injury.

I know just yesterday former NFLer Terrance Knighton put out a series of tweets talking about how ridiculous it is that Aaron Rodgers is earning so much less than NBA players. Part of that stems from Rodgers being willing, due to the system and general belief in the way the NFL works, to take a contract extension that was so long at a younger age. Is it good for the game is Rodgers goes from being a Packer one year to a Dolphin the next and then a 49er the year after that? Probably not but eventually that will likely stabilize, but that is going to be the way to maximize money. Still that may not benefit the overall general population of the NFL.

The players need to stand firm, threaten a strike, and demand that teams remove the franchise tag provision from the CBA and secondly make a move to reduce the length of rookie contracts to two or three years.  That allows players to gain much more negotiating leverage and begin to force the issue on contracts outside their home organization. Unless players get to free agency at a younger age they simply don’t have the expected careers to justify big “guaranteed” investments for any period of time.  Teams say that it takes three years to evaluate a player. If so then there is no reason for them to control those same players for up to 7 years through long contracts and franchise tag mechanisms.

Most people call free agency fool’s gold because the decline in those free agents is just too rapid. That’s because players are hitting free agency at 27, 28 and 29 years of age. But what if you had a system where Odell Beckham, Khalil Mack, Jadeveon Clowney, Mike Evans, etc… all in their early 20s were free agents this year?  That’s a different story whether we are talking teams fully guaranteeing a four year deal or simply doing a massive 1, 2, or 3 year contract. None of those players will ever hit free agency in this system. That probably even gives the mid tier guys a chance for bigger paydays with teams who don’t value the superstar as much.

But just saying that the NFL needs to guarantee contracts isn’t going to fix the problems. It will fundamentally change the way that the league does business and put pressure on players to take much lower contracts or be willing to go year to year. Either way the players are still going to be at risk. The whole system needs to be changed at its got to begin at the bargaining table when negotiating how much control teams have over their players careers once they draft them.