Stunned is the only way I can describe my reaction right now to this news. I had joked in the past that maybe there might be some old school nature to this contract when it happened but never in a million years did I think we would see a contract that runs for 12 years happen in the year 2020. This contract will effectively cover Mahomes’ entire prime of his career leaving him with one last negotiation at the age of 37 for the “twilight of the career” contract.
I can’t really come up with any comparisons to this. Back in the day there was a rush in NFL circles to do $100 million contracts. Players that signed those contracts were players like Brett Favre and Drew Bledsoe in 2001, Donovan McNabb and Daunte Culpepper in 2002, Mike Vick in 2004, Carson Palmer in 2005, and then Tyron Smith in 2014. Culpepper’s was the only one that ran 12 years.
Players moved away from these contracts because for generational talents, specifically at QB, the money grew larger and larger at the position while the players were locked into contracts that were 4 and 5 years old and their salaries lagged. Players moved much more into the realization that the massive size of the contract did not matter but just that the contracts made more sense to run five to six years so that they had access to at least two free agent contracts during the “prime” years of their career. Right now the fight between Dallas and Dak Prescott is over a four year contract just to show how this is so out of the ordinary.
There are a few ways a contract like this could make a little sense. One would be to tie the value to the percentage of the salary cap which can be done with yearly escalators. QB contracts are one of the few positions in the NFL to grow at the rate of the cap but generally you enter into long term agreements to gain a benefit somewhere in the contract. Usually that occurs after the 3rd year when the contract begins to lag the market. It could be a risky strategy for both sides given the uncertainty in the cap the next few years if salaries are tied for the entire contract rather than just the back end of the contract. This would be something that I never anticipated a team doing, but its one of the few ways to makes sense for a player to do a deal this long. Most likely for a team to have this make any sense they would have to set some kind of running average threshold that only kicks in if in its entirety it falls below a certain number.
Another option would be to tie the value to the market. There were clauses in older contracts that can tie salary to the average of say the top 5 at a position or the top player at a position. That would give the team side a little more certainty knowing that the Mahomes base value will likely be a block on the market for some time and let thing grow more organically rather than seeing perhaps a spike in 2025 in the cap that makes Mahomes’ salary astronomical compared to other players at the position.
Could the deal be fully guaranteed? I think teams would want to hold onto their cash rather than do that but that might be a way to spin a contract if its say $45 million a season with the entire $450 million guaranteed. I dont like this for a player because contracts always rise and QBs usually last a long time but its something.
A consideration that I would also have is if this is a 12 year deal designed to sound massive but one that contains a set of options that effectively make these mini contracts. As an example you could do a deal where in 2025 there is a massive $100 million payment and another $40 million in 2027. Numbers that are high enough to really jump the value of the deal or get a player into free agency.
All I know is that it’s certainly something different going on here and one that I never expected see no matter what mechanisms are used. Im sure this will be said to be the ultimate “win-win” but its rare to see that happen, so I guess we shall see if it truly works out that way.
There are plenty of ways to measure who we consider the most expensive players in the NFL. Generally we look at the annual per year/average annual value of a contract but that can sometimes be misleading. The APY is usually a new money average per year and doesn’t take into account creative ways teams account for salary cap dollars. Today I wanted to look at a different way to value players and its what Ill call the remaining contract value (or RCV).
The RCV is a moving number that changes every year. It is simply the sum of all remaining salary cap charges divided by the number of contract years remaining, not including voidable contract years. This gives the best approximation of how much teams will need to allocate in salary cap dollars for their players. First let’s look at the top 15 quarterbacks.
At the top of the list is Drew Brees whose RCV is the perfect example of the way that cap management impacts the value of a contract. Brees’ actual contract averages $25 million a season but because of the way the Saints have deferred cap dollars through the years they will need to pay for $35.65 million per year in cap charges for Brees to be on the team. He is the most expensive QB in the NFL and the Saints are lucky he never pushed his annual contract value.
On the opposite end of the spectrum are Jared Goff and Carson Wentz. Goff’s contract in particular is one that has come under much scrutiny because it averages $33.5 million a year but because the Rams proactively extended him the current true annual value is $31.268 million. Wentz’ falls into the same category.
Jimmy Garoppolo has one of the more unique contracts in which the team took a massive cap hit in the first year of the contract to drive the RCV down by nearly $1 million per year. Garoppolo at the time was set to be a free agent but this can be a strategy that teams with large levels of cap room use on extensions to make a much easier to absorb contract. Basically it would combine the benefit of the Garoppolo structure with that of the timing of the Goff and Wentz contracts. The Browns would be the team in the best position to do something like that if they were to extend Barker Mayfield next year.
Now let’s look at the non-QB’s.
I find the non QB category far more interesting because this is really where teams make trouble for themselves. Currently by traditional contract metrics there are only 7 players who earn more than $20 million a season and of those 7 just four earn more than $22 million a year. Yet when we dig into the cap breakdowns we have 12 players with a RCV of $20 million and 7 players who count for $22 million year.
Why does this happen? In many cases I think teams do a very good job in preparing for the extensions of quarterbacks and they fail to plan well for others. In many cases we have teams that have had to sign players in free agency with artificial low cap hits in the first year just to get them on the team making it a one year bargain and a significant increase in cost later on.
Teams also have a tendency because of the cap hits of these players in that 2nd and/or3rd contract year to often go in and restructure the deal for cap relief. The perfect examples of this are Khalil Mack, Alshon Jeffery and Fletcher Cox. If you get lucky and it works as it did with Cox you can survive it but if it goes sideways and you end up with Jeffery it’s a killer.
I’d argue that at some point Mack, Lawrence, Clark, and Flowers will all be looked as albatross contracts because of the contract structure causing hyper inflated cap charges that far outweigh the average annual value of the contracts they signed.
In a not too surprising development, Browns Tight End David Njoku has asked to be traded before the start of training camp.
1/2 Browns’ TE David Njoku and his agent Drew Rosenhaus asked today for the team to trade him. The Browns told Njoku they would like to keep him, but Rosenhaus told them he’s intent on a trade. They want a trade before training camp.
The Browns signed free agent Austin Hooper to a $10.5 million per year contract, the largest contract for a tight end in NFL history, which immediately put Njoku’s status for the year in doubt. Though Browns head coach Kevin Stefanski has been known to favor utilizing two tight ends in his offense the trade request really should come as no surprise.
For Njoku to hit the option year and put himself in play for a significant extension he needs to get the opportunity to, at the least, get back to the kind of numbers he put up in 2018 while being able to flash the athleticism that made him a 1st round pick. With only so many balls to go around this year on an offense that will feature Odell Beckham, Jarvis Landry, Nick Chubb, Kareem Hunt, and Hooper it is hard to picture that happening in 2020.
Though Stefanski may favor the two tight end approach, in his time in Minnesota there was really only one season in which one tight end put up the kind of season that would get people excited in free agency (Kyle Rudolph had 840 yards in 2016). Most years the top tight end is going to put up around 500 yards which is not a game changer at all.
You can get by at the position if teams around the NFL feel that you are being tied to the bench because there is a superior player on the team (i.e. Trey Burton in Philadelphia) but with the current memory of Njoku being that injury filled year he really needs to be a featured talent on an offense.
Njoku would be very cheap this year for a team at a salary of just $1.74 million and if he plays well would easily be worth the $6 million option year. He is the kind of player that teams would usually take a risk of sorts on but the question is what the Browns would want and what the market would be willing to trade.
The Ravens this past year received a 2nd round pick for Hayden Hurst, a similar 1st round disappointment who had fallen out of favor in Baltimore. Hurst had two years remaining on his contract plus an option year at the time of trade which should make him more appealing to a trade partner than Njoku who has just one year and the option. I would guess that would drop the Browns expectation to a 3rd round pick.
It’s possible that the compensation could drop even further since Njoku is actively seeking to be traded and the Covid crisis should also put many question marks on the year. While Covid existed during the Hurst trade the NFL seemingly did not take any of it as seriously as they have started to now. No team wants to give up anything significant if there is a chance that Njoku’s lone cheap year could be wasted on a 4 or 6 game season.
As a reply to a NFL segment on the lack of progress on a long term extension for Chiefs defensive tackle Chris Jones, Jones himself chimed in with his own thoughts as to what will happen if he doesn’t get a new deal.
Bell’s refusal to play for the Pittsburgh Steelers in 2018 was one of the most hotly debated subjects of the year with various opinions on the pros and cons (from me it was mainly cons) of sitting out. However there is one key difference in Jones’ situation when compared to Bell’s- how many times he has been tagged.
When Bell sat out in 2018 he had already played the 2017 season as a franchise player. Because of that the Steelers would have had to pay him at the QB franchise rate if they opted to tag him in 2019, which was a number that nobody is going to pay to any non-QB. While they could have transitioned tagged him at a lower number that type of tag does not prevent a player from getting legit offers in free agency the way a franchise tag effectively blocks free agency. So while one can certainly argue the logic in sitting out a year there was a light at the end of the tunnel.
Because Jones is on his first tag, the Chiefs would still have the right to tag him again next year at a reasonable rate rather than the QB tag number which is what set Bell free. The only difference for Jones next year would be that the tag would only carry a 1st and 3rd round pick as compensation compared to two 1st round picks if he signed elsewhere. That is still a steep cost to another franchise and probably takes at least half the NFL out of the bidding process. Essentially he would have to sit for two seasons to get to the same place Bell was and that is an incredibly long time.
The franchise tag pretty much stinks for good players. I completely understand why it wasn’t a focus of the recent CBA negotiations since it only hampers a few players a year but it creates a bit of a bizarre system where if you are too good but not indispensable you can end up losing money in the long term while lesser players get the riches of free agency right away.
The tag was meant to be a way to keep a team from being torn apart in free agency and losing its most notable players who were considered the face of a franchise. With teams carrying so much salary cap space now its just used as a tool to keep players for a season or two that the team has no real desire to do a long term deal with. Between free agent movement being so common and far better cap managed contracts by teams it really has no place in the game other than to protect losing a quarterback.
July 15 is the deadline to do a long term deal with a franchise player. Jones’ should be looking for a contract in the $21-$22M per year range and I’m not sure the Chiefs are looking to go there, though we have seen last minute deals happen before.
Roster construction is a very interesting thing in the NFL. In many ways it’s a chess game where you have to adapt as the league changes, changes that are generally dictated by the offense. As passing games explode teams have to move away from the traditional construction focused on linebackers and run stuffers and generally move more to help in the secondary. I wanted to look at how teams are investing in the corner versus wide receiver game these days and seeing if it is something that can be tweaked.
The concept of receiver vs corner has always fascinated me. Really it goes back for me to the peak days of Darrelle Revis with the Jets in 2009 and 2010 when we came across debates of sorts as to who was better- Revis being thrown on often and breaking passes up or Nnamdi Asomugha who just never got targeted. My take on it then was that there was far more value in having a player like Revis because a breakup of a play is a complete shutdown. It’s a non-gain or a limited gain for the offense. Lack of targets just causes the ball to cycle from WR1 to WR2 and even if Asomugha matched up against the top target each play (he did not) the offense would still be efficient.
This was what wound up killing the Jets in the championship game that year against the Colts in which Revis pretty much made Reggie Wayne irrelevant, but around the end of the first half Peyton Manning realized that playing opposite Revis was Lito Sheppard and Dwight Lowery (at least I think those were the two) and Austin Collie and Pierre Garcon went off for nearly 300 yards. The Jets would come back the next year with a team that featured a high priced Revis, a high drafted and eventually highly paid Antonio Cromartie, and a 1st round draft pick in Kyle Wilson. Whether on purpose or by accident the Jets stumbled into a group that had the potential to essentially have two number 1 corners of varying ability and at worse a number 2. It never worked out that way as Wilson busted and Revis and Cromartie only really played two seasons together, but I thought the concept was good. Im sure there are other examples but as a Jets fan this was the group that always stood out to me in the more modern NFL era.
So I wanted to see if that same concept might hold today. I looked at PFF’s stats for WR’s since 2015 and ranked every WR by their position on the team based on targets between 1 and 5. Here is the expected performance.
The numbers make sense in that the 1st receiver is the most dominant target over the course of a season but most of those numbers are generally a byproduct of opportunity. If you look at the yards per target column the dropoff from a 1 to a 2 is only about 2.6%. This is one of those reasons why so many consider the QB the driver of offensive performance and one reason why there is so much variance on a weekly basis from receivers as the big game potential exists if they find a favorable matchup/gameplan. If you use a net yardage type formula which will bump the number 1 performance for 1st downs, touchdowns, etc…its about a 3.5% drop on an opportunity basis. A drop from a 1 to a 3 is about 8.5%, to a 4 is 11.5%, and to a 5 is 17.5%.
To that end I kind of wonder why (or if) more teams are not attempting to put supergroups together that do the best job possible of cycling off not just the top target on the field but trying to get the offense to be forced to spread out further and drop down to those 3rd, 4th and 5th players or to generally more ineffective routes for running backs and most tight ends.
Here is a look at how much the NFL spends for their cornerbacks, ranked 1 to 5 by salary. Since draft picks have a low salary relative to their expected contribution I converted the salary of any draft pick still on a rookie contract to the expected APY using the Fitzgerald-Spielberger valuations that Brad and I worked on in the Drafting Stage. The only exceptions were for those who had an option year in play as they were valued at the option value if it was picked up.
Here is the breakdown for wide receivers.
This isn’t meant to compare salaries (I’d say a quick takeaway is that teams find receivers about 18-20% more important to winning based on the numbers), but to give us an idea as to how teams construct their rosters.
In looking at the numbers teams more or less go with a matching strategy. 18 teams have at least one average paid number 1 corner while 16 have at least one number 1 receiver. 25 teams have at least one “high end” (an upper quartile 2) number 2 corner while 23 teams have at least one “high end” number 2 receiver. Here are some of the combinations that exist in terms of groupings of talent.
Avg 1 and High 2
Avg 1 and Avg 2
At least 2 Avg 2
At least 2 Avg 2 and Avg 3
At least 3 Avg 3
There is a little disparity as you get to the teams with at least two average number two or three average number 3 receivers, but nothing too crazy.
But in general offenses dictate matchups and we mentioned above there is not that kind of a dropoff if you force a team to go to their number 2 or even number 3 target. However, when you look at corners there is more of a disparity. The top player on a yards per target basis on a team gave up around 6.4 yards. The second jumps to 7.8. The average third is around 8.5. While the coverage assignments are playing a role in these numbers and one would really need to dig deeper I would think the best way to slow down a passing game is not to go 1 for 1 but to stock up on higher end talent via the draft, trade, and free agency to potentially field a team that can force teams out of their typical patterns of wiping out the weakest link on a team.
Surprisingly the concept of the “cornerback supergroup” really doesn’t exist. Only three teams in the NFL currently have three players under contract who would rank as either an average CB1 and CB2 in the adjusted salary scale I used here. Those teams are the Dolphins, Lions, and Ravens. This is on par with the offense that has three teams with at least 3 receivers who are paid above the average WR1 or WR2 level. However as we drop down there are 7 teams on offense that have at least 4 receivers that rank above the average for a WR3. Defensively we have just 1 that goes four deep- the Patriots.
This just seems short sighted especially since we do see variance not just player to player but often season to season. One of the ways to minimize that risk is to treat the roster just as you would a stock portfolio (similar to my concept of picking multiple top QBs in the draft if you can). Players are always going to bust but the impact of the bust is deadly when there is no alternative option. We reduce that risk dramatically by also investing in another high potential player.
As a way to go a little deeper into this I decided to look to our friends at Pro Football Focus and look at their coverage grades they assigned to corners between 2015 and 2019 who played 300+ snaps and then grouped each of those players by salary and contract type. The lines are the average PFF grade of about 65 and salary around $4 million.
Basically, in every grouping of talent, you see a pretty strong distribution of above and below average seasons. To remove some of the clutter here are the numbers in table form. Please note I broke the free agents up into high and low dollar figures ($5.75M was the cutoff)
High $ UFA/SFA
Low $ UFA/SFA
Because I cut off the numbers at 300 snaps you can discount the UDFA numbers because these are the best of the best UDFAs that warrant playing time. For the other groups the list is much more inclusive especially for free agent signings.
There were two things that caught my eye. One is that teams surprisingly seem to make pretty good extension decisions. The second is that spending on bigger money free agents is resulting in more success stories than those who are wasting money on the lower salary tier. If we go back to our original tables which identified an average number 2 corner at costing around $6 million basically spending below that level in free agency is going to provide diminishing returns.
What if we looked at the draft by round?
Here again you need to focus on the top rounds because the further we go the more misleading the numbers because we have disqualified so many seasons by having a 300 snap limit. Its basically going with a first round player and then the 2nd and 3rd. The other rounds aren’t planning for a starter they are basically lucking into one similar to the UDFA route.
Our goal is to best ensure we wind up with at least two good corners in any given season. If you have failed to do well in the draft in the past the best route to that is to sign two expensive players and draft a player high in the draft. If you happen to have landed a player you already know you are going to extend the best thing to do is to sign an expensive player and draft another where you are staggering the salaries. A rough estimate of a 3 corner matrix using some IPA fueled math in a few configurations would be as follows
3 Above Avg.
At least 2 Above Avg,
3 Below Avg.
Extension/1st rnd Draft/Exp UFA
2 Exp UFAs/1st Rnd Draft
1st round/2 Cheap UFAs
3 Cheap UFAs
The first scenario if you do it properly has two rookie contracts running concurrently for a period of time. Basically it means after the rookies 2nd year you know he is an extension candidate so you go in sign a free agent for year 3 and draft a rookie. By the time the first rookie is actually up for a new contract you should know if the 2nd 1st rounder is also great or not. If hes great you are a team with two extension quality players and you can decide what to do with the 3rd.
The 2nd scenario is when you have flamed out in the draft. You sign guys to improve the team ASAP while developing a 1st. You can do this after 1 season of a rookie contract or most of it concurrently. Doing it concurrently is a bit more of a blind bet but can make you much better faster.
The other two scenarios which are more in line with most NFL rosters (remember most don’t even have 3 third tier corners) doesn’t give you the odds needed to really hit a home run in your coverage. Its why there is probably an argument that if you aren’t going to spend on the position outside of one blind pick you may be better off just punting on the position and calling it a loss. That lone 1st round pick isn’t going to cut it.
The possibilities are pretty much endless but the gist of it is the more players you try to fill up the room the better chance you have of pushing the offense off their typical norms by optimizing the chance to hold down those first two and hopefully 3 targets in an offense.
Given the way the league has gone its far more important to be able to provide strong coverage in the secondary on 1,000 snaps in a year than provide a pressure on 80 snaps a season. There is a cost benefit here in free agency since corners are discounted at 20% on receivers and even more on pass rushers. Teams can exploit that by doing a bit more “supergroup” planning rather than just piecing the secondary together the way they currently are which has way too much over-reliance on one player.
The rumor mill is once again swirling around Jets All Pro safety Jamal Adams as the Jets are apparently hesitant to give him an extension which has Adams reportedly very upset again with the organization. Trade rumors started again which sources close to the Jets have denied but I think these are interesting situations and worth exploring.
Player’s like Adams are very hard to sometimes take a fair look at. On one side there is the player and there really are little holes in his game. He is arguably the best overall safety in the NFL. He plays up in the box, can rush the passer a bit more than others and can cover well enough in the secondary. He’s the best player on the Jets at the moment.
However, being the best player on a bad team sometimes doesn’t carry the same value as the same player on a good team. Since Adams arrived in New York the Jets are 16-32. His being the best safety has made little impact on the overall success or failure of the team. That isn’t a knock on him its just that there is only so much a safety can do to increase the chances of winning for a team. Adams being at the peak of his career isn’t going to make the Jets a 10 win team. It is also one of the reasons why the league values safety on the lower end of the salary spectrum, basically on par with running backs and tight ends.
That said to a good team that considers themselves a Super Bowl contender whatever added value that safety brings can be worth a lot because getting from 11 to 12 or 12 to 13 wins on a year is huge as is getting that one added win in the playoffs. While Adams isn’t going to make a bad team great or even good he can be considered a game changer in a different kind of situation. If that is something the Jets can exploit it can bring more value than the player himself.
Adams still has two years remaining on his current contract which makes him very valuable around the NFL. That value will diminish after this season as his salary increases from $3.5 to $9.86 million and teams lose that valuable year of control. So the max trade value is going to be in 2020 not 2021. My guess is a fair trade package would be a first round draft pick plus either a third or fourth round draft selection in return for Adams.
The final piece in evaluating a trade will be the money associated with it. My assumption is that Adams should be looking for $17 million a season from the Jets. He was being shopped for two number 1 picks last year and is considered the best player on the defense. The current high value contract on the Jets is CJ Mosley at $17M per season so I think it is a reasonable ask. Mosley did not play a high value position and the Jets went way over the top of the market to sign him. There is no reason that they should not do that for Adams. While Im sure some are going to argue that the Mosley contract is on the prior GM I think its also clear that that was an Adam Gase target not to mention that the contract guys are all the same now too. For the sake of argument lets say that Adams would sign for the standard safety number contract at $15M a season when considering a trade just because I am sure the Jet fan would like the cheapest number to consider.
With those numbers we can start some scenario analysis. The first scenario is to keep Adams and to just use your regular budget to address other positions having to spend $14.5M for someone like James Bradberry or $20M for a Yannick Ngakoue If he (or a similar player) was to shake loose.
The second scenario is the trade. If traded I would expect a mid first round draft pick to cost around $4.6 million a season and a mid third round pick will cost $1.1 million a year. That should leave the Jets with an extra $9.3 million per year to spend on a player or players in free agency. So now we are at a 1st, a 3rd, and $9.3 million.
Odds are you will not find a player who is as good as Adams with whatever first rounder you ultimately end up with but if you play the game better you may find someone more valuable. As I mentioned above the veteran salary scale would indicate that safety is not very valuable by themselves. But that first round pick could be used to help get a quarterback if Sam Darnold busts. Clearly that is more valuable. It can be used on an edge rusher, a wide receiver, or a cornerback. Each of those will likely provide more impact on the teams fortunes even if the player is a very good player but not the best at the position. Those are also players that you can not find, or rarely find, in free agency. The third round pick should provide a team with a solid “lunchpail” type player that can start or be a solid situational contributor.
Just to use some Jets players of the past who were not all time greats but might illustrate the kind of return would be something like Jamal Adams for Antonio Cromartie and Brian Winters. The savings could have been used in free agency to cover the cost of signing someone like Ha-Ha Clinton-Dix as a replacement safety and maybe a pairing of Kevin Johnson to help in the secondary and Shelby Harris to play on the line or just spend it all on a player like Chris Harris.
The key for a strategy like this to work is to find whatever way possible to maximize your return in the draft by using the main pick on a position that you rarely can buy in free agency and one that provides massive value between the rookie contract number and veteran contract number for an equivalent player. If you decide to be the Raiders and use a 1st rounder on a running back (or just draft another safety to replace Adams) you are negating the value of the trade.
Lets take this one step further. Lets say the Jets use that pick on a cornerback. While maybe it’s a 50-50 proposition he is good, free agency often isn’t much better as the Trumaine Johnson signing proved. You would have spent $14.5 million to sign a player in free agency. Now you don’t have to because you got an extra draft pick to use on a premier position like that. From that standpoint the Jets have actually opened up far more than what we mentioned above because they are addressing a need cheaply. When I mentioned Ngakoue and Bradberry above odds are you would not sign two expensive free agents in most years so if you play your cards right you are opening up the possibility to address both needs by drafting one spot and signing the other. If you had budgeted $14.5M to spend on a need you can divide that however you want now. That route doesn’t exist without the trade.
There are other factors that are negatives with a trade. One of the reasons I thought Adams would have been extended by now was because when the Jets did not finalize a trade last year and let it leak out they looked bad. Sometimes situations like that don’t exactly go over well in the locker room either. While the Jets draft picks in recent years have been average at best the fact is around that room they have seen Leonard Williams shipped out, Darron Lee shipped out, Robby Anderson shipped out, etc… while new faces have come in and taken the cash from the team. You cant really put a number on those kind of things.
It is also worth reiterating that these are just rumors. The Jets may simply have decided they don’t want to get into the concept of extending after 3 years. With a quarterback contract in the wings they probably need to see much more from Darnold before even entertaining that discussion and waiting here gives them more footing with Darnold and players in the future that waiting until after year 4 is the right way to do business with them. Perhaps they want to see where the contracts with Justin Simmons and Anthony Harris land if they sign new deals in July. It can also be as simple as the Jets being cautious with the pandemic and not frontloading a contract with less than expected revenues coming in.
But I just think when you are a team that is as bad as the Jets have been you have to consider trading away players who are labelled as cornerstone talents if you can find a viable path in which the trade actually makes the team better overall. I think this is a case where it could make the Jets better overall and certainly cant make them much worse than they have been the last three years.
Had a really good conversation on contracts with the guys at PFF today and right at the end of it some wacky news popped up about Dak Prescott that didn’t make much sense to me (and later I along with some others found it was a false rumor) but really opened up some strange discussions on Twitter about contracts. This also ties in with one of the first things we talked about on todays podcast which is what are the things you first look at when you see a contract and this seemed like as good a time as any to talk about that further using Prescott as example.
While reports on contracts often are about annual values, maximum values, and/or injury protection the real meat of the contract is the cash flow of the contract. From the perspective of the agent the more money up front the better. From the team side the opposite is true and they want to push more money to the back. All the other things are important to some extent but how the players get paid is really the primary factor with things like guarantees and structure being used as a way to mitigate the risk for the sides to some extent.
For the most part when we benchmark contracts we look at what’s referred to is “new money”. For whatever reason a lot of people find this confusing and get all mixed up with it but basically all this means is if a player is already under an existing contract we back the existing money and years out of the contract. When analyzing a contract I usually refer to the money earned over and above what was called for in their prior contract the “Year 0” earnings. For example if a player had $25M remaining on his old contract and his new contract called for a $49M payment in the same year he would have a “Year 0” salary of $24 million. It’s essentially a prepayment on the new contract years. Year 1 of the contract would be the first year the player would have been eligible to be a free agent has he simply played out his prior contract.
If you are looking to sign a top market contract your goal is to also likely set new cash benchmarks at the various points of a contract. The following is the breakdown of the running cash new money cash flows of the top multi-year QB contracts of currently active players.
As you can see the numbers that are on the front end of these contracts are massive. The average of the group is about $60 million in new money earned by the time they have finished what would have been the first year of a contract signed in free agency. Since Dak does not have a “Year 0” to consider you can jump right into Year 1 to see the kind of money he would be looking at. This is one of the reasons why I found the statements I was reading about a $45M salary being selfish. You can not find any QB on a big contract that doesn’t earn much more than that on the front end of the contract.
The reason why the front end numbers are important for a player is because those are the years of a contract that are easier to earn. Even if a player’s salary is not protected by a guarantee the front end contract years are usually where the player is more effective. There is usually still a honeymoon period between the team and player at that point. Usually the players dead money at that point is often so high that it is harder for the team to move on anyway.
Getting back to the benchmarks the top line numbers are basically Wilson at every level with $71M, $90M, $114M, and $140M. Those numbers are gigantic and lap the field. Its $10M more than any other player at the start of the contract and $7M more in the 2nd year. One of the best ways to compare this is to break down the contract into value per year at every stage of the contract.
While Wilson did not earn anything close to the supposed demands of a contract that fluctuated with the cap and other oddball things you can see how strong it is. His contract on a per year basis is $1.5M per year more than Goff and Rodgers but the gap is much wider on the front end, which are the most likely years that the players will earn. It is important to note that QB is a little different than other positions because the career is much longer than other positions but the concept still remains the same.
When constructing an offer for Prescott his numbers have to fit somewhere in here. That is another reason why the $45M final year was kind of ludicrous. If its part of the $175M he would wind up well below the average for the other players until that last year since you would be taking $20M of money in the first four years out so you could throw it in the final year of the contract. That is maybe a tactic for a lesser player at a lesser position but would probably be considered somewhat insulting for a QB.
Don’t be surprised if one of the hardest parts of any offer is first bridging the gap as to where these cash flows wind up. The compromises are generally what you see with the others. Goff and Rodgers have contracts that average the same amount of money but if there was an epic disaster that caused the teams to bail (and there were no full salary guarantees) the Rams would have saved $3.5M because they were able to push some money later into the deal. Similarly if you look at Matt Ryan and Carson Wentz you can see an average per year that has Wentz earning $2M more per season. Yet the two earn basically the same number through two years and its not until the end of Wentz’ contract that there is more divergence. These are all ways to find compromises so that both sides come out of the negotiation happy. But those are moderate deferrals not millions upon millions.
If you base an offer on the structures of the other contracts you would wind up with cash flows in the range of $60M, $87M, $113M, and then $140M. That gives you the average per year of the Wilson contract but a cash structure that is better than most of the others but only catches up with Wilson on the backend.
The fifth year is an interesting topic. The big contract change in the movement from 5 to 4 year contracts really began with Wentz and Goff with an assist from the three year contract signed by Kirk Cousins in free agency. The Seahawks were a four year contract team and there was nothing unique about Wilson getting a four year contract. The older guard on four year contracts were old players. There was no reason for teams to really worry about five years there as they are a different subset of comparables.
The difference you get with Wentz and Goff is that those players were obligated for at least 5 years of control due to the fact that they had option years in their rookie contracts. So a four year extension represented 9 years of a players career. For Prescott a four year contract represents 8 years of control. If four years is a sticking point I would imagine that Dallas’ argument is what’s the difference between tagging Prescott this year and then doing a four year deal next year? They risk prices going up due to team success but the only real market risk is Deshaun Watson with the Texans. Personally if I was a team I would prefer to get in before that only because the Texans have shown some odd tendencies at times but I would not go crazy about it.
There is leverage in that scenario for Dallas at least to a point. Dallas will have Prescott under contract this year for $31.4M. That number is far far far less than any of the other players on this list. Even f the tag dragged for two years the two year salary of $69.08M is way way way less than the two year salary of any of the players on the chart as well. If they tag this year and do a deal next year at $35M per year for four years its an average of $34.3M over five seasons. As long as Dallas keeps the salary down under $35.9M the five year value would not exceed $175M or exactly what he would earn taking a five year contract now.
Even if prices go up there is value in getting that fifth year under contract. Lets say Dallas had to go to a $38M offer that ran from 2021-2024. That would average out to $36.7M per year from 2020-2024. While that may be more on paper than what Dallas is offering now they would get that final year under contract. Even if that final year costs say $35-$38M it is probably less than it would cost to tag Prescott in 2024 if they agreed to a four year contract today.
The franchise tag is really only a benefit for the player if they are playing the long game. That is something you can do better at QB than any other position but you basically are giving up money now for the chance at earning it two years later. The odds would be against a team using a third franchise tag so you would be free to cash in on the market. That’s big. Take in $69M and then another $60-70M in the first year of a contract in 2022. If you are willing to wait and leave for another team that is the most lucrative path but its not one that most players take.
I would think the key to a five year contract is to take into account what the market would be next year if he played out this tag. In essence value this as “old money” and negotiate a four year extension on top of it. If they take $38M as the number its going to be five years for $36.7M mentioned above. Its not that far off a $35M per year contract. Bring it down to $36M and its effectively a four year, $37.2M extension.
From there you can go back to the cash flows to find a way to make it worthwhile to do the longer term beside the fifth year. Based on the Ryan contract I would assume a fair 5th year salary to be around $33.5M. That leaves the four year number at $146.5M. Let year 1 trail Wilson and run around $63M to be closer to what the rest of the market is. By year two he earns slightly more than Wilson ($90.75M to $90M), and then $4M more over the three year period and the $6.5M more in year four. That would likely give both sides positives in the contract and different ways to value the deal to make everyone happy about what they wound up doing rather than playing out the season and then going back to the drawing board.
But whenever you hear a leak about an offer see if you can find any rumors of the contract breakdown before you really evaluate it. And when something sounds completely out of whack like a back end $45M payment its probably worth questioning completely before really running with it as anything remotely valid.