The 49ers and Colin Kaepernick agreed to a massive contract extension that puts him in the upper echelon of the position. Per reports by Albert Breer the base value of the contract is worth $19 million a season with a maximum value of $21 million per season. Supposedly the deal contains $60 million in guarantees but the fully guaranteed amount I would be certain was less than this.
Last year I though he would max out at $18 million based on contract history of limited sample size players. So when I first heard $21 million a year I was pretty stunned. $19 million is a bit more reasonable, but I’m still surprised at the figure. San Francisco is one of the stronger salary cap managed teams in the NFL and usually seems to come out ahead with their approaches to early extensions. While we may find that to be the case when the full details of the contract structure come out I wanted to examine some thoughts as to how a player with just one season and a half of play could be paid so much.
You Don’t Have to Be Great to Earn Great Money
There was a time when Peyton Manning was basically the standard bearer for all things salary in the NFL. When Eli Manning won his first Super Bowl there seemed to be a bigger shift that postseason success and “potential” far outweighed regular season play when it came to contracts. Then this year it went a step further and simply being deemed a “franchise QB” with years to go was enough to bring in a huge contract.
In July, Matt Stafford signed an extension worth $17.67 million a year with $41.5 million fully guaranteed. Stafford hadn’t really won anything in his time in the NFL. He had some big numbers due to volume of use but overall he was more or less an average QB. This past January the Chicago Bears signed Jay Cutler to a deal worth $18 million a year with $38 million guaranteed. Not only has Cutler never been a big winner, but he has not been a big statistical producer and he is always injured. For Cutler to receive that contract was really amazing.
As you look at the field of QB’s in the NFL there are other mediocre type QB’s who will soon be eligible for an extension. Alex Smith of the Chiefs is the biggest one and a real concern for the 49ers. The 49ers had a choice to make between Smith and Kaepernick in 2012 when Smith was healthy enough to reclaim his job following an injury. The organization chose Kaepernick and traded Smith to the Kansas City Chiefs.
You can read my detailed look at Smith, but in light of the Cutler deal it’s a very real possibility that Smith could earn $18 million or more in his next contract. If Smith earned that money Kaepernick would clearly argue that he has to get paid more than Smith since the 49ers already agreed that Kaepernick was the superior player. Other names like Andy Dalton, Cam Newton, and Sam Bradford could also have their numbers called at anytime this year. All could push the market even further.
The Young QB and the Big Spending Organizations
A second concern for San Francisco comes from outside the organization, specifically their rivals in Seattle. Kaepernick and Russell Wilson will likely be locked together for their careers as long as both continue to do well. Wilson is extension eligible as soon as week 17 ends this season. Seattle has already shown a willingness to break the bank for Richard Sherman and Earl Thomas. Wilson, who already has one Super Bowl, would be next and based on the track record of the Seahawks it could be a record setter. That becomes a problem for the 49ers even if they don’t win the Super Bowl this season.
Other players eligible in 2015 include Andrew Luck of the Colts, Robert Griffin III of the Redskins, Nick Foles of the Eagles, and Ryan Tannehill of the Dolphins. The Colts like to throw money around at players, believe strongly in Luck, and have the cap room to do whatever kind of extension they want. The Redskins have always done some crazy things with their money and that has not changed with Bruce Allen as GM. Philadelphia has jumped in heavy on QB’s before and Miami already has some real questionable contracts on the books, though I’d call a Tannehill extension chance remote.
All of these deals would likely drive the price and the cash flows from the contracts could put the 49ers in a difficult position with the salary cap. Doing a deal now gets it done on their terms.
There is Still Uncertainty about the Salary Cap
Right now the salary cap is still in a state of flux. While it jumped very high this year and is rumored to grow by at least $7 million next year, those numbers are likely coming from the same sources that said the cap would be flat for years. Outside of a few select individuals nobody knows if the cap growth this year was due to revenue growth, poor estimations in the past leading to adjustments, or some concession by the NFLPA.
At this point when an agent argues that the salary cap will rise by X% giving a team more room to afford a QB a team still has a strong leg to stand on saying they disagree with the assessment. It could just be a one year fluke after a few years of no growth. Once you get two years of big growth it becomes more and more difficult.
The 49ers Salary Cap Situation is not Great
San Francisco does not have a great salary cap situation moving forward. They had to use the June 1 cut this season on Carlos Rogers, the void year provision on Anquan Boldin, and restructured Navorro Bowman, off serious injury, for cap relief. My estimates had them at $129 million in cap commitments to 2015 and that does not include an extension for WR Michael Crabtree. Needless to say it’s a tight situation.
What they don’t want is to be in the Ravens position in the 2013 offseason with big cap commitments, some big free agents, and a free agent QB coming off a Super Bowl. They could not protect themselves from losing Flacco in free agency unless they used the exclusive Franchise tag, which would have crippled them in the offseason. The Ravens had no choice but to pay Flacco $20.1 million a season using a contract structure that is one of the worst in the NFL in terms of leverage.
By extending now they avoid being backed into a corner and can account for the deal as a 7 year contract bringing the salary cap annual value down to the $16.5 million range if no incentives are reached and $18.1 million range if they are reached. Those are much more manageable than the alternative.
So while this still seems very high for a player with such a limited sample size there are some very valid reasons as to why the team likely decided on the deal. Hopefully we’ll get the full breakdown in the next day or two and can comment more on the contract and understanding the numbers involved.
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.