Thursday night during my weekly salary cap Q&A on Twitter I started getting a great deal of questions about the rumors about Ndamukong Suh signing with the Dolphins. The basic questions centered around how could a team like the Dolphins, who are cap strapped, compete with a team like the Raiders who will have $70 million in cap room by the time free agency begins. So let’s expand on this and show the ways Miami can create a stronger contract for Suh to consider.
Now for this exercise I will base everything on a 6 year $100M deal for Suh. The cash flows would closely mimic those of JJ Watt with slightly more going to Suh over the first three years than Watt received.
The major difference between the two organizations at the moment is their approach to contract structuring, something the Dolphins will try to exploit. The Dolphins are now run by Mike Tannenbaum who will be willing to use both the signing bonus and option bonus mechanisms to work a player into the salary cap as evidenced by his time on the Jets.
The Raider’s Reggie McKenzie has been essentially opposed to using any prorated contract mechanisms. The only value player last year where the team prorated significant money was for tackle/guard Austin Howard and that was most likely caused by a clerical error than being intentional. This is something the Dolphins will try to exploit.
In my proposed contract with the Dolphins Suh will receive a $32 million signing bonus and $1 million base salary for a first year salary of $33 million. In year two Suh would receive a $6 million option bonus and $5 million salary. The first two years would be fully guaranteed and figure year 3 is injury guaranteed. Here is how the contract would look:
Our contract gives the Dolphins two years of virtual cap relief on the contract with just $20 million to be accounted for in 2015 and 2016. This gives the Dolphins time to get their roster in order, dead weight off the books, and be helped by a rising salary cap before Suh’s contract becomes a burden.
The Raiders would be unable to match the first years cash flow using their traditional model, due a small rule known as the 50% rule that will cause large differentials in first and second year salary to be treated as a signing bonus. Without moving off their preferred structure, Oakland would need to offer more money to Suh in the first two years of his contract than Miami (nearly $50 million total) which would seem excessive for any player. Here is how the Raiders would be able to most closely match the cash flow of the contract:
Oakland would essentially eat up half their cap in one year on Suh, which isn’t unreasonable. The Raiders simply have to convince Suh that the one year less in upfront cash is fair. The team can combat this a bit by turning a majority of his 2016 base into a roster bonus paid in March to try to improve on the timing of payments compared to Miami’s.
But in looking at the two contract’s the important thing to consider is what happens for Suh after the guarantees in the contract run out? We can turn to the Expected Contract Value metric to try to put the two offers more in context:
In this valuation the Dolphins offer would be expected to earn the player about $2.5M more than the Raiders one. This is mainly due to the likelihood of Suh seeing the 3rd and 4th contract years being greater with Miami (89% and 65.8%) than Oakland (77.3% and 58.1%).
That outcome should also change even more in the Dolphins favor if they either give him a larger option bonus but smaller base in year 2 or restructure his contract in 2017 for further cap relief. Neither of those, specifically the restructure, is remotely likely in Oakland.
What this means is that if Oakland doesn’t come off their standard contract they will likely need to beat the Dolphins four year cash offer by somewhere between $3 and 4 million to actually have the earning power of the player remain the same. If we begin to factor in things like state taxes it may be even more.
None of this means the Raiders don’t have a shot unless they change their contract approach and we are certainly making many assumptions on contract structure, but this illustrates the why and how a team with such limited cap space can compete on equal footing in a competitive market with a team with huge cap room. We’ll see how things play out next week but Miami will need to employ a very player favorable structure to make this work in their favor.
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.