Following the Matt Stafford $27 million a year contract there was again more discussion about how much quarterbacks are making in the NFL. One discussion is about whether a player like Stafford, who has had limited team success and is considered an above average but not top tier player, deserves it. That answer should be a clear yes given the market dynamics. I had him pegged at $27-$29 million a year and that is what he received. The second deals with the market dynamics and if they are indeed flawed, which is what I wanted to discuss today.
Without a doubt in recent years the QB market has simply been whomever of merit signs last gets the biggest contract. This was true starting with Joe Flacco’s extension in March of 2016, which led to Andrew Luck’s extension in June of that year, then Derek Carr’s this June and most recently Stafford’s.
Prior to these four contracts the market definitely did not act the same way in large part because of Aaron Rodgers decision to take an under market contract from the Green Bay Packers in April of 2013. Rodgers, who was unquestionably better than any other players in the NFL, signed for just $1.9 million per year more than Flacco of the Ravens. No player could make an argument they deserved a better contract than Rodgers, but most could argue they deserved close to or more than Flacco and a number of players fit around those two. So from 2013 to 2016 there was a defined best and top player, but it also seemed to create a shift where any quarterback with a pulse got paid a huge number. In my opinion this is where the market broke down.
I’d imagine if you took a casual poll of NFL observers and asked them to name the top NFL QBs you would mainly get responses of Rodgers, Tom Brady, and maybe Drew Brees and Ben Roethlisberger. If you asked everyone to grade the players on a scale of 1-10 those four names would average a grade above a 9 and the next group would probably be at a 7.
The salary cap is supposed to promote some type of competitive balance in the league. Generally if you spend highly on one position it should mean that you have an area of weakness at another. The most expensive position has always been the QB so if someone has a great QB they should have to break the bank for that player. It should create a system in which the team with the so-so quarterback has extra cap dollars (and dollars in their actual cash budget) to spend on other players to try to counteract the great QB.
But when everyone effectively earns the same salary where is that competitive advantage? You can argue the merits of a Stephon Gilmore or Darrelle Revis, but the Patriots had the ability to sign those players in large part because they were on the same playing field as everyone else financially and offer the opportunity to play with Brady. Maybe a team like the Dolphins could offer more money to get those players, but they can’t because Ryan Tannehill makes about the same as Brady. Similarly the Ravens would probably be able to keep more talent than the Packers, except they can’t because Flacco and Rodgers make the same money. Now there will always come a time where this occurs naturally (for example with Rodgers contract 4 years old it was a given that the market eventually would catch up and pass him in any generation), but with this group it happened right away.
While I often talk about this issue most of it comes from my own opinions formed from watching the NFL and studying team salary structures, but then I got to thinking that maybe this was not really anything new and Im just being influenced by my own bias’. So I thought what would make more sense would be to go back and see if these market dynamics are indeed unique.
So to do this I wanted to get a historical sample of QB salaries through history. I was able to rebuild, for the most part, the top contracts at the position at four year intervals. Why four years? A few reasons. One is that four years I figured would encompass most big contracts in recent history, since the QB lifecycle is longer than other positions where two or three years would be more valid. Secondly it hit on some important years- the current year, 2013 (where I think things began to really change at the top), 2009 (old CBA influenced year), and 2005 (many teams still adjusting to newer rules to encourage passing). Finally this was far easier than doing 10 years, many of which would just have overlapping contracts anyway (and take much more time too at the low end).
To calculate the true QB value what I did then was take their annual contract value (in terms of new money) and divide by the salary cap in the year they signed the contract. Basically this tells us what percentage of the cap the team felt a player was worth and allows us to compare players across generations. The quarterbacks I used were the ones that I remembered as being projected to start and not the ones who ended up playing the most (i.e. Chad Pennington over Brooks Bollinger in 2005 and Tannehill over Jay Cutler this year) or ones may have been a high priced back up that made more than some starters (think Chase Daniel in 2016). I may have missed a player or two, but for the most part it should be ok.
As a disclaimer the APYs I am using may be slightly off and there is also a difference in true value of the 2005 and some 2009 contracts. Back then, specifically at this position, players were more interested in signing monster sized contracts than the current trend of large guarantees and annual values. There is a lot more fluff in a Carson Palmer 6 year contract signed with three years remaining on a rookie deal than anything you see these days, but they will be valued the same.
So what did I find looking at this?
Status Quo at the Top
The top 5 players at the position generally have not moved since 2005 and have actually slightly fallen. The numbers went 17%, 15.3%, 16.1%, and 16.5%. The league has always valued a number of players at a high level and that isn’t changing. The highest paid player was Palmer at 18.9% of cap in 2005. Like I mentioned above that there was some funny money in this but it was still a stunning deal. After that was Aaron Rodgers in 2013 at 17.9% and Peyton Manning in 2004 at 17.4%. Stafford, when valuing contracts this way, actually has the third highest contract in the NFL behind Rodgers and Matt Ryan.
Slight Upward Trends in the 2nd Level
While the league always viewed the best players as worth a lot of money, that was not always the case for those considered top 10, but not top 5 players. In 2005 the average of the 6th through 10th players was just 9.7% of the cap. By 2009 that number had grown to 11.1% in large part because of the class of 2004, 2005, and 2006 earning new contracts that were a level below the last group. It moved to 12.9 and 13.2% the last two years. Given that the big jump occurred closer to 2005 I would say that this was more rule change oriented with more teams seeing that 2nd level QBs could now give higher level results.
Big Jumps in 3rd and 4th Level QBs
The really big changes occurred in the 11th to 20th ranked QBs and that has all happened in the last four years, which really goes back, in my opinion, to a few bad contracts namely for Flacco setting that around $20 million market and Matt Schaub setting a close to $16 million floor. This was relatively steady from 2005-2013. Now those numbers have spiked from around 9% and 7.5% in 2005 to nearly 13 and 11% now. The names in this tier today include Palmer, Brady, Tannehill, Alex Smith, Sam Bradford, Andy Dalton and Flacco. For historical perspective names in this blocks would have been the likes of Trent Green, Marc Bulger, Daunte Culpepper, Jake Delhomme, Kurt Warner, and Matt Hasselbeck. It also would have included the top 3 or 4 draft pick types which is what led, in part, to the new CBA rules. If anything that inflates the 2005 and 2009 numbers and explains somewhat why there was a drop in the 16-20 category for the 2013 year.
Some Growth at the Bottom
This is growth that has more to do with the current rookie contracts all being in the bottom 10 of the NFL and pulling up the numbers. I don’t think there is any difference in veterans here. Josh McCown and Brian Hoyer at 3.6% of the cap isn’t any different than Pennington at 3.4% or Matt Cassel at 3%.
Here is how the numbers look for those interested in such things. The numbers given represent the average percentage of salary cap spent on that specific tier at the time :
In looking at the way the rules have changed in the NFL I think you can make a justification for the way things have changed for the top 10 players at the position and more investment there. The disconnect with me, which was also there before looking at this, is the odd increase in movement from 11 to 20.
Another way to illustrate this change was to just use APY and see how many veteran players were within x% of the highest contracted player at the time.
Those are quite big numbers today compared to what happened in the past. If we selected the second or third highest contract, since Stafford’s contract is brand new and other changes could happen, the numbers are even more stark.
So what’s the answer? I actually think Stafford’s contract is the first step provided that the position can gain a champion that really pushes the market and creates a more natural spread of salaries moving forward. But the second step is going to require a few teams to make very difficult decisions with their players to help bring the market back to normal.
The problem right now, and I hear this all the time on Twitter when discussing this topic, is that you need a quarterback and without one what do you have? But when you look at those big salaries who is really winning besides the true best? Manning isn’t. Flacco isn’t. Luck isn’t. Stafford isn’t. Palmer isn’t. Tannehill isn’t. Newton and Ryan are up and down. Just because you pay a player a big salary doesn’t somehow make them a better player. Mark Sanchez was the same crappy quarterback before and after his ill fated extension in 2012. Sure maybe having a Tannehill over a Matt Moore type brings you less fear today but most of the time the result is the same or close to it at the end. Then after the season is done the question will be asked how do you get him more weapons or a better defense? Hint- the answer isn’t to pay him more, its to pay the QB less so you can get try to get him far better weapons than Brady.
I know that is a frightening thought to some. Teams and the fans are confident because the plater is considered an “expensive” QB, at least until the clock strikes midnight and you realize you have a Matt Schaub under contract for $21.5 million and you have again missed the playoffs.
Just remember that most of the Super Bowl winning QBs have not come from tier 1 contracts and that is the ultimate goal. The smallest tier 1 deal we had in our little study was Donovan McNabb at 12.8% on a contract that was signed all the way back in 2002. Since 2000 the only QBs to be paid in that range were Peyton Manning in 2006 (17.4% at signing), Eli Manning in 2011 (13.2% at signing), and Tom Brady in 2016 (13.2%). That’s it.
If we translate the Super Bowl winners into todays dollars, other than the Manning one, no player would be over $22 million. The veteran average of those players would be around $18.6 million. In today’s league that is the level of Brock Osweiler’s salary. It is also worth noting that Manning didn’t win the Super Bowl until his contract was worth under 14% of the cap.
Perhaps the Redskins and Kirk Cousins will be a great test of this. Cousins will likely go and earn around $30 million a year from some team and probably continue to be a 0.500 QB. Maybe this forces the Redskins hand to get better elsewhere while developing a QB. A few teams might feel immediate pain from doing something but eventually there should be a correction. It really amazes me that there hasn’t been one already when you see the lack of success that most of these players have had, but thus far everyone is too afraid to make a move to the unknown.
But if this game of leapfrog just continues and the best players continue to take moderate contracts it will be more of the same with a handful of teams trading a trophy each year and everyone else wondering what happened and why they can’t beat them. The funny thing is everyone tries to copy the Patriots and they have acted this way for years. Brady’s has almost always been at the cusp of the top 5 or below, except for one contract. People just chalk it up for him taking one for the team. They should follow that same model and then maybe they could beat him.
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.