Marcel Dareus’s new extension is arguably the most player-friendly contract in the league. Let’s take a look at why that is the case:

The contract is reported as being worth $95.1 million over 6 years, for an average per year of $15.85 million. These numbers represent the “new” money; the total amount of the deal is $103.16 million over the course of 7 years. The contract also reportedly contains $42.9 in “full” guarantees and $60 million worth of “total” guarantees.

Most contracts are reported using this distinction between “guaranteed money” and “fully guaranteed” money, but of course this distinction does not make any sense. Money is either guaranteed, or it is not. Dareus is either absolutely certain to receive the entire $60 million, or the entire $60 million is not actually guaranteed at all. Full guarantees are the only guarantees using any common sense definition of the word guarantee.

The amount that makes up the difference in reported fully guaranteed money and reported total guaranteed money typically just amounts to a built-in early team option deadline (an “ETOD”) (the default team option deadline is the first week of the regular season, when all salaries of vested veterans become guaranteed). If a player’s base salary will become guaranteed on the 5^th day of a league year, it should never have been considered or reported as guaranteed in any way prior to that date. The team would have every opportunity to cut the player after the conclusion of the prior season, in which case the player would never receive the money. The only thing that is different in the case of the contract season in question is that the team must make a decision relatively quickly and then cannot subsequently change its mind.

So on the one hand, we have money that is guaranteed. Full stop. On the other hand, we have money that is subject to an ETOD. Most other contract money is subject to the default team option decision deadline. However, there is another category of contract that money with unique characteristics that distinguishes it from the other types.

And that brings us back to Dareus. In addition to a guaranteed signing bonus and option bonus, his base salaries in 2015 and 2016 are guaranteed. Where things get interesting is that if he is on the roster the 3^rd day of the 2016 league year, his entire 2017 base salary becomes guaranteed. This really amounts to a future team option accelerated deadline (an “FTOAD”).

An FTOAD scenario is fundamentally different than an ETOD scenario. In an ETOD scenario, the team has had an opportunity to evaluate the player’s performance in the season immediately preceding the season subject to the team option. But in an FTOAD scenario, the team has to make a guess as to how the player will perform in the upcoming season before it can decide whether to exercise the FTOAD for the season subject to the team option. The decision is significantly more difficult due to the veil of uncertainty that surrounds the intervening season. An FTOAD is very likely to be exercised, as the intervening season (i.e. Dareus’s 2016 season) would typically be guaranteed as well, which would cause a huge sunk cost if the FTOAD is declined. Bears fans have familiarity with this concept, as Jay Cutler’s contract contained an FTOAD in 2014 and a partial FTOAD this offseason. If the Bears had declined the FTOAD concerning $10 million of Cutler’s 2016 salary this offseason, his entire 2015 salary would have been a sunk cost of dead money due to the exercise of the 2014 FTOAD.

Not many players in the league have contracts containing FTOADs, but a handful of them do.  I highlighted this as one of the reasons why Dez Bryant’s contract is superior to Demaryius Thomas’s, despite their superficial similarities. However, Dareus’s contract is the only one in the league that I am aware of that contains a partial FTOAD addressing a contract season two years into the future. If Dareus is on the roster the 3^rd day of the 2016 league year, not only will his 2017 salary become guaranteed, but also $2.35 million of this 2018 salary will become guaranteed.

As a result, the veil of uncertainty has been amplified. At the very beginning of the 2016 league year, the Bills will have to make some sort of educated guess as to how productive and valuable Dareus will be both 1.5 years and 2.5 years into the future. If their guess is that he will likely justify his salary in 2017, but not in 2018, they may have to decide to exercise the FTOAD even knowing that the second portion of it may be a sunk cost. They also still have to consider the sunk cost of the 2016 base salary if they decline the 2017-2018 FTOAD (not to mention the signing bonus and option bonus dead money). Further compounding the issue is that Dareus also has an ETOD in 2017 addressing an additional $5 million of the 2018 base salary.

In terms of Expected Contract Value, this creates a situation in which the first four seasons of the contract are extremely likely to be fulfilled. As the table below shows, Dareus’s Expected Outcome remains above 90% through the 4^th year of the deal. As a frame of reference, the only other players to record 4^th year Expected Outcomes greater than 2/3 for any of the deals I have run through ECV this offseason are Tyrone Crawford (73%), Lavonte David (72%), Cam Newton (71%) and Corey Liuget (67%). The combination of sunk cost concerns and performance uncertainty will most likely cause the Bills to exercise both the 2016 and 2017 FTOADs, which, in conjunction with the dead money protection from his signing bonus and option bonus, will cause them to almost certainly exercise the remainder of their 2018 team option.

Marcel Dareus
Year	Salary	Expected Outcome	Expected Value	Adjustment
2015	—	100%	—	$28,000,000
2016	$250,000	99.5%	$249,087	$14,900,000
2017	$10,000,000	98.6%	$9,860,064	—
2018	$10,175,000	93.9%	$9,553,878	—
2019	$10,585,000	69.8%	$7,386,662	—
2020	$14,600,000	44.0%	$6,417,930
2021	$14,650,000	25.6%	$3,757,003
Subtotal			$37,224,625	$42,900,000
Total			$80,124,625

 

An interesting comparison can be made to the contract that Ndamukong Suh signed with the Dolphins in free agency. His contract purports to be worth $114.375 million over the course of 6 years, with $59.955 million guaranteed. The deal contains no ETODs or FTOADs, but the base salaries in the first 3 seasons are included within the aforementioned guarantee. As a reminder, his ECV breakdown looks like this:

Ndamukong Suh
Year	Salary	Expected Outcome	Expected Value	Adjustment
2015	$15,000	100.0%	$15,000	$26,485,000
2016	$15,000	99.0%	$14,850	$23,485,000
2017	$15,000	94.8%	$14,220	$9,985,000
2018	$17,000,000	50.5%	$8,585,000	—
2019	$19,000,000	34.0%	$6,460,000	—
2020	$18,360,000	16.6%	$3,047,760	—
Subtotal			$18,136,830	$59,955,000
Total			$78,091,830

 

If we eliminate the 7^th year of Dareus’s deal in order to make an apples-to-apples comparison, the total value becomes $88.51 million, and the ECV becomes $76.367 million. This means that Dareus can expect to earn only $2 million less than Suh through 2020, despite being schedule to earn $25.865 million less. Dareus can expect to earn 86% of his contract, whereas Suh can expect to earn 71% of his contract. Keep in mind that Suh was a free agent at the time of signing, with the ability to negotiate with all 32 teams. Dareus, on the other hand, only had the ability to negotiate with one team, faced the prospect of injury risk over the course of an entire season, and would have been subject to the franchise tag in 2016.

Just to clarify, I am not necessarily saying that this is a bad contract for the Bills. I have absolutely zero opinion as to how productive and valuable Dareus is relative to all of the other players in the league. Even if I wanted to try to evaluate Dareus with that goal in mind, I lack the expertise to make a credible determination.

However, the structure of the contract tells me that one of two things took place: (1) the Bills feel very strongly that Dareus ranks among the top handful of players in the league, and therefore wields a significant amount of leverage despite the fact that he is under contract and could be tagged the following offseason, or (2) the Bills do not place an emphasis on minimizing unnecessary salary cap risk and therefore acquiesced to the agent’s request for ETODs and FTOADs-twice-removed without thinking much of it.[1] Given that the Bills gave LeSean McCoy an unnecessary new contract that negated part of the value of the trade to acquire him (a contract with zero dead money risk), and in doing so took on significant long-term salary cap risk while obtaining only minimal short-term salary cap optionality, I find the latter possibility to be more likely.

I have not finished calculating the post-cut-down version of Commitment Index, but a preliminary look shows that Buffalo remains near the very top of the list of most contractually committed teams. The team is comfortably behind Dallas, but bunched together in the next grouping with New Orleans, Miami, and Kansas City. As a result, the Bills have a lot riding on their current group, and may have difficulty retooling over the next couple of years if the team disappoints in 2015.

[1] For basketball fans reading this article, the inclusion of these FTOADs (particularly the 2016 FTOAD concerning the 2018 salary) in the contract bears a striking resemblance to the inclusion of the pick swaps in the Sixers/Kings Nick Stauskas trade, in that it seems very likely that the opposing party would have accepted the deal without them, but figured there was no harm in asking and surprisingly found their request granted.

Introduction Part 1:  Justification, Theory, & “Contract Analytics”

Introduction Part 2:  Inputs & Outputs

Introduction Part 3:  Contract Comparison

Introduction Part 4:  Salary Cap Budgeting

Introduction Part 5:  Frequently Asked Questions

Expected Contract Value was created by Bryce Johnston and Nicholas Barton.

Bryce Johnston earned his Juris Doctor, magna cum laude, from Georgetown University Law Center in May 2014, and currently works as a corporate associate in the New York City office of an AmLaw 50 law firm.  Before becoming a contributor to overthecap.com, Bryce operated eaglescap.com for 10 NFL offseasons, appearing multiple times on 610 WIP Sports Radio in Philadelphia as an NFL salary cap expert. Bryce can be contacted via e-mail at bryce.l.johnston@gmail.com or via Twitter @eaglessalarycap.

Nicholas Barton is a junior at Georgetown University. He intends on double majoring in Operations and Information Management and Finance as well as pursuing a minor in Economics. Currently one of the leaders of the Georgetown Sports Analysis, Business, and Research Group, Nick consults for Dynamic Sports Solutions, an innovative sports start-up that uses mathematical and computational methods to evaluate players. He also writes for the Hoya, Georgetown’s school newspaper, and his own blog, Life of a Football Fan. Nick can be contacted via e-mail at njb50@georgetown.edu.