Expected Contract Value: August Extensions

I was out of the country for a few weeks, and in that time a number of noteworthy players signed large contract extensions. Today I will provide the Expected Contract Values for those contracts, as well as some notes on the contract characteristics.

Because of age and prior contract status, the most relevant comparison for Philip Rivers is Ben Roethlisberger. Roethlisberger’s ECV at the time of signing was $58,036,250, which puts him a little bit ahead of Rivers, despite Rivers having more fully guaranteed salary at the time of signing. This is mostly attributable to Roethlisberger receiving a larger signing bonus, and thereby more dead money protection after the first year of the contract.

Philip Rivers
Year Salary Expected Outcome Expected Value Adjustment
2015 91.7% $37,500,000
2016 $16,500,000 63.9% $10,543,500
2017 $14,000,000 39.0% $5,460,000
2018 $15,000,000 16.6% $2,490,000
2019 $16,000,000 9.0% $1,440,000
Subtotal $19,933,500 $37,500,000
Total $57,433,500
 

The most relevant comparisons for Russell Wilson are probably Cam Newton and Ryan Tannehill, two other young quarterbacks who signed large extensions this offseason. Not surprisingly, Wilson’s Expected Contract Value surpasses Tannehill’s ($55.6 million) by a wide margin, despite Tannehill having a 6th year on his contract. On the other hand, Newton’s ECV ($89.6 million) far surpasses Wilson’s. Newton’s fully guaranteed 2016 option bonus accounts for much of the difference, and his 6th year salary adds another $5.1 million worth of ECV. A major factor in the differing outcomes is due to the weaker position that Wilson started in. Newton was set to receive a large 2015 salary based on the 5th year option of his rookie contract, whereas Wilson was due to earn very little in the final season of this rookie contract.

Wilson may ultimately come out on top though, as he is able to reach free agency (or force an extension) a year earlier than Newton. Based on the age of the two quarterbacks and the likely increase in the salary cap, Wilson is probably in a better position in 2020 as a free agent than Newton is with a non-guaranteed $19.1 million base salary.

Russell Wilson
Year Salary Expected Outcome Expected Value Adjustment
2015 99.9% $31,700,000
2016 $12,342,000 95.7% $11,811,294
2017 $12,600,000 85.1% $10,722,600
2018 $15,500,000 58.2% $9,021,000
2019 $17,000,000 37.9% $6,443,000
Subtotal $37,997,894 $31,700,000
Total $69,697,894
 

The stated value of Hilton’s deal ($65 million) is just a little bit lower than the stated values of the contracts signed by Dez Bryant and Demaryius Thomas ($70 million), but his Expected Contract Value falls well short ($55.3 million and $50.5 million, respectively). As with Wilson and Newton, this shows the heightened leverage that a team has when the player’s alternative is to play out the final season of his contract for a very low salary. Hilton would have taken a much larger risk by playing this season under his rookie deal than Bryant or Thomas would have taken by playing under the franchise tag, and as a result, the Colts were able to sign him to a deal that carries much less risk for the team.

However, the difference in Expected Contract Value is not as large as one might expect based on the difference in fully guaranteed money ($11 million for Hilton compared to $32 million for Bryant and $35 million for Thomas). This is because fully guaranteed base salary in the first and second years of a contract, as is the case in the Brant and Thomas contracts, is generally overrated. The player is very likely to remain under contract in the second year of a deal, so the added Expected Contract Value is not very substantial. If the Colts guaranteed Hilton’s 2016 salary – thereby almost doubling his fully guaranteed money to $20 million – his ECV would have increased by less than 600K.

TY Hilton
Year Salary Expected Outcome Expected Value Adjustment
2015 99.9% $11,000,000
2016 $9,000,000 93.7% $8,433,000
2017 $8,000,000 86.1% $6,888,000
2018 $11,000,000 65.4% $7,194,000
2019 $13,000,000 51.4% $6,682,000
2020 $14,542,000 27.2% $3,955,424
Subtotal $33,152,424 $11,000,000
Total $44,152,424
 

Notice the difference in Expected Outcomes between David and Wagner in the fourth and fifth seasons of their respective deals. David beats Wagner by a wide margin (72% to 53% and 50% to 36%) despite having no dead money protection. This shows the power of adding additional seasons onto the end of a contract; the Bucs must account for the potential for surplus value in the sixth year of the contract when making decisions regarding the fourth and fifth seasons. Wagner may be better off by getting to free agency a year earlier, but David’s contract is more likely to complete five seasons due to the optionality benefit that the Bucs have built into the deal.

Lavonte David
Year Salary Expected Outcome Expected Value Adjustment
2015 99.7% $5,863,418
2016 $5,000,000 96.4% $4,820,000 $5,000,000
2017 $6,000,000 88.4% $5,304,000
2018 $8,750,000 71.7% $6,273,750
2019 $9,750,000 49.9% $4,865,250
2020 $10,750,000 28.1% $3,020,750
Subtotal $24,283,750 $10,863,418
Total $35,147,168
Bobby Wagner
Year Salary Expected Outcome Expected Value Adjustment
2015 99.7% $8,977,427
2016 $7,500,000 95.1% $7,132,500
2017 $5,000,000 88.8% $4,440,000
2018 $11,000,000 53.0% $5,830,000
2019 $11,500,000 36.2% $4,163,000
Subtotal $21,565,500 $8,977,427
Total $30,542,927
DeAndre Levy
Year Salary Expected Outcome Expected Value Adjustment
2015 99.7% $13,000,000
2016 $5,250,000 92.3% $4,845,750
2017 $5,990,000 73.3% $4,390,670
2018 $6,250,000 44.4% $2,775,000
2019 $6,750,000 26.2% $1,768,500
Subtotal $13,779,920 $13,000,000
Total $26,779,920
 
Ryan Kerrigan
Year Salary Expected Outcome Expected Value Adjustment
2015 $250,000 99.9% $249,750 $18,788,000
2016 $250,000 93.6% $234,000 $5,000,000
2017 $8,500,000 82.5% $7,012,500
2018 $9,250,000 60.0% $5,550,000
2019 $10,750,000 41.6% $4,472,000
2020 $11,750,000 19.6% $2,303,000
Subtotal $19,821,250 $23,788,000
Total $43,609,250
 

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 sophomore 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.