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The chart below compares the Expected Contract Value with the stated contract value for each contract of $10 million or more signed during the 2016 offseason. Expected Contract Value 1.1 is applied at the time of signing. Expected Contract Value 1.1 takes into account the nature and timing of contract amounts, the resulting relationship between dead money and APY in each year of the contract, the length of the contract, and the position and age of the player. Expected Contract Value 1.1 is therefore a performance-neutral measurement of expected contract earnings. As a result, the primary way a player can exceed or fall short of his Expected Contract Value is to perform better or worse than the performance expectations implied by his contract.
| Player | Team | Stated Contract Value | Length | Expected Contract Value | % Expected to be Earned |
| Lane Johnson | PHI | $59,362,242 | 6 | $46,555,539 | 78% |
| Kelechi Osemele | OAK | $58,500,000 | 5 | $42,767,659 | 73% |
| Brandon Brooks | PHI | $40,000,000 | 5 | $30,710,673 | 77% |
| Kelvin Beachum | JAX | $45,000,000 | 5 | $29,868,206 | 66% |
| Russell Okung | DEN | $53,000,000 | 5 | $29,603,042 | 56% |
| Alex Mack | ATL | $45,000,000 | 5 | $29,351,500 | 65% |
| J.R. Sweezy | TB | $32,500,000 | 5 | $24,263,349 | 75% |
| Mitchell Schwartz | KC | $33,000,000 | 5 | $24,258,306 | 74% |
| Jeff Allen | HOU | $28,000,000 | 4 | $23,077,809 | 82% |
| Joe Barksdale | SD | $22,200,000 | 4 | $17,735,226 | 80% |
| Alex Boone | SF | $26,800,000 | 4 | $17,239,129 | 64% |
| Bobby Massie | CHI | $18,000,000 | 3 | $13,837,669 | 77% |
| Ben Jones | TEN | $17,500,000 | 4 | $13,161,887 | 75% |
| Donald Stephenson | DEN | $14,000,000 | 3 | $11,370,503 | 81% |
| Richie Incognito | BUF | $15,750,000 | 3 | $8,092,388 | 51% |
| Donald Penn | OAK | $11,900,000 | 2 | $6,872,039 | 58% |
| Total | $520,512,242 | | $368,764,924 | 71% |
The contracts signed by Russell Okung and Kelvin Beachum were among the more interesting contracts signed during the offseason. As a quick summary, the players signed contracts with little (Beachum) to no (Okung) money fully guaranteed at the time of signing, but with team options exercisable soon after the conclusion of the 2016 season that, if exercised, would trigger two season’s worth (i.e. 2017-2018) of guaranteed salaries. Expected Contract Value 1.1 deems it likely that the options for both players will be picked up next season, but one should keep in mind that this is a performance-neutral calculation, and in the case of these contracts in particular performance will be determinative.
The discussion seemed to focus on whether the players made good decisions to include the team option concept, and most commentary focused on the amount the players might have been able to command as free agents in 2017 in the absence of a team option. Team options are clearly disadvantageous for players, but I don’t the analysis can conclude at comparing the value of the option years to such a hypothetical 2017 contract. This analysis assumes that the players had the option of receiving the same 2016 compensation in either scenario, which I do not necessarily think was the case.
Since a team option has value for the team, one would think that the players were compensated for agreeing to the team option. There are two potential ways the players could be compensated for agreeing to the team option. Either (1) the dollar amounts of the option years are larger than would be expected or (2) the players’ 2016 compensation is more than what would have been obtained without agreeing to the team option. The consensus seems to indicate that the first possibility is likely not the case, particularly given the rising salary cap and the fact that the options would only be exercised if the players play well.
We are therefore left with the second possibility, which indicates that a one-year contract for either player would have included less than $5 million worth of 2016 compensation. Perhaps teams were only offering $4 million, or $3 million, for one-year deals, given that any team offering a one-year deal would receive no optionality or upside for 2017 and beyond. Given the injury history of each player, perhaps maximizing 2016 earnings was worth capping upside for 2017 and beyond (while still forcing the teams to pay more for 2017-2018 than may have been offered in three-year deals). I am not saying that this is what happened; I am merely offering one possible line of reasoning.
Just as team options have optionality value to teams that should result in corresponding value to players in the form of either less risk (more guaranteed money) or more upside (more total annual money), player options have optionality value to players that should result in corresponding value to teams in the form of either less risk (less guaranteed money) or more upside (less total annual money). Alex Mack signed his previous deal under unique circumstances, but it would be interesting to know how much less a team would be willing to pay a typical free agent in order to agree to provide a player option. For example, Oakland would presumably have been willing to offer Kelechi Osemele less than the $25.4 million in guaranteed money or $13.2 million per year over the first two seasons if Osemele demanded a player option after the second season (or any season for that matter). The interesting question is: How much less?
Lane Johnson is an example of how Expected Contract Value shows that players who sign extensions while still under contract tend to see higher probabilities of remaining under contract longer into the extension. This is because a player’s APY – the basic market standard for player worth – is calculated based on new money, but the total deal value is what gets spread across both the previously-existing seasons and the new seasons. As a result, in each season of Johnson’s contract, the salary – and therefore indirectly the potential cap savings – is smaller than what would be implied or expected based on the APY of the deal. The player therefore perpetually seems like somewhat of a bargain as compared to a scenario where the entire deal value must be squeezed into only new contract seasons, and the team therefore has less incentive to release the player.
| Lane Johnson |
| Stated Value: $59,362,242 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | — | 99.4% | — | $13,112,242 |
| 2017 | $250,000 | 97.7% | $244,209 | $7,750,000 |
| 2018 | $10,250,000 | 86.8% | $8,896,731 | — |
| 2019 | $10,850,000 | 72.5% | $7,865,301 | — |
| 2020 | $8,835,000 | 57.9% | $5,113,729 | — |
| 2021 | $8,315,000 | 43.0% | $3,573,326 | — |
| Subtotal | — | $25,693,297 | $20,862,242 |
| Expected Contract Value: | $46,555,539 (78%) |
| Kelechi Osemele |
| Stated Value: $58,500,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $500,000 | 99.1% | $495,649 | $12,700,000 |
| 2017 | $500,000 | 93.3% | $466,643 | $12,700,000 |
| 2018 | $10,200,000 | 70.4% | $7,178,796 | — |
| 2019 | $10,200,000 | 53.5% | $5,460,076 | — |
| 2020 | $11,700,000 | 32.2% | $3,766,495 | — |
| Subtotal | — | $17,367,659 | $25,400,000 |
| Expected Contract Value: | $42,767,659 (73%) |
| Brandon Brooks |
| Stated Value: $40,000,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | — | 99.6% | — | $12,000,000 |
| 2017 | — | 97.7% | — | $5,000,000 |
| 2018 | $8,500,000 | 78.9% | $6,707,921 | — |
| 2019 | $7,500,000 | 60.0% | $4,501,247 | — |
| 2020 | $7,000,000 | 35.7% | $2,501,506 | — |
| Subtotal | — | $13,710,673 | $17,000,000 |
| Expected Contract Value: | $30,710,673 (77%) |
| Alex Mack |
| Stated Value: $45,000,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | — | 99.0% | — | $13,250,000 |
| 2017 | — | 93.4% | — | $6,750,000 |
| 2018 | $8,500,000 | 60.0% | $5,099,035 | — |
| 2019 | $8,500,000 | 34.5% | $2,930,237 | — |
| 2020 | $8,000,000 | 16.5% | $1,322,227 | — |
| Subtotal | — | $9,351,500 | $20,000,000 |
| Expected Contract Value: | $29,351,500 (65%) |
| J.R. Sweezy |
| Stated Value: $32,500,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | — | 98.0% | — | $9,500,000 |
| 2017 | $2,500,000 | 90.9% | $2,271,688 | $2,500,000 |
| 2018 | $6,500,000 | 70.6% | $4,588,142 | — |
| 2019 | $5,750,000 | 56.9% | $3,273,929 | — |
| 2020 | $5,750,000 | 37.0% | $2,129,589 | — |
| Subtotal | — | $12,263,349 | $12,000,000 |
| Expected Contract Value: | $24,263,349 (75%) |
| Mitchell Schwartz |
| Stated Value: $33,000,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $240,000 | 99.5% | $238,902 | $7,760,000 |
| 2017 | $600,000 | 96.7% | $580,287 | $4,900,000 |
| 2018 | $6,300,000 | 78.5% | $4,947,996 | — |
| 2019 | $6,600,000 | 56.2% | $3,706,431 | — |
| 2020 | $6,600,000 | 32.2% | $2,124,690 | — |
| Subtotal | — | $11,598,306 | $12,660,000 |
| Expected Contract Value: | $24,258,306 (74%) |
| Jeff Allen |
| Stated Value: $28,000,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $500,000 | 99.1% | $495,581 | $9,500,000 |
| 2017 | $2,750,000 | 94.2% | $2,591,270 | $2,500,000 |
| 2018 | $6,250,000 | 75.3% | $4,705,168 | — |
| 2019 | $6,500,000 | 50.6% | $3,285,789 | — |
| Subtotal | — | $11,077,809 | $12,000,000 |
| Expected Contract Value: | $23,077,809 (82%) |
| Joseph Barksdale |
| Stated Value: $22,200,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $50,000 | 99.0% | $49,488 | $7,500,000 |
| 2017 | $1,550,000 | 93.1% | $1,443,103 | $3,000,000 |
| 2018 | $4,800,000 | 71.1% | $3,412,512 | — |
| 2019 | $5,300,000 | 44.0% | $2,330,122 | — |
| Subtotal | — | $7,235,226 | $10,500,000 |
| Expected Contract Value: | $17,735,226 (80%) |
| Alex Boone |
| Stated Value: $26,800,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $100,000 | 96.3% | $96,300 | $6,600,000 |
| 2017 | $3,300,000 | 76.8% | $2,736,048 | $3,400,000 |
| 2018 | $6,700,000 | 43.5% | $2,912,532 | — |
| 2019 | $6,700,000 | 25.3% | $1,694,224 | — |
| Subtotal | — | $7,239,129 | $10,000,000 |
| Expected Contract Value: | $17,239,129 (64%) |
| Bobby Massie |
| Stated Value: $18,000,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $350,000 | 96.4% | $337,508 | $6,500,000 |
| 2017 | $5,500,000 | 75.3% | $4,177,758 | — |
| 2018 | $5,600,000 | 50.4% | $2,822,403 | — |
| Subtotal | — | $7,337,669 | $6,500,000 |
| Expected Contract Value: | $13,837,669 (77%) |
| Ben Jones |
| Stated Value: $17,500,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $500,000 | 99.2% | $495,926 | $5,000,000 |
| 2017 | $500,000 | 93.8% | $468,990 | $2,500,000 |
| 2018 | $4,500,000 | 65.3% | $2,936,999 | — |
| 2019 | $4,500,000 | 39.1% | $1,759,973 | — |
| Subtotal | — | $5,661,887 | $7,500,000 |
| Expected Contract Value: | $13,161,887 (75%) |
| Donald Stephenson |
| Stated Value: $14,000,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | — | 97.5% | — | $6,000,000 |
| 2017 | $4,000,000 | 80.5% | $3,218,709 | — |
| 2018 | $4,000,000 | 53.8% | $2,151,794 | — |
| Subtotal | — | $5,370,503 | $6,000,000 |
| Expected Contract Value: | $11,370,503 (81%) |
| Richie Incognito |
| Stated Value: $15,750,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $100,000 | 87.4% | $87,400 | $5,450,000 |
| 2017 | $3,775,000 | 46.8% | $1,766,952 | — |
| 2018 | $6,425,000 | 12.3% | $788,083 | — |
| Subtotal | — | $2,642,388 | $5,450,000 |
| Expected Contract Value: | $ 8,092,388 (51%) |
| Donald Penn |
| Stated Value: $11,900,000 |
| Year | Salary | Expected Outcome | Expected Value | Guaranteed |
| 2016 | $300,000 | 73.8% | $221,261 | $5,500,000 |
| 2017 | $6,100,000 | 18.9% | $1,150,778 | — |
| Subtotal | — | $1,372,039 | $5,500,000 |
| Expected Contract Value: | $6,872,039 (58%) |
Expected Contract Value was created by Bryce Johnston and Nick Barton.
Bryce Johnston earned his Juris Doctor from Georgetown University Law Center in May 2014, and currently works as a corporate M&A 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 @NFLCapAnalytics.
Nick Barton is a junior at the McDonough School Business at Georgetown University. He is majoring in Finance and Operations and Information Management. Nick currently interns with an NFL team . His prior work experience includes interning with CollegeSplits and Dynamic Sports Solutions, and working as a research assistant for the Center of Applied Research of the Apostolate.