While there are still lingering contracts out there in free agency I thought we had enough meaningful data at this point to do a post free agency autopsy of the market and what would be some takeaways from this year.
The Pandemic Impacted Signings Less Than Expected
Going into this offseason one of the thoughts that I, and many had, about free agency was that the pandemic was going to drive down signings except at the top of the market, but it really seemed to hit differently than expected. Here is the breakdown of free agents signed between 2018 and 2021 at various salary ranges in the NFL.
As expected the group of $15 million per year earners was not impacted. There were 11 signings in that group this year, one more than last year and three more than the prior two seasons. This is still a hard club for players to break into but this growth is actually a positive sign even if some will argue it does not seem like much. Last year of the 10 players who signed for that much money per year five were quarterbacks. This year was just 1 player. If we take out the QB it means our growth in the $15M+ category has gone from three to seven to five to ten so this is a good trend for high end players.
What I did not expect was the big pullback on contracts in the $10 to $15 million range. This had been steady growth the last three years and last year in particular saw a ton of players hit $10 million right on the nose. This year it fell to 2019 levels and I thought this was a group of players who would be pandemic proof.
The biggest drop was in the $7.5 to $10 million and $5 to $7 million categories. This was somewhat expected but I think most thought it would be much worse. Considering this was the logical drop for $10 million per year players this would be somewhat alarming. We currently have records of 69 players signing contracts between $5 and $15 million a year. While there are probably a few lingering ones who will get signed the next lowest number was 75 players back in 2019. So these are 2017 type numbers for the NFL.
The drop there led to massive spikes in the lower tiers where the NFL hit new highs in player signing in contracts worth at least $2 million per year.
Still the Overall Market Dropped
Here is the summary data of contracts signed between February and the end of April for veteran free agents for the last four years.
|Year||Length||Avg. Total||Avg. per Year||Full Guarantee||Total guarantee||Signing Bonus||Incentive|
That decline in the area discussed above saw the total contract value drop to a four year low, the average per year drop to a three year low, the injury protection drop to a low and incentives and bonuses used for cap purposes hit highs.
Shorter Term Contracts Continue to be a Thing
The league hit a new high this year with a massive 85% of contracts signed being no longer than two years in length. While some may claim that this is a movement to get back to free agency sooner rather than later, especially in a perceived down money year this is a four year trend now. If you read our free agency guide this year you would have seen just how bad most multi year signings are and in my opinion, this is more the NFL not pushing money on non-star players. The three year contract also took a big drop this season but it seems to be getting harder and harder to negotiate longer term contracts in free agency. Here is the percentage of signing by contract length over the last four seasons.
The Two Year Contract Continues to Be a Miss For Salary Growth
The following table breaks down the average per year for every offseason signing based on the length of the contract.
Despite the pandemic we saw the longer term contracts grow in size, the three year contract stay relatively steady and the 1 year deal grow in size. The two year contract was always going to decline since the figures from 2020 were bloated a bit by Tom Brady and Drew Brees signing two year deals but they without those two they had moved to about $5.3 million a year. This year they are back down at prior levels, indicating that teams will not pay a premium for a short term contract, probably meaning players should thing hard about doing a more expensive two year deal versus a one year contract that gets you back to free agency.
Guarantees Continue to Be Strong Except For Long Term Deals
In general the trends for guarantees are up or steady (if we take the QB contract out of the mix) except in those long term contracts. Teams have really pulled back on over guaranteeing the contracts the way they had in the past with the average injury protection on a five year contract way down.
One of the weird things with the NFL is the fact that teams and agents both seem too focused on the guarantee number and have missed the boat on guarantee as a percentage of the contract. Here is the breakdown on percentage of the contract value that is protected for injury.
Its strange with the actual percentage of the contract guaranteed on both four and five year deals falling while its jumping everywhere else. Its as if one side if focused on cost control in this area for the big deals but is willing to up the numbers on the shorter term stuff. In general, I think there are big misses in the way we value guarantees by not focusing on new money guarantees in contracts.
Signing Bonus Money Is Way Up on Big Deals
With some teams in a salary cap crunch we saw the return of the bigger signing bonus to the equation to help defer cap charges. The five year contract length saw their average signing bonus jump to $16 million from just $10.5 million a year ago. The three and four year contracts also saw big bumps and all were highs for the previous four seasons.
The percentage of the guarantee paid as a bonus is also way up across the board. This was somewhat expected but I didn’t anticipate it to this level. The use of void years to maximize proration was also way up which explains the jump in size for signing bonuses on the three year contract. Here is the breakdown of average contract bonus this offseason and the percentage of the total contract guarantee paid as a signing bonus.
These are all complete departures for teams and something that more players should encourage when signing contracts as they offer more protection than voidable/tradeable base salary guarantee structures.
The Big Spenders and the Non Spenders
I went back and looked at the average contract value per year added from 2018 to 2020 and compared that to what teams spent this year and also looked at the guarantees for the similar periods.
What the Patriots did is nothing short of absurd. They went from adding an average of $27.27M a year, the fifth lowest in the NFL, from 18 to 20 to add $111M this year, a 308% increase. The guarantee commitment was even more outrageous going from under $20 million to over $170 million. While I dont have the data in front of me to say this with certainty I feel confident that this will wind up as the biggest jump in NFL history.
The Bengals continued their new offseason spending habits by adding $55M per year to the team, continuing a growth pattern for them. The Giants got back into the mix with a 61% change with the Texans and Steelers rounding out the top five in contracts signed though the Texans fit the weird category of an increase in total value but major decline in guarantees. That is what happens when you sign a bunch of 1 and 2 year contracts. The Jaguars were third in spending this year but they have always been that way so this was not a departure for them at all.
The cap strapped Eagles basically signed nobody and while they have never been extremely active in this timeframe this was nearly 80% off from their norm. Also way down were the Saints who had to restructure everyone on the team just to barely climb under the cap. They dropped from an average of $57 million a season in additions to $17 million. Likewise the Falcons dropped a similar percentage from $26 million to under $9 million. While the Packers are not known as free agent spenders their 44% decline indicated that not only did they not sign outside free agents but also lost their own free agents. The Colts were nearly 40% off their norms which is almost unexplainable since they had no cap issues.
Here are the numbers for all the teams in the NFL and how far off they are from their three year average. Ill be back over the weekend or early next week with an opposite look to see how much value was lost per team in free agency.
|Team||APY (avg, 2018-2020)||APY (2021)||% Change||Avg. Guarantee (2018-2020)||Guarantee (2021)||% Change|