According to John McClain of the Houston Chronicle JJ Watt has signed a six year contract extension worth $100 million that will make him the highest paid defensive player in the NFL. The contract would contain $51 million in guaranteed money.
The first thing that jumps out to me are the numbers in the contract and the similarity to Mario Williams of the Buffalo Bills. Williams had signed a six year contract worth $96 million with the Bills a few years ago that had been considered an outlier for a number of reasons. The maximum value of that contract was $100 million and the total guarantee on that contract right around $50 milion (the real guarantee was $24.9 million).
So my assumption here is that they matched the contract of Williams except the incentives are a part of the base contract value. Williams’ cash flows over the first three contract years were $25 million, $15 million, and $13 million. I would imagine that those will be the baseline numbers used for Watt.
Because Watt has two remaining years under contract, techincially the new extension money does not start until 2016. When we calculate his year one cash total what we need to do is add up all his salary from 2014 through 2016 and subtract his original 2014 and 2015 salaries from the contract. Per McClain Watt will earn $20,876,385 in 2014 and 2015. That means his new money in that period is $12 million. Id anticipate his 2016 cash salary will be $13 million or slightly higher.
I’ll be very interested to see the cash flows and guarantee structure of the full contract. If the only bonus in his contract is the $10 million signing bonus that leaves very little salary cap protection for Watt. Williams received $25 million in prorated money. The fact that this is a 8 year contract for cap purposes it makes the last three years of the contract completely “pay as you go” and essentially worthless years unless there is some unique structure involved. Houston usually has per game active roster bonuses in their contracts so Id imagine this is a major part of the contract as well.
When I had looked at Watt a few weeks ago I thought he would have opted for a shorter term contract with less money, but strong cash flows up front to improve his odds of a second go around with free agency. This contract now ties him up until 2021 if he continues to perform well.
Regardless, this contract now sets the market for the young pass rusher in the NFL. There is no question that this is a valid contract, unlike the Williams one, and this represents about a 26% increase over the annual value of Clay Matthews’ contract. For Robert Quinn, Muhammad Wilkerson, Greg Hardy, etc…this contract is great news because their pay was going to hinge on what Watt could negotiate with the Texans.
From Houston’s end the timing was right if they were to sign a mega deal. At the moment they have no big name or money QB on the horizon. The team is clearly transitioning away from Andre Johnson as the face of the franchise and it was important to lock Watt up as the new face. From their perspective they could have had Watt for the next three years for around $23 million and dealt with three years of questions about commiting to him long term and potential holdouts. They will likely spend an extra $11-$13 million over the three year period for peace of mind and favorable salary cap terms.
When I get the full contract details I’ll update his page accordingly and try to do a side by side with Williams’ contract.
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.