Josh Norman signed a five-year contract with Washington for a reported stated value of $75 million, of which $36.5 million is guaranteed (using any common sense definition of the word “guarantee”). The Expected Contract Value of the deal is $54,848,581 (73% of the stated value):
|Stated Value: $75,000,000|
|Year||Salary||Expected Outcome||Expected Value||Guaranteed|
|Expected Contract Value:||$54,848,581 (73%)|
Norman’s contract is well structured from the perspective of Expected Contract Value. The larger contract amounts come in the earlier contract seasons, when the probability of remaining under contract will always be higher. The lower contract amounts in the final two contract seasons increase the probability (as compared to a back-loaded contract structure) that Washington will choose to retain him. The inclusion of a signing bonus also provides protection from release through the end of the contract. Norman’s Expected Contract Value would have been higher if he signed this contract at age 26 instead of age 28, but this is out of his control.
Agreeing to include nonguaranteed contract seasons is always a bad thing for a player, all other things being equal. But in this case I suspect that all other things would not have been equal. If Norman asked to limit the contract to only two seasons in length (the number of seasons that are currently fully guaranteed), it is unlikely that the Redskins would have agreed to pay $37 million over those two seasons. So in this case, I think it is fair to say that Norman agreed to three nonguaranteed seasons in exchange for receiving more money guaranteed in the first two seasons. That seems like a reasonable exchange.
From Washington’s perspective, the team option years in 2019 and 2020 are somewhat valuable due to their moderate size, but there is not a lot of flexibility in this contract. More than 40% of the guaranteed money comes in the form of a signing bonus, which amounts to potential dead money that is not tradable. If this contract goes poorly in 2016, Washington will not have the same degree of flexibility to trade Norman as Philadelphia did with Byron Maxwell. The signing bonus proration that would accelerate into 2017 upon a trade would be $12 million, and the fully guaranteed $16.5 million base salary would probably force Washington to eat additional money in order to facilitate a trade.
The first nonguaranteed season is in 2018, but even at that point Washington would have to incur $9 million worth of dead money to release Norman. Norman’s cap number in 2017 is scheduled to be $20 million, which is high enough that one can anticipate Washington doing a cap-related restructure a year from now. Doing so would only make getting out of the contract in 2018 or beyond more painful. These consequences largely stem from Norman’s $8 million cap number in 2016, which is small relative to the APY of the deal. This underscores the point that teams can generally accomplish almost whatever they want in any specific year, but due to the temporally free flowing nature of the salary cap regime, every decision made in the present has consequences for years into the future.
After this signing, Washington’s Commitment Index Score is 165 (6th highest) and 2017 True Cap Space commitment is $47.26 million (8th most). As of March 21, Washington’s Commitment Index Score was 92 (17th highest) and 2017 True Cap Space commitment was $27.76 million (23rd highest). If the team signs Kirk Cousins to an extension, it will challenge for the top spots in both Commitment Index and 2017 True Cap Space. In other words, the team would possibly have the least flexibility in the league going forward.
There are still several players on Washington with a low probability of remaining under contract for 2016, as calculated by Expected Contract Value 2.0: Shawn Lauvao (30.6%), DeAngelo Hall (18.7%) and Kory Lichtensteiger (14.4%). It seems fairly likely that at least one of these players will be released after the draft.
|Year||Cap Number||Probability||Dead Money||Probability||Expected Cap Number|
|Total:|| || || ||$58,902,500|
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 email@example.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.