There is a great column up on ESPN by Ed Werder about a growing resentment towards TE Rob Gronkowski of the Patriots for not playing in games on Sundays due to a fear of re-injuring his forearm. I wanted to look at the financials of his deal and explain why Gronkowski’s camp wants to make certain that the possibility of re-injury is next to nothing.
Gronkowski signed an incredible $54 million dollar contract extension in June of 2012, that was the largest contract ever given to a Tight End. However, Gronkowski still had two years remaining on his rookie contract, which means that the extension years technically do not even begin until 2014. Gronkowski was given an $8 million dollar signing bonus, but that was the only change to the existing contract years as his base salary and workout structure for 12 and 13 were left unchanged.
In both 2014 and 2015 Gronkowski’s contract contains relative low salaries. He will earn $4 million dollars in 2014 and $5 million in 2015, for a total of $17 million over the first two extension years. That is actually light for a top tier TE contract, let alone one that was for the highest paid player in the NFL. In the same timeframe Antonio Gates earned about $20.8 million, Vernon Davis about $19.8 million, and Jason Witten $18 million. On a percentage basis Gronkowski actually earns less of his 5 year contract value than Jared Cook of the Rams. Cook’s $14 million two year payout represents 39.9% of the value, while Gronkowki’s totals 38.6%.
What further complicates the situation is the guarantees and bonus structure located in the contract. Gronkowski’s 2014 salary is fully guaranteed, which essentially makes his 2013 season irrelevant towards his contractual future. 2015 is guaranteed, at the moment, for injury only. It does not become fully guaranteed until the day of the 2015 League Year. The real money in the contract is unlocked by New England picking up an option in 2015 that will keep the 2016 thru 2019 seasons intact. The option is worth $10 million and would pretty much ensure him of earning another $18 million thru 2017. That would bring the 4 year total on the contract to $35 million which is exceptional money at the position.
This option is very unique in that it will be charged against the salary cap in 2015, but the decision is not made until after the 2015 season on actually exercising it. Gronkowski’s salary cap figure in 2015 is $8.65 million because of the early accrual of the option bonus. Releasing Gronkowski before his full guarantee kicks in would save the team $5.35 million in cap space.
So when you look at the salary structure of the contract Gronkowski’s ability to earn money in 2014 is not tied whatsoever to the 2013 season. That money is locked in. But his future is tied to how he performs in 2014 and again in 2015. If Gronkowski rushes back from injury, re-injures his arm, and goes through another 10-12 game season in 2014 his ability to earn his 2015 salary could be compromised. New England could even approach him about restructuring his deal to remove or defer the option if the play and/or playing time significantly declines. If this becomes a long term lingering issue his chance to earn the big contract money that happens after 2015 will essentially vanish.
There seems to be, based on published reports, distrust between Gronkowski’s side and the Patriots due to the handling of Gronkowski’s initial injury. The belief is that the organization more or less rushed a surgery for their short term gain when no surgery was really needed. The Patriots also declined the option this year on WR Brandon Lloyd which may have opened some eyes around Gronkowski’s people about how non-guaranteed those options truly are. For Gronkowski’s financial future he needs to perform in future seasons, not this one, and that could be an issue as they decide when the time is right to allow him to take on full contract in a real game.
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.