Are Rookie Contracts Contributing to Lack of Salary Growth

With salaries rising in recent years one of the less talked about issues is the changes in the rookie wage scale from the prior CBA. I always thought that overall this entire topic was not understood very well by many writing on it who tried to frame the entire first round as having been drastically hurt, when it was just the top few players, but the point was to protect teams from the financial commitment to busts which this does. I think the bigger side of this though is that it may be something that has helped put an artificial hold on top salaries and when you have a first round like yesterdays I think it better illustrates that point.

In the NFL contracts are all about comparables and having jumping points to exceed when discussing contracts. You always want to do better than the last contract and pretty often that happens. But a few things have gone on in recent years that I think are hindering that.

“Back in the day” the rookie contract was something to watch unfold. There were legitimate negotiations between agents and teams about values, incentives, contract structures, and so on. Many of the contracts essentially provided two sets of poison pills in there which benefitted not just the top rookies in the draft but potentially their teammates.

Rookie costs were high both in terms of salaries and salary cap charges. The rookie wage scale as it exists today actually did exist back in the 2000s as well, except there were all kinds of loopholes that were exploited by the agent side and the team side didn’t really fight back until the genie was out of the bottle.

These loopholes allowed the creation of salary cap minefields because the front end had to comply with effectively the same kind of wage scale that is in place now. Teams used a secondary bonus, either an option or salary advance, to prorate big amounts of money and they gigantic escalators that would grow and grow each season to comply with the rules. One time incentives that would be earned just by having a pulse, could see a team take on millions of cap charges in one year. These type of contracts are always a benefit for the players because it makes it more and more difficult to release the player.

It also puts a team in a salary cap crunch which changes the way they do business on other contracts. The two major ways in which this can impact a team is that to comply with the cap they need to use large signing bonuses with other players to fit them within the salary cap. Signing bonuses promote longevity in the league. Secondly it makes it far more difficult to use the franchise tag since the tag is going to be extremely high and will seriously hamper a tight cap situation. These lead to more activity in free agency or insane amounts of leverage when negotiating a contract extension such as when Larry Fitzgerald signed his record breaking contract with the Cardinals. Top flight rookies who have negotiated favorable contracts and saved some money also have the power to hold out, ala Darrelle Revis, and push for better deals.

With the current rookie wage scale much of this is blocked. With top players earning less at the top of the draft the immediate result is an early contract extensions. Agents want it because they want to get paid and the big money happens 4 or 5 years after the draft, not during the draft. Players want it because that’s when the big money happens. They no longer have any leverage because teams are now carrying so much cap space year after year that the franchise tag is a massive detriment as anyone can use it on anybody. There is no threat of the 120% rules kicking in or cap jail. Teams are rolling over millions upon millions. The whole system has made planning on the team end far easier with four year contracts, moderate cost option years, and limited cap penalties.

It is making it more and more difficult for the best players to hit free agency in a meaningful way or exploit the system via extensions. So many of the position breaking contracts like Fitzgeralds, Suh’s, Calvin Johnsons, Adrian Peterson’s or even Revis’ came in part because of their ability to negotiate very favorable rookie contracts.

The rookie system also gave starting points for veteran negotiations. Some contracts were immediately top deals just based on draft position alone. It gave people a number to work from and exceed. Now the players rely on second tier free agents- only 10 of the top 50 contracts in the NFL were signed in free agency and of those only 4 or 5 were top players- to help set those numbers and leveraged extensions that are setting lower limits on positions.

Using a 5% inflation rate here is how the top draft pick annual contract values for their base packages under the old CBA would likely be looked at today and how that compares with the current wage scale.

Pick Pos APY Old APY New Rank Rank
1 DE 18,292,305 7,602,138 2 22
2 QB 15,947,138 7,257,224 20 23
3 DE 12,898,421 7,037,735 8 25
4 RB 14,071,004 6,786,894 1 4
5 WR 11,725,837 6,347,912 7 27
6 S 11,374,062 5,564,021 4 22
7 WR 9,393,976 4,936,909 20 37
8 RB 7,035,502 4,309,798 4 12
9 WR 5,699,832 4,278,440 30 40
10 QB 5,018,424 4,105,986 30 31

As I briefly mentioned earlier you can see it’s the top 6 or 7 picks that were pretty much impacted by the wage scales and I think that is true here. The defensive end, safety, and running back markets all would have been pulled up. I think you could argue that the second tier WR would also benefit though that may be a bit more of a stretch. At most under the current system only the RB market has a chance of any growth. It probably won’t though given the nature of the position.

This is probably something that should be addressed in the next CBA. It doesn’t mean you have to move back to the old pay scale for rookies, but maybe a more aggressive option system that kicks in after year 2 or 3 would make more sense to drive values. Bringing back cap spending requirements would help and of course killing the franchise tag would help too.

High end position growth should really be growing and pulling the middle group up with it. Right now it just seems like that isn’t the case. Shorter term contracts, limited top end growth, ability to cut after two years, and so on is the norm now. It wasn’t always that way and the players should do a much deeper study on where the NFL money is going and career earnings with the new system before they begin the process of starting the ball rolling on extending the CBA.