Geno Smith’s Contract Contains No Year 3 Guarantees


Earlier today we discussed Geno Smiths contract structure and the potential reasons behind the workout bonuses in the contract. According to Joel Corry the contract does not contain the year 3 guarantees:

So what to make of this then? We’ll its a loss for Roc Nation in that Smith becomes the first QB to not receive a premium in terms of guarantees in the 2nd round. That said it does give Smith an opportunity to earn actual cash faster than his peers, specifically in the 4th year of the contract, a year none have any guarantees.

I think for the Jets its a win. They didn’t cave in on somewhat of a precedent that had been set by some more difficult to deal with teams like the Bengals and Broncos. The bonuses nearly ensure participation in the event Smith is unhappy with his contract in 2016 and give the Jets a longer time to evaluate him in that 4th year in the event they are turning elsewhere.

For Smith the focus is simply on timing of cash flows. It is better than the rest of his comparison players so in that manner its a win provided he makes it to year 3. The worry for him would be if the Jets are bad this season and have an opportunity to draft a QB then the 3rd year guarantee may have come in handy. As a backup his salary would be low, so I don’t see that as a big concern, but still its puts him a bit behind others who were protected a little more in the event of not claiming the job quickly. If he plays as well as Dalton or Kaepernick the 3rd year guarantee will be no issue.

I would think the contract will be used against Roc Nation if a veteran agent is considering signing a 2nd/3rd round grade QB that he thinks is considering Jay Z’s agency. Its a small bullet point that can be used to discredit the job that was done. If Smith is a star, though, and has his face plastered all over NYC, it will be a moot point. The purpose of signing with Jay Z is about marketing potential and it will be tough to convince someone that they can market the player better than Jay Z will if there is any success shown by the player off the football field.


Why Does Geno Smith’s Contract Contain Such Large Bonuses?


According to ProFootballTalk the Jets have added large workout bonuses into QB Geno Smith’s contract. I speculated yesterday that Smith’s contract would contain at least $100,000 in workout or offseason bonuses but was a bit surprised at the amount that these contain, $690,819. Some speculate that it’s a sign the Jets could be worried about Smith’s offseason dedication while others say that it was a masterful negotiation by Jay Z’s Roc Nation. Which is it?

In terms of offseason money this is the largest amount for a non-first rounder over the final two years of his contract. The prior largest figure was Janoris Jenkins, whose deal contained $684,163 in season roster bonuses, an amount that was chosen because of Jenkins off the field problems. That doesn’t mean it is uncommon to have bonus money, I believe 18 of 32 second rounders had some sort of bonus money last season, just uncommon for it to be of this size. That could indicate some issues with Smith that the Jets are trying to ensure don’t pop up.

While the Jets in the past have been big workout bonus believers, their new GM, John Idzik, has come from a system where the offseason money is not a priority. Considering the Jets let go of the teams lead contract negotiator it is highly unlikely that they would be looking at workout bonuses as a main component of contracts. Again this paints a unique picture for the GM making this a somewhat unique situation.

On the other side of the coin offseason bonus money is always in the players favor as it forces a teams hand to release a player early or pay him. It’s almost like having a “no-offset guarantee” clause in your contract if you make it through workouts or a roster bonus date.  In terms of cash flow it is beneficial to get more money early rather than needing to wait for the season to begin.

Again its not uncommon, specifically for the QB. Colin Kaepernick had $200,000 in workout bonuses with the 49ers. Andy Dalton received $200,000 in reporting bonuses from the Bengals. Brock Osweiler has $349,245 in roster bonus money coming his way from the Broncos. So the precedent for the bonus money is there and in all of these cases this was money pushed for by the agents to improve the cash flows to a very highly valued asset.  Osweiler’s situation is probably the most unique because of the presence of Peyton Manning which is why he pushed for high roster bonuses rather than the later bonuses the others received.

So what was the purpose of the high bonus?  First I would say it depends on the guarantee structure of the contract. As of typing this I do not know  if Smith’s 2015 base salary was guaranteed. I would assume that it was based on former treatment of QB salaries. Dalton received a guarantee on his 3rd year salary. Kaepernick had close to $600,000 of his third year salary guaranteed. Osweiler, selected much later in the round, received his first two years guaranteed. All of their contracts, more or less, represented a premium in guarantees over the slot. That is the QB premium I talk about that exists in the draft.

If Smith did receive a full $585,000 guarantee on his P5 in 2015 that is a big win for the player. The presence of the workout bonus in this case essentially guarantees him  a full guarantee on his third year. That is better than Kaepernick and puts him in the same category as Dalton, both players drafted a few slots higher. That’s a big win.  If there is no year 3 guarantee then Smith lost big and the workout bonus was just a compromise to cover for the guarantee. That will be a big blow for Jay Z’s first client in the NFL and one that will be used against him.

The Jets tied all his extra year 3 and year 4 compensation to workouts, normally meaning something like 70-80% attendance. As I said before the number is a surprise especially given Idzik’s track record.  It may not have anything to do with Smith the player, as is being speculated, but more Jay Z the agent. The Jets have to assume that Smith is going to be their QB of the future. The NFL permits contracts to be renegotiated after the 3rd season in the NFL. This agency is a complete unknown around the NFL and there could be a feeling that Smith is going to be advised to holdout in the future to make it known that he wants a new contract.

The workout bonus gives the Jets protection for that in year 4. A roster or reporting bonus can allow Smith to collect without being present in the offseason, staging a bit of a mini-holdout as we have seen others do. The large workout bonus makes it almost mandatory for Smith to participate even if unhappy with his contract status. About 40% of his 2016 salary is connected to workouts now. That should at least help, a little bit, the potential of an agency turning the offseason into a big story about contracts. The Jets have been down this road multiple times with Darrelle Revis.  Idzik himself even saw a little bit of this last year when someone starting floating a story about how Russell Willson was underpaid and was going to demand his contract redone, even though the CBA didn’t allow it. It was likely a bogus story from the start, but it takes the focus off football.

So when the details of the contract are official we can make a better determination of the whys of the contract. If that guarantee is missing from 2015 then it was a win for the Jets side and they have likely tried to protect themselves from any outside forces keeping Smith from attending the offseason programs. If the guarantee exists then Smith’s team did a really good job and maybe the Jets felt that this was the best protection they could get in the future. We should know the answer later today.