The numbers are officially in on Charles Clay’s new contract with the Bills and I thought this deserved a closer look because of the structure of the contract. At the time he signed the contract Clay was designed a “Transition” player by Miami, which gave them the right to match any offer for Clay. Though Miami had already signed Jordan Cameron to replace Clay, the Bills proceeded to craft an offer sheet as if Miami might consider matching the offer so let’s examine just what they did.
Last year there were two attempts made to sign player’s to offer sheets that the other team would not match. The Browns were successful in taking Andrew Hawkins, a restricted free agent, away from the Bengals by utilizing a frontloaded contract structure that would pay Hawkins 80% of the total contract value in the first two years. The contract was designed in part to go against the grain of the pay systems used by the Bengals in their very deliberate negotiations, plus they knew the Bengals did not want to over-commit money to a position they already had a great deal of talent in.
The Jaguars then attempted to take Alex Mack from the Browns by using a void clause in the contract that would allow Mack to earn a pretty large sum in the first two contract years and then void the contract. This was not successful as the Browns quickly matched the offer sheet likely for two reasons. One there was nothing from an actual valuation standpoint that would make a team think twice about paying the player. Mack wasn’t being overpaid nor was the deal structured in a way to deter the Browns from matching it. Secondly the void clause was too far out such that it was of little concern to the team.
I wrote about the Mack contract last year before the Jaguars made an offer and said that the only way to take Mack from the Browns was to put together an offer sheet that had so much money up front the Browns would not match it. It was basically a big money play using a similar mechanism as the Hawkins one. That is clearly what the Bills did with Clay.
The annual value of Clay’s contract is just $7.8 million a year which is in the realm of the second tier tight end (Jason Witten, Vernon Davis, Jared Cook, etc…) market. The high end market consists of all players above $9 million (Rob Gronkowski, Julius Thomas, and Jimmy Graham). The Bills put Clay, in terms of expected cash flows, in that top contract tier to discourage the Dolphins from matching the offer.
Here is the way the cash flows of the more recent free agent contracts at the position break down:
The two year total for Clay is massive, as is the three year total. Considering the true length of most free agent contracts is three or less years, Clay is essentially now a tier 1 tight end. While Cook is his closest comparable in terms of total value and production the true terms of the contract are never even remotely close. Basically anyone negotiation on the team side for a tier 2 tight end would immediately throw the Clay contract out of any analysis because of this.
When we look at it as a percentage of 4 year contract value (to bring the players to the same level as Graham) we can really visualize just how crazy the contract would be for any team to match.
Clay will earn over 73% of the four year value in just two years. Everyone else in the 50% range. He’ll be over 85% by year 3, again well above anyone else and any normal contract structure. When you factor in some of the soft factors of the contract such as a big signing bonus ($10 million) and possible second signing bonus ($10 million) plus the guarantees it is simply an unmatchable contract.
For Buffalo to get value on the contract they will either need Clay to play for five years at a very good level (similar to a Greg Olsen/J. Witten type career I’d guess) or they need Clay to play at an extreme level for two of the first three years (Graham/Gronkowski level). There has been little in his career to show that he can do that, but that must be their expectation otherwise they would not have signed him to this contract.
Had Miami not signed Cameron to a contract would the Bills have had to go this high in salary to keep them from matching. Maybe. I think they could have come up with a contract that would benefit the team somewhat while still protecting their interests, but they would have needed to do something aggressive like this structure.
Once Miami signed Cameron I think using this type of contract was pointless but I would not be surprised if the Bills and Clay had agreed to this deal a week before and wanted to see who Miami did with their roster before finalizing the structure of the contract to best block Miami. In this case the high salary cap charge in year two was developed based on Miami’s projected cap situation next year with a no trade implemented to make certain the Dolphins could not trade him off to avoid the charge.
Odds are this will go down as one of the worst signings of free agency, but if Clay does in fact become an elite level player, credit the Bills for thinking somewhat outside the box with their approach to a contract which could have been nothing more than them negotiating for another team like occurred with the Jaguars last year. We’ll see if more teams use these structures in the future for players that are internally projected to be much better in the future than the past.