The Seahawks and Russell Wilson Contract Battle

Russell Wilson’s contract situation with the Seahawks gets more interesting by the day. His agent recently indicated that Wilson is prepared to play out his contract and not sign an extension with Seattle unless the contract is valued properly. It is a tricky negotiation between Wilson and the Seahawks for a number of reasons, so let’s discuss some of the issues at play.

The Issues Valuing Wilson

In today’s NFL I think there is a big push from agents to exceed numbers that are reported by the media. In the past that number was usually a total contract value and a signing bonus. Most recently it has been reporting of guaranteed value, which has led to contracts containing millions of “injury only” guarantees that are near worthless but makes for a nice headline on ESPN or another major sports outlet.

The most recent one has been three year payout, but with a twist. Traditionally when we view contracts we look at a three year metric based on new money, which, for an extended player would likely equal four years of cash flow minus the cash amount remaining in his old contract.  Recently that has been replaced by reporting three year numbers outright. Whether that has been from agents pushing new numbers, teams giving an internal view, or a lack of understanding, it is now something that is going to be an important total for a player. Here is the breakdown of the two three year pay metrics.

PlayerThree Year NewThree Year Pay

For many player’s there is little difference between the two numbers because of how big their contract was at the time of signing, but Wilson is coming from a miniscule salary of just $1.542 million. A better way to look at this new metric is to really just look at the two year new money value:

PlayerTwo Year New

This is very constant for the three extensions signed with one year remaining (Rodgers had two years remaining so its not comparing apples to apples) and is really the way teams are viewing the contracts which is consistent with the standard new money contract valuation regardless of how things are being reported.

Because Wilson is earning closer to $1 million than $10 million this leads to a three year pay of around $54.5 million which is well short of any of the top of the market players and that may be a big disconnect. For the Seahawks to bring Wilsons three year total to top of the market they would need to pay him around $67 million between 2015 and 2017, which is a number no team could consider.  The team could franchise tag him twice and it would cost them significantly less money.

The only way to make such a figure work would realistically require a monstrous signing bonus and probably an option bonus as well. Neither is something that Seattle has done in the past and it is unlikely they would consider it here. So if this is a hold up it is something that will not go away until after the season at which point the traditional three year and this overall three year metrics match.

Seattle also needs to decide how much they want to commit to Wilson. Wilson is likely going to argue about two players in particular that were past market setters despite never being considered best QB in the NFL. Those players were Eli Manning and Joe Flacco. Both players were signed primarily because of postseason success, which Wilson can lay claim to.

Manning’s contract represented a 16% increase from his brother Peyton’s contract annual value while Flacco’s deal was just a touch higher than Drew Brees’ contract.  They could also go back and look at Ben Roethlisbergers original extension which was slightly more than a 4% raise over the Peyton contract and really the first young player to “jump the market”. That sets a price between $22.1 and $25 million a season, with $23 million likely being the fair value point.

Does Seattle see that as a valid number?  I always thought they did, but signing such a contract does change the complexion of how they do business and severely limits the mistakes that they can make. With an affordable contract that can waste millions on a Percy Harvin or Sidney Rice and survive. With Wilson at $23 million that safety valve is gone. I’m sure it is not lost on the Seahawks that of the last 10 Super Bowls only three were won by teams with elite pay QB’s.

The other consideration for Seattle is the Q market of the future. When Manning signed his big contract extension in 2009 it was a given that Tom Brady and Peyton would exceed that in short order. Drew Brees and Aaron Rodgers were showing the potential to earn very lucrative extensions.  Jay Cutler was considered a high potential player at that time and Matt Ryan and Joe Flacco both looked solid. Top picks were still earning $13 M per year at the position without even playing a down. Quite frankly the Giants knew that Manning’s contract would not remain as the top deal and by the end of the contract term it is clearly a low end contract for a starter.

It is a different landscape now. There has been a lack of talent at the QB position in recent years. Many of the top picks have failed and those who have not are already signed for less money than what Wilson will be seeking. Rookies are now paid pennies for four years. It’s basically Wilson, Andrew Luck, Philip Rivers, and Manning who will set the new market and, other than maybe Luck, will all be very close. It will be a long time before we look at Wilsons contract as anything but a top market deal and that means no benefit for the Seahawks over the term of the deal the way the deals of the past worked out.

Wilson’s Options

I have heard some say that Wilson needs to hold out to maximize his value. I don’t see that as an option for him. Wilson only has three years in the NFL and if he fails to report to camp in a timely fashion he will not earn an accrued season towards free agency. If he fails to earn that season he will only be a restricted free agent in 2016. The Seahawks would likely tender him as a RFA rather than a franchise player, which would cost Wilson over $16 million in earnings. While it’s possible another team would sign him to a lucrative contract, I would be worried about collusion of sorts on the owners end, making an example of a player that tried to force the hand of the team and punishing for it.

Playing out the season is not a terrible option for Wilson. He would be given the franchise tag designation which should be somewhere between $19 and $20 million. If they used the exclusive franchise tag it would be as high as $25 million, though I think if they viewed him as being worth $25 million he would be signed to a contract already.

The franchise tag for a quarterback is not as devastating as it is for other positions. Quarterbacks have a long life cycle compared to other positions in the NFL.  Players are playing into their mid and late 30s on big money contracts. This is a major difference from other positions where making the turn past 28 begins a decrease in value and by 30 severely limits earning potential.

The QB position is more protected than any other position in the league from injury, and the lack of talent at the position leads teams to not even consider the injury as a major negative. When Manning signed with the Broncos in 2012 he came off major neck surgery and could have signed a contract worth far more than the $19 million per year deal he did in Denver. Teams overlook injuries at QB more than any other position in the NFL.

The salary is also higher than most others. It is doubtful that he would be tagged a second time and $20 million in 2016 followed by a free agent contract that matches the $40 million one year contract value and $53 million two year value of the top end QBs would give him a stronger three year package than any contract he could sign today. That would allow him to earn a total of $60 million in new money by 2017 and $73 million by 2018. That is more than the current standard two and three year metrics used to value the current top of the market contracts.

Playing the season out also gives him the benefit of playing with, what is on paper, a better set of receivers following the trade for tight end Jimmy Graham. Currently the biggest knock on Wilson is that he does not have the numbers to back up a top of the market contract. But Wilson also doesn’t get the same opportunities than a Luck gets to just fling the ball around the field. Early in their careers players like Brady and Brees didn’t fulfill their potential until the supporting casts improved on offense and the coaches trusted them to do more. A player like Graham fits it perfectly with Wilson’s strengths of big play production and should only improve those numbers.

If Wilson was very negative on the tag he could threaten a holdout next season and instead focus on his baseball career. I’d think the money left on the table would be far too much, but in my opinion this would be a more valid threat than a hold out. A franchise tag is not a valid contract and there is no punishment for not signing the tag and playing football. The Seahawks would be forced to carry Wilson on their accounting books for the 2016 season at a large figure even if Wilson has no intention of signing. If Seattle pulled the tag at any time he would become a free agent. Seattle would have the right to tag Wilson again in 2017, but he would no longer be held for two first round picks as compensation would drop to a 1st and 3rd round pick making it more reasonable to sign elsewhere.  Again I don’t see this as likely, but it could put more pressure on Seattle next season if they pursued the baseball option.

Points of Compromise?

What would worry me as a Seattle fan who wants Wilson to be the QB for the next 10 years is if a deal is not reached this summer does it mean the front office does not have a high opinion of the QB and view him more as an interchangeable piece? From an outsiders perspective like mine, Seattle has a very different valuation process for players than most other teams. Many of the big money contracts that they have signed have not really been rooted in past performances and current market conditions. It has been more about future visions and placing a price tag solely based on projections of how the player would fit in and how price cant get in the way of signing such players.

Their biggest success in that regard was with Marshawn Lynch. Lynch’s original contract extension with a large guarantee and close to top market price was overpriced based on his initial run in Seattle and last few years in Buffalo. But they saw something in him and made sure money wasn’t a factor even if the deal was a bit of a head scratcher. Things didn’t work so well when they did the same with Harvin. Harvin had almost no track record to justify the price of trade and contract other than being the lone bright spot, at times, on a bad offensive team.  Seattle felt he could be more and didn’t care about the price, they just wanted the player. They also gave top of the market contracts to Richard Sherman and Earl Thomas, and traded for a top line contract in Graham. Now these positions are less impactful on the cap than a QB contract, but it just seems odd that they are not heading there with Wilson.

One of the options that they could explore with Wilson is a four year, rather than five year, extension.  Depending on where Wilson was valued by the team would give the basis of a contract. The low end players, Ryan Tannehill and Colin Kaepernick, earn around $73 million in the first four years of their deal. The high end contracts see $84 million or more.

Splitting that number could be a compromise. From the perspective of annual value that contract would only hit $19.625 million, which would likely make the Seahawks happy. Despite the annual value not hitting the big mark, the four year payout might be considered reasonable. The team could fully guarantee the contract or guarantee a very large amount and remove any future franchise tag designations to make the contract more appealing to the player.

The benefit of a shorter term contract for Wilson is that it allows him to hit free agency again at the time when potentially the next wave of extensions would be hitting for players just drafted and the clock will re-start for the Ryan’s of the world. He can also tout a very high (or even fully) guaranteed percentage of the contract. The cap will have likely risen significantly in that time as well.

Perhaps most importantly it guarantees him free agency in 2020.  2020 is currently slated to be the final year of the current collective bargaining agreement. It would allow him to be signed to a contract under the current set of rules and framework established in the CBA. The NFL dramatically reduced player payouts, at least in the short term, in the last CBA negotiation. Extensions are also difficult because of the application of the 30% rules and teams at the end of the last CBA clearly reduced their spending. He would also get paid before any possible lockout or strike would put business on hold.

Essentially it’s a $7 million tradeoff (the difference between his total contract value and the 4 year deal of the biggest contracts) for guaranteed free agency in 2020 and maybe more security if he is worried about injury.  The more times a player can hit free agency the better and the short term of this contract should help in his overall career in regards to earning multiple extensions. Looking back at the 2004 class  those players will most likely sign three lucrative contracts in their lifetime- their rookie contract, their first extension in the late 2000’s and a final extension in 2015/2016.  Wilson can’t do anything about missing out on the big rookie contract, but doing the short term deals gives Wilson the chance to get three lucrative extensions in his career.

Wilson is already one of the most popular players in the NFL and taking this kind of contract should only help his status and marketability outside of the playing field. While that won’t make up $7 million, he’ll possibly be able to make it up over the long haul if he can continue to max out extension after extension.

But the solution here, unless there is a major change of opinion by Seattle, is probably going to require thinking outside of the constraints of annual contract values and looking at cash flows, percentages of contract guarantees and big picture possibilities if he wants to do an extension this seas