Things to Watch For in Free Agency

Was reading some things on Twitter today and I got to thinking about how this may be a more unique free agent period than anything we have seen before for a few reasons. Why is it unique?  A few reasons. For one we have unprecedented levels of cap space with two teams likely nearing $100M in cap room and multiple teams in excess of $50 million. Many of these teams are clearly desperate for talent and have new coaches in play that will be expected to turn things around quickly. Secondly we are entering the second cash spending period and that comes with a bit of a twist. This I don’t think this is a great group of free agents which may make released players more attractive than they typically have been in the past. So lets explore some little tidbits that may happen in the next few weeks.

Players Should Not Be Willing to Take Pay Cuts

Normally this time of year players begin to get pinched by their teams regarding their contracts. Maybe the players were hurt the year before, maybe they are getting older, maybe they just were underperforming. Whatever it is teams generally have the leverage to ask for players to reduce their salaries to justify their spot on the roster and in return maybe they will throw the player a bone for the chance to earn it back in some (very) not likely to be earned incentives. Already we have seen two releases, both in Green Bay, where players that would normally fall into this group were released. Those players were James Starks and Sam Shields, both underperforming players who were hurt last year.

With all the money available in free agency and the poor group of free agents nobody should willingly take a pay cut unless there is a very good offer on the table by their former team. It simply doesn’t make sense. Look at a guy like Jason Peters of the Eagles who the Eagles are supposedly going to ask for a salary reduction from his $10.7M figure. Peters played 16 games last year and was selected to the Pro Bowl. It is a position of desperate need and there is talk that Andrew Whitworth of the Bengals, also 36 years of age, will earn a deal worth over $10 million a season. It makes no sense for Peters to even consider taking less than his current number unless he just really wants to stay in Philadelphia at all costs.

If you are a decent player with a decent history there is simply too much money right now around the NFL to consider otherwise.

No Player Whose Contract is Set to Expire Should Sign a New Contract

I’ve never understood the concept of a player who played out his entire contract, generally his rookie contract, rushing to the table to get a deal done in February at the NFL combine and understand it even less this year. The money in free agency can be outrageous. Nobody looked at Olivier Vernon as a franchise defining player. Hes a good player but not a once in a lifetime talent. He got paid as a once in a lifetime talent. Look at a player like Michael Bennett who seemingly regretted the contract he signed with the Seahawks the minute the ink was dry. Bennett signed just a few days prior to free agency and then watched as lesser players broke the bank days later.

The best example for every player and agent should be the case of Derek Wolfe and Malik Jackson. Both were on the Broncos in 2015 and both set to be free agents. Jackson was probably considered to have more upside while Wolfe may have been the steadier but less spectacular player. Wolfe agreed to a contract prior to free agency that paid him less than $10 million a season. Jackson ended up topping $14 million in large part because he went to free agency. Jackson may be a better player but the disparity should not be over $4 million a season.

While it is true that free agency can be a crapshoot and sometimes things don’t work out (Rueben Randle last season is a perfect example) the fact is any free agent needs to negotiate the contract as if he was a true free agent. Don’t base decisions on last years salaries and don’t let teams bring up deals from 2014 and 2013. Everything should be about 2017. The team has an exclusive negotiating window but they should not be given any more rights that that especially this season with so much money available.

The only exception I would say to this is a player who is going to be franchised.  While there are certainly some merits to the tag when it comes to upping your value, those players wont have the same leverage. Still it doesn’t hurt to see new salaries come in so you are negotiating in 2017 dollars not 2016 dollars.

Don’t Expect Contract Extensions or Early Restructures if they can be Avoided

Last year during the senior bowl period we started to see a few extensions roll in. IIRC, both Lane Johnson and Travis Kelce were done in a few days of each other and signed big contracts. This year all we had were a few small contracts with tiny bonuses for long snappers, and the big contract for Jamie Collins that contained a small signing bonus. There was also a contract signed a few weeks before by the Jets and guard Brian Winters that contained no signing bonus.

Why do I mention the signing bonus phrase?  It has to do with the CBA. The CBA divides mandatory spending periods as running from 2013 to 2016 and 2017 to 2020 at which point the CBA expires. Teams during those timeframes have to spend 89% of the unadjusted cap on player salaries, but there is a catch.  The 2016 LY technically runs until March of 2017. That means any player contract that is signed between now and free agency which contains a signing bonus will see that money allocated into 2016 rather than 2017 for purposes of this spending rule. Since every team is already compliant with the 2013 to 2016 bucket why not push as much money as possible into 2017?

In addition one of the things that stuck out to me in the last CBA was how at the end of the CBA teams really held back on spending. It made sense since most everyone felt a lockout was inevitable and the best way to break the players is to make sure they don’t have money to survive on once the season rolls around. The NFL career is so short it is difficult for players to be willing to sacrifice a year in a strike/lockout situation. For that reason it makes more sense for teams to allocate money to 2017 rather than having to catch up by signing big contracts and extensions in 2020 when there could again be labor disagreements.

Expect to See More Roster Bonus Payments

With all the cap space on hand teams have less incentive to use signing bonuses and instead use roster bonuses which count in full against the cap. This also plays into the above points as one of the ways to structure the contract to avoid the funding issues by using roster bonuses, like in the Winters contract, rather than the traditional signing bonus.

I think for players this is a negative. The more pressure you can put on a team to not release you the better and while dead money is always going to play second fiddle to cash considerations it is a very real consideration. When you look at a player like Brandon Carr who nearly played out his entire contract with the Cowboys the primary reason behind that happening was because of all the prorated money in the contract which made it difficult for the Cowboys to threaten an actual release.

These are minor points that the teams will likely win out on but more agents should push back and try to get more in the prorated payments if possible.

Post Free Agency Extensions

I think with the rising cap and the potential for crazy money to continue to be spent in free agency more and more teams are going to try to bring more cost certainty to their rosters by extending their rookies after three seasons rather than waiting until their contracts are going to expire. The early teams extend players the more leverage they will have and the more they can prevent themselves being impacted by some of the crazier contracts that have been signed by various teams that throw the market on its head.

While such contracts do put more risk on the team the reward is very high on these contracts. If they can push long term contracts such as the Cowboys and Texans did with Tyron Smith and JJ Watt, teams will be much better off in the long run.  In the past I think we saw this approach used by the 49ers and Eagles among a few others, but just based on how they currently do business I think it makes a lot of sense for the Bengals, Steelers, Broncos, and Patriots to be moving in this direction. Really any team that is re-signing their rookies more often than not should be moving early rather than getting Flaccoed by waiting until its too late.

  • hkim2016

    Lots of cheap money flooding into markets with scant investment opportunities in the 2017 LY? That sounds awfully familiar… sort of like the US economy? Haha

  • Werner

    Jason, how do the potential restrictions for 2020 as last CBA Year and 2021 as a potentially uncapped year into play ?

  • Werner

    Wonder if we can play some number games:
    1. Assume Clubs form a cartel to keep money tight and just do the 89% minimum, i.e. Cap Number is not 168′ but 149’52.
    2. Recalculate Cap Space accordingly as a total number for all 32
    3. Adjust Salary Cap to expected needs, say 50 Players (add/subtract from current # 2017 under contract with 500k per each Player +-) leaving room for 7 Free Agents and 8 Draft Picks each (7 rounds + Comp) with target of 65 Players being under contract at peak (Active, IR, PUP, NFI, Suspended..) each
    4. Subtract Rookie Pool Allotment total
    = Total Money left for 224 FA
    ./. 224 highest current APY of Free Agents
    –> available money to stir Salary inflation (floor)

    • hkim2016

      I think your line of thought is interesting… but the temptation / inclination to break the cartel is pretty high for each team. And history does show that teams regularly go over 89% right? In practice how would that collective action be enforced?

      • Werner

        Well, this was considered just the bottom line for the average salary increase an FA must yield for “Inflation”. Anything else is Yield for Negotiation, Skill, Demand / Supply Imbalance, Fear & Panic of a GM and what not….And obviously as a total of rehired UFA only. For any Clay Matthews who may see a pay cut, because he is barely “fieldable” anymore, there is a Donta Hightower and a Chandler Jones coming from 2′ APY… And from Business View the Giants may have come off cheaper paying out Reeses contract instead of letting him go on a spending spree that yielded a play off loss.