Thoughts on Jimmy Garoppolo’s $137.5 Million Contract with the 49ers

The numbers for Jimmy Garoppolo’s $137.5 million contract are out via Adam Schefter and now that gives us a good chance to really dive into the numbers and break down the pros and cons of the contract. As with everything there can be some gray areas with these contracts and cap charges so I’ll explain as we go along.

Per Schefter’s report the most notable parts of the contract are a massive $28 million roster bonus and $7 million signing bonus in the first year of the contract. The $28 million roster bonus is reported as guaranteed and my assumption is its guaranteed for skill and injury to prevent it from prorating. The $7 million signing bonus will be prorated over the five year contract at $1.4 million a season unless they did something to accelerate it this year. The 49ers have done some neat tricks with the cap to do things like that and I can’t discount that possibility.

For those that want to get technical about how this works (and if you don’t just skip this paragraph) a team can use a player controlled void in which the player pays the team back some crazy sum of money (say $28 million in bonus money) to void the contract or where he can simply opt out and the team can buy it back for $1 to accelerate all the bonus money. This would allow the team to take a $7M rather than $1.4M charge this year, essentially treating the signing bonus as a roster bonus. Why not just use a roster bonus?  Well the NFL also has a rule that the cap charge in the 2nd year of the contract has to be at least 50% of the first or that money is treated as a signing bonus which mangles the cap management of the deal. So by using the player void a team should be able to skirt the 50% rule. Anyway its unlikely any of this happened so back to the contract…

The 49ers included $4 million of per game bonuses and $3 million of workout bonuses as part of the deal. Those are good numbers for the 49ers and allow them to maintain their current contract structures. I think the fact that those numbers are in there shows that the contracts for the team have more or less remained independent from John Lynch, at least in terms of structure. The only current player with a number close to this is Aaron Rodgers with the Packers who has $3 million in per gamers and $3.5 million in workout money. In both cases these terms are basically the cost of doing business with these particular organizations.

Still this is a number that may be less than what the 49ers wanted. The team had negotiated $2 million per year in per game bonuses in the Colin Kaepernick contract a few years ago, which would have been $10 million over 5 years. Kaepernick was of similar draft stature and far more accomplished at the time of signing. This contract probably also says something about the deal that his group negotiated for him and probably rushing into it rather than forcing the issue but that’s a topic for a different day.

The contract has $74.1 million guaranteed for injury and $48.7 million guaranteed up front. I don’t really get wrapped up in any of these numbers when we are looking at a contract of this magnitude. The effective guarantee is the first two years of the deal minus the per game bonuses which is about $59.6 million. That is about $9 million more than he would have earned if tagged twice so that’s a big number.  The other guarantees vest on April 1 (a 49ers norm) so there are outs in 2019 and 2020 with the cap and plenty of time to reduce his salary if need be. If he is highly successful he can increase his injury guarantees. Those are all things that sound nice but are basically worthless.

The total guarantee package is third among QBs behind Matt Stafford and Andrew Luck and the full guarantee is well behind Stafford and Aaron Rodgers. That said there are plenty of ways to benchmark those numbers and in terms of newly guaranteed money, $48.7 million is massive. Of Stafford’s $60.4 million guarantee and Rodgers’ $54 million guarantee, $16.5 million and $20.5 million were already virtually guaranteed to those players on prior contracts. Only Stafford received a higher “new” injury guarantee and that was only by $1.4 million. So in that respect Garoppolo’s full guarantee is the biggest in the league and the total package is pretty impressive.

In terms of benchmarking the contract on a cash flow basis, which is really how we should be looking at these contracts, this deal is not a market setter despite the high APY. Here is the new money breakdown of the top QB contracts in the NFL.

PlayerYear 1Year 2Year 3Year 4Year 5
Jimmy Garoppolo$42,600,000$61,200,000$86,400,000$111,900,000$137,500,000
Andrew Luck$40,845,000$58,845,000$79,970,000$101,970,000$122,970,000
Matt Stafford$51,000,000$70,500,000$92,000,000$112,000,000$135,000,000
Aaron Rodgers$41,750,000$54,350,000$68,000,000$88,900,000$110,000,000
Russell Wilson$42,500,000$55,100,000$70,600,000$87,600,000FA
Ben Roethlisberger$41,400,000$53,400,000$70,400,000$87,400,000FA
Derek Carr$46,522,481$66,522,481$85,522,481$105,147,481$125,025,000

As you can see the first year cash, despite the massive cap being reported, is right in line with the market. Its way below Stafford and a few million below Carr. Its right in line with Wilson. There remains a big gap in year 2 when comping with Carr and Stafford. It takes until the third year of the contract for Garoppolo to surpass Carr and its entirely possible he wont see the third year of the deal (Carr may not as well). You will see that he doesn’t pass Stafford until the final year of the contract. This is a nice way of teams inflating contract numbers to get a deal done even though the cash flows are more reasonable for the team. In this respect I would consider Stafford still the gold standard for any future contract negotiations especially in terms of security added from signing bonus money that at least gives a team pause when they consider releasing the player.

From a salary cap perspective the 49ers frontloaded the contract for a whopping $37 million cap hit this year (and perhaps more if they did that acceleration trick) but took a modest $20 million cap hit in 2019. This surprised me a little as I expected big cap charges in the first two years so this tells me two things. One is that the team still isn’t sold on him being a sure thing just yet as doing this would have forced them to raise the two year cash flow level by about $6 million. Secondly it tells me that they are going to be active in free agency and this gives them a better chance to spend next year as well.  Here is the breakdown of the contracts cap structure:

The 49ers can walk away in the third year of the contract with basically nothing negative on their salary cap. For a contract this big and a player with such a small sample size that’s a good thing. Compare that to a team like the Bills who is struggling with Tyrod Taylor simply because of bad decisions made with the contract structure and you can see why the 49ers front office generally gets praised by people like me through the years.

The backend will have cap numbers around $27 million which is far better than Stafford’s $30M+ contract and will likely be better than most deals signed between now and the time those years actually occur, assuming of course he is still on the team. I wouldn’t consider it a major competitive advantage but it is an advantage, IMO, if he is playing on those numbers.

The biggest from this contract is something I always come back to when these QB contracts come down and that’s how teams simply can’t help themselves. Garoppolo has started 7 games in his career and landed what is either the 2nd or 3rd best contract in the NFL among QBs and from one of the stingier teams in the NFL to boot. It’s kind of absurd. When you go back to the rookie wage scale you wonder if the NFLPA should fight that again. What difference is there between Garoppolo at 7 games and Garoppolo at 0?  A few preseason starts?  Some chatter from the Patriots locker room?  Those top contracts had impact around the other positions in the league and now its just money being thrown at QBs.

Do I think this will have a major impact on the market?  Overall probably not at least for top tier talent. Like I said above Stafford’s deal should be the gold standard and the one that is going to be used to benchmark Kirk Cousins, Matt Ryan, Aaron Rodgers, etc… over the next year or two. Where it probably has more impact Is for the 2nd tier players that have potential but some question marks. In some ways this builds on Carr’s deal in that manner. Where teams in the past have been able to take some more advantageous cash numbers on the backend of these question mark players they wont be able to do that as easily since they will need to reach higher APY numbers than ever before. Life will be more difficult if you stumble into a Ryan Tannehill, Tyrod Taylor, or even Brock Osweiler if we go back to where Garoppolo was when this was signed. For someone like Marcus Mariota I have to think this is a pretty promising development.

As for the 49ers its kind of unique to see where they are at. They have who they believe is their QB under contract now and hes pretty young. They have massive amounts of cap space to spend and may see a window to really go for it. Its rare for a team to be able to treat a $27 million QB the way most would treat a rookie in regards to ways to work with the cap but their ability to amass all this cap space has them essentially in the same place teams like the Rams and Eagles are in large part because of the rookie QB giving the an ability to spend and build around him. I’m not sure if it will work as well but this is a more interesting follow for the next year or two than the Browns who have all the cap room like the 49ers but don’t have the QB yet.