Thoughts on Josh Normans $75 Million Contract

It did not take long for Josh Norman to find a new home and shockingly he was able to garner what is arguably the best contract for a cornerback in the entire NFL. The $75 million contract with a $51 million payout in the first three years is a stunning number for a player who will be 29 years old and has made one Pro Bowl in his four year career. It is a contract that likely brings back memories of the massive Albert Haynesworth deal Washington signed years ago which will go down as one of the worst moves in NFL history. Washington has been more conservative in recent years with their contracts, but this is a pretty aggressive move that the team feels it needs to push it over the top after their playoff run. Rich Tandler has the full details of the contract and that will allow us to look at it in more depth.

The Overall Contract

Here is how Norman’s contract stacks up in general terms to the top 5 players at the market.

Player Age at Signing Years Total APY Effective Value Effective APY
Josh Norman 29 5 $75,000,000 $15,000,000 $75,000,000 $15,000,000
Darrelle Revis 30 5 $70,121,060 $14,024,212 $70,121,060 $14,024,212
Patrick Peterson 24 5 $70,050,000 $14,010,000 $83,019,114 $11,859,873
Richard Sherman 26 4 $56,000,000 $14,000,000 $57,431,000 $11,486,200
Joe Haden 25 5 $67,500,000 $13,500,000 $74,378,193 $12,396,366
Janoris Jenkins 28 5 $62,500,000 $12,500,000 $62,500,000 $12,500,000

By almost any metric this is a big winner for Norman. The $15 million APY represents an increase of nearly 7% over Revis’ contract signed last season. Even if most looked at Norman as Revis’ equal that is a big increase. If you look at the history of the contracts, the Sherman, Peterson, Revis game of leap frog were tiny incremental jumps. Peterson received a 0.07% increase over Sherman’s deal and Revis a 0.1% jump over Peterson’s contract.

A jump of 7% would indicate that Norman was able to convince Washington not only that he was essentially Revis’ peer but that the team needed to add a near full level of salary cap inflation (7.6%) to the contract. This is an argument that almost never works in the NFL.

Cash Flows

As we know sometimes annual values can be very misleading so it is often best to look at the actual cash flows of the contract to get an idea of pay structure.

Player Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Josh Norman NA $20,000,000 $37,000,000 $51,000,000 $62,500,000 $75,000,000
Darrelle Revis NA $16,000,000 $33,000,000 $49,000,000 $60,060,530 $70,121,060
Patrick Peterson $15,000,000 $25,000,000 $35,000,000 $46,250,000 $57,500,000 $70,050,000
Richard Sherman $11,000,000 $21,000,000 $33,569,000 $45,000,000 $56,000,000 NA
Joe Haden $14,000,000 $24,400,000 $34,600,000 $45,800,000 $57,000,000 NA
Janoris Jenkins NA $16,000,000 $29,000,000 $40,000,000 $51,250,000 $62,500,000

Again this is a very strong contract for Norman. While he does fall behind the younger players in first year payout that is primarily because they signed extensions where new money is dumped into old contract years. From that point forward he is above the rest of the group in each year, making this a legit contract. The realistic values here would indicate around a 4% raise over the market with the year 5 salary giving him a bigger jump on Revis in the overall value.

Guarantee Structure

Player Total Guarantee % Guaranteed Full Guarantee % Full Guarantee New Guarantee Total GPY Full GPY
Josh Norman $50,000,000 66.70% $36,500,000 48.70% $50,000,000 $10,000,000 $7,300,000
Darrelle Revis $39,000,000 55.60% $39,000,000 55.60% $39,000,000 $7,800,000 $7,800,000
Patrick Peterson $48,000,000 68.50% $16,250,000 23.20% $35,030,886 $9,600,000 $3,250,000
Richard Sherman $40,000,000 71.40% $12,431,000 22.20% $38,569,000 $10,000,000 $3,107,750
Joe Haden $45,078,193 66.80% $22,678,193 33.60% $38,200,000 $9,015,639 $4,535,639
Janoris Jenkins $28,800,000 46.10% $28,800,000 46.10% $28,800,000 $5,760,000 $5,760,000

Norman’s full guarantee ranks second only to Revis and pretty much laps the rest of the field. Most impressive, though, is the total guarantee on his contract. The $50 million total guarantee jups Peterson by 4%, which is what we also see in the cash flows as the real raise over top of market. It also happens to match the guarantee per year of Sherman, though my guess is that was not a metric that was looked at.

The $50M is really even more impressive than it appears. Peterson at the time of his signing already had millions in salary that was already virtually guaranteed. If you pull those out of guarantee, Peterson was actually only $35 million in guarantees. The others are all around $39 million. For Norman to reach $50M on the deal is incredibly impressive and showed the Redskins either not taking a very in depth look at the landscape or just not caring because they were that interested in getting a contract done.

The bonus structure itself is more or less in line with the market. 30% of the guarantee will be paid as a signing bonus which is less than some of the others. It also represents 20% of the total contract value which is right in line with the Peterson, Sherman, and Haden group.

Important Decisions in 2017

Bryce did his ECV on the deal today which pegged the value at $54 million which would more or less indicate that Washington does in fact see this as a legit three year contract. I think the key for Washington is to let this be their one risky contract they sign in the next two years and not compound it by restructuring in 2017 which will push the expected contract value that much higher. Its one thing to do that with a player who is 26 and another with one who will be 30.

Right now Washington will carry a $20 million cap charge in that year for Norman which is going to lead to one of the tighter cap situations in the NFL when you consider that they do not yet have a quarterback under contract. There clearly will be a temptation to rework the deal but that will really create a mess moving forward. His cap is already $17 million in 2018 and any restructure adds to that. He can be released right now for $9 million in 2018 if things go bad and any restructure likely means he can’t be released that year because the excessive cap charges. This also makes any decision about 2019 that much more difficult.

If you look at the Jets this year with Revis they have, more or less, considered his contract untouchable despite their lack of cap room. The reason is because they will lose all flexibility with him if they do that and lock in a third year. Washington has to follow the same model.

Impact on Franchise Players

I had a good question on Twitter about if this would chance franchise players asking prices. While my immediate response was “no” I do think it’s a topic that could be explored a bit more. What was very unique here is that Carolina seemed to encourage Norman to find a trade partner. While franchise players are allowed to negotiate with other teams, most teams I don’t believe waste the time because they know that the team is not going to release the player and the cost of two first round picks is far too high to sign anybody.

But the Panthers being open to a trade likely opened up more doors for Norman. I would guess Norman had some relatively firm offers on the table that made him confident that he would get more than the $11 million, which would be a realistic number for a player Normans age, offered by Carolina if the Panthers released him or perhaps agreed to a low level trade. Carolina may have just realized that a comp pick was worth more, especially if there were ever a rule change that upped the value further of comps next year.

But if the Panthers were serious about keeping Norman they may have shot themselves in the foot with the way that things were handled. Maybe the gamble was that he would not find an offer much better than theirs, which was my assumption as well, but his side may have already had something much more concrete. They didn’t really use their leverage well and that may be something teams look at when dealing with franchise players and allowing them to seek a trade rather than taking the assertive role in the contract.

How this played out may be a blow to teams like the Jets who seem to be looking at moving Muhammad Wilkerson. At the very least there was one team out there that saw Norman as the best in his position yet they refused to trade anything for him. Though trading franchise players is rare this is the second time in a few years where teams have taken a backseat role in the process and ended up with nothing for the player other than future compensatory picks.