Thoughts on Matt Ryan’s New Contract

The numbers are in for Matt Ryan via a report at PFT and his $150 million contract certainly would seem to be the new benchmark for just about every reasonable metric, so lets take a look at the deal.

Ryan’s contract sets new records for fully guaranteed salary ($94.5 million), total guarantees ($100 million), APY ($30 million), 3 year cash ($98.25 million) and 1st year cash ($54.75 million). Unlike the other recent record setting contracts the Ryan deal sets new cash barometers in every year of the contract. It doesn’t take him until a 4th or 5th year to set himself apart from the field the way it did for a Jimmy Garoppolo.

When the Kirk Cousins and Garoppolo contracts were signed I said that the true comparison for any new QB contract would still be the Matt Stafford contract and from the looks of it everything built off that. Here are the comparable cash flows of the other top QBs on long term contracts.

Player Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Matt Ryan $33,250,000 $54,750,000 $75,250,000 $98,250,000 $122,000,000 $150,000,000
Jimmy Garoppolo $0 $42,600,000 $61,200,000 $86,400,000 $111,900,000 $137,500,000
Matt Stafford $34,500,000 $51,000,000 $70,500,000 $92,000,000 $112,000,000 $135,000,000
Derek Carr $24,022,481 $46,522,481 $66,522,481 $85,522,481 $105,147,481 $125,025,000
Andrew Luck $27,845,000 $40,845,000 $58,845,000 $79,970,000 $101,970,000 $122,970,000
Aaron Rodgers $30,150,000 $41,750,000 $54,350,000 $68,000,000 $88,900,000 $110,000,000

From a structural standpoint the contract is a major win for Ryan. Ryan’s $46.5 million signing bonus is less than Stafford’s $50 million bonus, but is still a massive number. For whatever reason Atlanta is one of the few remaining teams that utilizes old style option bonuses at signing and that gives him a $10 million prorated on top of the $46.5 million. Taking that into account Ryan has a larger prorated bonus than Stafford both on a percentage of contract basis and overall number.

The huge bonuses along with the $5.5 million vesting guarantee for 2021 should lock in his 3 year new money earnings unless he falls completely off a cliff. The cost to cut that year will be $29.1 million on the cap. When it becomes easier to move on from Ryan the Falcons will need to make a quick decision since he has large roster bonuses in the final two years of his contract that are due at the start of free agency. I think that is a great feature.

The structure lends itself to massive cap hits in 2021 and 2022 of $34.3 and $35.05 million at which point he will be 36 and 37. There will (hopefully) be a new CBA in place at that point in time and who knows where the cap will be. In the last negotiation there was a salary cap rollback. If something similar occurs the Falcons could be in a position where they are forced, because of cap considerations, to extend Ryan earlier than other players. That’s a good deal for Ryan.

Is there any real area where you say that the Falcons made out well?  Maybe the cash up front which is more or less a 6.7% raise on the Stafford deal before years 4 and 5 bring the disparity even higher.  The new guarantee on the contract (total guarantee minus his existing contract money) also did not reach Cousins $84.5 million.  They also will be a first mover on the big new contracts before the Packers potentially set the market or other teams like the Panthers and Seahawks potentially do extensions for their guys that may make the market jump.

The one area where I do believe that the contract was impacted by Kirk Cousins was the guarantee. Cousins received $84.5 million at signing and it was only logical that Ryan receive more, especially given that he has two additional years on his contract compared to Cousins. The $100 million is virtually guaranteed at signing for Ryan given the early vesting date of the final $5.5 million.

The massive injury guarantee for QBs began with Andrew Luck who set a big record at $87 million back in 2016 with the Colts. That contract was the first leap forward in a stagnant market, and it was a giant leap with guarantees, which had been in the $60 million range. Teams still had not broken past Luck’s guarantee until Stafford last year.  Stafford set the stage for the $100 million injury guarantee but with Cousins and the Vikings doing the full guarantee it expedited the process for a real $100 million guarantee for a player.

The question is where do contracts go from here. Ryan is a terrific QB. Hes been to a Super Bowl and he is an MVP. Does this set the market cap until Rodgers signs or do we go back to leap frog?  Russell Wilson is also up soon.  You have the young players like Jameis Winston.  Cam Newton is still under contract for a few years but could be looking as well. Do the rising guarantees and APY now add a barrier for the position when it comes to extensions for the Marcus Mariotas and Sam Bradfords of the world?

People often ask why the NFL was dominated by so few players for such a long period of time and I personally believe a lot of that was due to the overpayment of the QB. The NFL in recent years has had a few tiers of players. The ultra elites of Tom Brady, Aaron Rodgers, Peyton Manning, and Drew Brees. The top flight starters with Ryan, Ben Roethlisberger, and Russell Wilson. An average tier of Philip Rivers, and so on…Except everyone was paid the same regardless of what tier.

Instead of using the difference in salary at the QB spot to enhance deficiencies in other areas by outspending those with elites, the NFL General Managers fell into this trap of being so fearful of losing a passable Ryan Tannehill or Joe Flacco in free agency that they paid them as if they were ultra elite players. Instead of having some financial advantages in free agency to use on other players they were on the same footing as the Patriots. Not surprisingly the other teams could not build teams to compete.

For the first time in a long time we are starting to see a salary spread at QB. This year among non-rookies there are 22 players making between $15 and $30 million a year. The year before it was about that same amount between $16 and $25 million and the year prior between $16 and $22 million. So there is a growing disparity which overall I think the league needs if they want more competitive balance.

I think the prognosis here is better than in the past to get a real market in place. The last go around saw the NFL hurt by two contracts, Joe Flacco and Aaron Rodgers. Flacco at $20.1 million set an easily attainable mark for almost any QB because the only thing he had going for him was a Super Bowl win. From any other standpoint (stats, eye test, top 10 draftee, etc…) he became an easy to match benchmark especially when you had other players still waiting on contracts.   Rodgers, who was worlds better than the next closest guy, set a market cap at just $22 million just two months after Flacco signed. There was no way to comp to Rodgers at all so all these guys just landed right around these two contracts and the entire league was hurt.

It should be different now. A few players (Carr, Stafford, Luck, Cousins, Garoppolo, A. Smith, and Flacco) are already under contract. The older players (Eli Manning, Brady, Rivers, Roethlisberger) likely wont challenge the top tier at this stage). Ryan is more established and only a select few should be able to match him. The rookies coming up soon for new deals haven’t really exploded on the scene. So unless teams all just cave to the QB pressure we may see a more competitive landscape in the future as the pay is more representative of the performance at the position.