Thoughts on David Johnson’s $39 Million Extension

There was much buzz last weekend about a $39 million contract extension signed by Cardinals running back David Johnson and now with a better picture of the contract we can break down the deal and see where it benefits both sides.

First things first, despite the closeness of the contract APY this deal is not the Todd Gurley contract nor is it really close to it. While the Gurley deal was going to be valuable to the running back market because it showed a willingness to pay for the position, it always had the makings of a tough deal to match. Between Gurley’s draft stock. Importance to a win now franchise, and so on it was a deal to lift the market but unlike most positions probably not be a point of growth.

The Johnson contract likely sets realistic expectations for the market moving forward. Johnson doesn’t have the draft cache of Gurley, he is coming off an injury, and the Cardinals are in somewhat of a transition phase. Without the Gurley contract I’m not sure if Johnson would have gotten close to the  $13 million a year mark, but it does illustrate a bit of a compromise between the number 1 contract and the numbers 2 and 3 contracts.

Here is how the new money cash flows from this contract compare to the previous top 3 contracts at the position.

Player Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Johnson $12,000,000 $18,750,000 $30,000,000 $39,000,000 NA NA
Gurley $15,000,022 $28,050,022 $37,050,022 $47,050,022 $57,500,000 NA
McCoy NA $16,000,000 $21,050,000 $27,300,000 $33,625,000 $40,050,000
 Freeman $14,500,000 $16,500,000 $20,250,000 $26,750,000 $33,050,000 $41,250,000

From a cash structure standpoint the Cardinals achieved a terrific value in the early contract years. The $12 million in new extension year money is less than both Freeman and Gurley. The $18.75M that will be earned by the end of 2019 is only 17% more than McCoy and 14% more than Freeman, despite the fact that his 3 year value is more than 40% higher than both of theirs. The payout structure through next year is very favorable overall. Here is how the contracts compare in the % of 3 year payout by season to show how different the frontend is to the other contracts.

Player Year 0 Year 1 Year 2
Johnson 30.8% 48.1% 76.9%
Gurley 31.9% 59.6% 78.7%
McCoy NA 58.6% 77.1%
Freeman 54.2% 61.7% 75.7%

The contract begins to take more favorable shape in the second year where the $30M is essentially a split between the Gurley high end and McCoy old market high end. The $39M three year total also fits in a similar spot. This is also where the contract “catches up” in terms of percentage payouts.

Another strength in the contract for the Cardinals comes to the money tied to health. I think given the beating that the running back position takes and the risk involved on the team side for a big contract that the per game aspect is a reasonable approach to take. In each extension year Johnson will have $1.05 million tied to being active for 16 games. None of the other players have per game bonuses in their contracts. That brings the downside of the contract below $36M for three years. From what I would consider a likely to be earned standpoint I’d probably value the deal somewhere around the $38M level with somewhere around $1 million being lost to games missed.

The other thing I like about the contract is the structure for Arizona. Like shown above the big money turn doesn’t kick in until the second extension year (2020). At that point the Cardinals, if things go south for them as a franchise, would only incur $6 million in dead money if they were to trade him. Obviously that is not their intention and it’s more expensive then tagging him, they won’t take on massive financial penalties if they make the move. They also don’t have early offseason money to force them into a quick decision on that front.

The guarantee is relatively strong for Johnson and probably the strongest part of the contract. At signing he has $24.682 million fully guaranteed and $31.8825 million guaranteed for injury. That’s $30M in new guarantees which is larger than any contract except Gurley’s. On a per year basis and percent of contract basis that is pretty exceptional value since it is only a three year contract.

Here is how his contracted new guarantee matches up with the market

Player New Guarantee New Full Guarantee % Injury % Full
Johnson $30,000,000 $22,800,000 76.9% 58.5%
Gurley $33,050,022 $10,000,022 57.5% 17.4%
McCoy $26,050,000 $26,050,000 65.0% 65.0%
Freeman $20,250,000 $16,500,000 49.1% 40.0%

The injury protection is a market setter and the full guarantee is pretty close. These numbers are this high because it is a shorter term deal (more on that in a bit) but it’s good to see this amount being guaranteed despite the fact that the team does not control the entire backend of the player’s career.

The vesting schedule is very favorable to Johnson. $5.1 million that is guaranteed for injury in 2020 vests to fully guaranteed pretty early on. This more or less protects his three year value of $30 million (minus whatever those per gamers earned will be). He also has another $2.1 million in 2021 protection that vests in 2020 so realistically he is going to be in a position to earn his three year salary regardless of how many games he misses in 2019 and 2020 as that 2021 protection should cushion any losses due to injury.

The structure as it pertains to the salary cap and guarantees also offers nice protections. There is really no feasible point to just cut ties with him until the fourth year. I like this concept for both sides if you are doing a risk averse kind of deal and this is very strong protection for Johnson to make the deal solid rather than contain lots of funny money or fake guarantees.

The Cardinals will pay more than two franchise tags (figure two tags would cost $26.4 million while he can earn $30 million over the same timeframe) but that is how deals should be with high quality players. The final year of the contract is very low relative to the overall deal at just $9 million so that can be a beneficial number for both sides. If he is playing great the Cardinals have a bargain that year. If he isn’t they have wiggle room to move down. With a few dollars guaranteed that year both sides would have a reason to work together in the event the bad scenario occurs. Regardless it’s not unrealistic to think he could be worth around $9M at that age.

The other two parts of the deal that got a good deal of attention are an incentive package that can bring the total contract to $45 million and the benefits of a short term deal and free agency. I don’t view either as that noteworthy. Incentives in contracts like this are always difficult to earn. Essentially you have to play at a MVP level to max those out and that is hard to accomplish. The expectation on such incentives should be less than $1 million, probably much less.

As for the years, 3 years is great if you are a 24 year old wide receiver. For a 28 year old running back, not so much. Johnson will be 31 by the time his next contract rolls around. Assuming he plays this one out his value will trail Gurley by about $8 million (assuming he does not hit the high end incentives) through three seasons. To catch up to Gurley’s four year value that season he will need to earn at least $18.5M in the first year of a new contract. That will be near impossible. So to sell that as a catch up year I don’t think is a fair assessment.

Had the Cardinals gone to a longer term contract odds are the cash flows on the front end would have likely been increased. It’s possible some of the overall guarantees would have been increased. Years 3 and 4 may have had more unrealistic values for the two sides. There is zero reason for a team to do that if they don’t believe they will get good value out of year 4 and/or 5. My guess is you wouldn’t have had the numbers come out that both sides would be happy with and he would be without a deal today.

Some online have kind of hinted that this was a step back but if anything I think this is a contract that goes back to something we talked about back in the podcast days about negotiating high percentage guaranteed contracts that reflect an honest assessment amount the shelf life of the player. That final year I think really reflects that. It’s also hard to say that a contract worth $13 million a year is a step back, being that it is the 2nd largest contract signed for a running back since 2012.

As I said above the Gurley contract was special and going to be hard to top. I know we live in an age where the expectation is every contract signed for a “name” player is larger than the last “name” player to sign but that should only be the case when contracts truly are not reflective of market worth. The longer a contract holds a position at or very near the top the better that contract is for the player. This contract is on par with what Arian Foster signed back in 2012 when adjusted for inflation and I would think Arian Foster is a pretty fair comparison for David Johnson. That would put this deal somewhere close to top 15 running back contracts of the last 15 years on an inflated basis. That isn’t a bad thing.  It’s bringing the market forward after years of being nowhere.

As for Leveon Bell is this a win or a loss?  If he is banking on $16 million a year it’s a loss. This reinforces that the Gurley deal is special and its going to take work to top it. If all Bell wants is a big guarantee, something the Steelers would never give, it’s a win.  Bell is most likely looking at a 3 year deal in free agency and over $30 million in guarantees is pretty solid.