Full details were released today on the Aaron Rodgers extension and while we happened to guess the structure correct in our Twitter musings lets give full credit here to Aaron Wilson of Scout.com who confirmed the guess with his breakdown of the contract. There is really no need for me to rehash the contract details as you can simply click to read those, but what I wanted to touch on was the impact of this contract. When the story came out that Rodgers received a $110 million dollar extension my first thought was that it was a win for the Packers and the details pretty much confirm it. Why?
The QB market has more or less gone crazy since since the 2004 class started getting their extensions which in turn led to the elite veterans like Peyton Manning and Drew Brees getting mega contracts. The craziness more or less hit a peak a few months ago when Joe Flacco, fresh off a Super Bowl win, received a contract worth $20.1 million a year, highest in the NFL. The deal immediately sent shockwaves because Flacco, who has had plenty of postseason success, has never had a statistical year that even approached the elite in the game.
When I looked at a market for Aaron Rodgers earlier this month I felt that Flacco needed to be looked at the same way Ben Roethlisberger was looked at years ago. Roethlisberger had the terrific teams out in Pittsburgh, made big plays when it counted, but was not really considered the driving force in the game. He set a market which was later surpassed by the higher drafted and bigger market player in Eli Manning. To me Flacco would be Big Ben while Matt Ryan would be Eli. Using those data points Rodgers, who clearly would be the role of Peyton or Brees, could have earned upwards of $26 million a year following the model where Ben represents the young floor and Eli the ceiling. The Packers got what they wanted by getting Flacco to be considered the young ceiling for the most part. The raise Rodgers receives over Flacco is 9.45% very close to the 10.8% raise Peyton earned over his brother. In contrast Peytons raise over Roethlisberger was close to 18%.
So what we really have here is a major market setting contract that leaves almost no room for Ryan or Matt Stafford to get anywhere near what they were hoping for as they move into contract negotiations. Even if things break perfect for them they are probably only going to earn slightly more than Flacco. Had Rodgers earned more it would have been a far more lucrative market for this new generation of star QB.
The Packers also received a major win in the contract by having Rodgers agree to $3,600,000 in game day active bonuses, which means if Rodgers is hurt he is not paid. Taking those out of the contract the real base value is $106.4 million or $21.28 million a year. Flacco has no clauses in his deal and its a pure 21.1 million a year regardless of injury. That is only going to add further pressure onto other QB’s who are looking for contracts.
The Cash Flow Comparison of the contract is as follows between Rodgers and Flacco
Outside or Year 1, which is really 3 years worth of payments less the old money in the contract the difference in APY each year is more or less representative of the general $1.9 million a year difference in total APY between the two players. So there is no real part of the deal that indicates Rodgers was to earn significantly more than Flacco in real terms.
In terms of functional money Rodgers is only protected through two extension years at which point he will only have $7 million in dead money remaining on his contract. His deal contains no dead money in years 4 and 5. Flacco is protected all the way until the final year of his extension provided the Ravens pick up his option bonus in 2014 which more or less a formality. That makes Flacco’s deal a far stronger deal for the player. Though clearly nobody expects Rodgers to break down in the next 5 or 6 years the league is a funny place and one bad hit can change alot of things in a players fortunes.
All in all the Packers come out with a major win here. They capped an exploding market and got a contract on their terms- protected roster bonuses and no back end contractual dead money. That is great cap management and perhaps having the right system that gets the players to buy in and take contracts that are more team friendly than other organizations are able to get from their players. The league is probably pretty happy with the contract as well.
Jason is the founder of OTC and has been studying NFL contracts and the salary cap for over 15 years. Jason has co-authored two books about the NFL, Crunching Numbers and the Drafting Stage, which are widely circulated in the industry and hosts the OTC Podcast. Jason’s work has been featured in various publications including the Sporting News, Sports Illustrated, NFL Network and more. OTC is widely considered the leading authority on contract matters in the NFL.