Thoughts on TJ Watt’s $112M Contract with the Steelers

TJ Watt became the highest paid defensive player in the history of the NFL, signing a four year, $112 million contract that surprisingly contained $80 million fully guaranteed at signing from the Steelers who generally have some type of phobia around guarantees. PFT has the breakdown of the contract so I thought I could run some quick analysis on the contract.

Here is how Watt’s contract compares to the two prior top end players in terms of new money cash flows.

PlayerYear 0Year 1Year 2Year 3Year 4Year 5
T.J. Watt$25,911,000$49,911,000$69,911,000$90,961,000$112,000,000FA
Joey Bosa$28,640,000$42,390,000$63,640,000$87,640,000$109,640,000$135,000,000
Myles Garrett$23,750,000$42,750,000$60,000,000$80,203,875$100,000,000$125,000,000

Outside of the earnings this year, which trail the Bosa contract, the numbers here completely blow away the market. His earnings through the first year outpaces Garrett by 16.8%. In the second year he has a 9.9% advantage over Bosa and then dropping down closer to the Bosa numbers where he will earn 3.8% and 2.2% more in years 3 and 4. Watt’s contract also has the major advantage of free agency after just four seasons giving him another crack at free agency before the other two players.

As a point of reference two franchise tags would have cost the Steelers about $40 million between the 2022 and 2023 seasons.  He will instead make close to $70 million. A third tag would have cost the team at least $31 million or the value of the QB franchise tag. That probably would have brough the three year number between $71 and $77 million. He will make over $90 million on this contract so this destroys the franchise tag outcomes at every stop.

It is worth pointing out that Watt appears to have given up the rights to the 17th game check this year based on Florio’s contract breakdown. That was worth $593,471 so it is not an insignificant number. If you factor that in you would take that out from each year’s cash flows. (edit- he will receive the extra check it just was not included in the original article)

Watt is the first non-QB to crack the $30M three year metric. That is a big milestone for the defensive players. This would make him the 9th highest paid in terms of three year cash behind Josh Allen, Dak Prescott, Russell Wilson, Patrick Mahomes, Aaron Rodgers, Matt Ryan, and Ryan Tannehill.

In terms of guarantees the Steelers gave up their long standing tradition of not guaranteeing any part of the contract beside the signing bonus. That was the big surprise to me even though it is a point that mainly means nothing for either side. My contention all along was that the Steelers would offer a contract close to $30 million a season but with only the signing bonus guarantee, which I assumed would be around $50 million.

They completely broke with tradition, doing full guarantees on the 2021, 2022, and 2023 salaries. Even Ben Roethlisberger only received some injury guarantees in his contract with the Steelers. I would have thought as part of a tradeoff Pittsburgh would at least get a five year contract but instead they just did four, which again is also a surprise. There do not look to be any early roster bonuses in the contract so I guess in that sense they may have gotten some deferrals on the cash payouts in 22 and 23 compared to what they would do in a normal contract. The P5 salaries are paid out over a longer term now while the roster bonuses would have seen larger front end payouts. I would also guess they offered a bigger bonus this year in lieu of guarantees and saw a concession there as a better cash option for them.

I would anticipate that this will mark the end of the Steelers being able to argue that they can not do guarantees in their contracts in the future. It probably will also put the Packers and Bengals, the two other teams who do not use guaranteed salaries, on the spot in the near future and make it more difficult to stick with the past. This year marks a new era for the Steelers’ contracts who used void years for cap relief for the first time ever as well. Welcome to the 20’s I guess.

By not getting the fifth season (nor apparently including a dummy year) the Steelers wont have the ability to spread out cap charges to the max extent in the future. Its not a big deal for next year but would be a bigger issue in the future. Perhaps they are banking on not needing to touch the contract outside of 2022 when he will have a $31 million salary cap charge.

Ultimately Watt will rank 1st in annual contract value, 1st in full guarantees, 1st in three year salary, tied for 1st in signing bonus money, and 4th in total guarantees among EDGE players. He is also the only EDGE to earn at least $17.5 million a season and be signed for just four years instead of five or six years. It’s a terrific deal for him and one that the Steelers have to hope they can build around in what will likely be the post-Roethlisberger era.