There was some news today that the Miami Dolphins are apparently working on a $105 million contract extension with QB Ryan Tannehill. Of course the initial reaction to that has focused on the big number which is exactly what this type of deal, if it ever happens, is designed to do. So let’s just take a quick look at some of the thoughts that probably go into this offer.
I think most would agree that Tannehill hasn’t done much to stand out in his first three years in the NFL. He’s shown improvement in his three years and is relatively young. He has some pretty good week’s and some pretty bad ones as well. Thus far I don’t think he seems like someone a franchise would really tie themselves to, but you can also do far worse than Tannehill, putting him into a keeper category for a team that likely has no opportunity to find another QB in the next two seasons.
For Miami this is the ideal time to work out an extension. Right now the only soft factor that Tannehill has to point to in a negotiation is where he was drafted. If he was to sign this extension he would be the only veteran QB earning a double digit annual value that had not made even a token playoff appearance prior to signing the contract.
The guarantee on the contract is reported to be in the ballpark of $30 million which would likely represent the first two years of the contract, one of which would probably be guaranteed for injury only. Considering the Dolphins are already going to be locked into around $17 million (his $2 million salary this year and a $15/16M option in 2016) this is going to represent a $12 million raise over the next two years, which is in line with what was earned by Andy Dalton and Colin Kaepernick.
For Miami that means that close to 2/3 of the guarantee was already a sunk cost. By getting that out of the way now it should, in theory, give them the ability to go year to year with him beyond that with his fate being tied to team performance. It’s better to have things work this way than to potentially be in the same position two years from now with the same questions and adding another $30M guaranteed to the money you paid him in 2015 and 16.
An extension now also gets the jump on the perceived impact that a Russell Wilson and Andrew Luck extension will have on the market. Both QB’s have a good chance to become the highest paid in the NFL and pull the market with them. There is also the next wave of veterans (the 2004 draft class) that can possibly pull the market upwards if they sign deals before Wilson and Luck.
The big $105 million figure is to draw your eyes to that number and not realize that it’s a 7 year offer. From an annual value that works out to $15 million a season, or the lowest paid long term starter not named Brady in the NFL. The only other QB to receive a 7 year contract is Jay Cutler. The backend of these contracts is all funny money designed to change the narrative about the contract.
Clearly a deal for Tannehill now shows the impact that the Joe Flacco contract had on the market. Flacco tracked right along with these other players at the lower end of the veteran salary spectrum, but Flacco won the Super Bowl in his walk year and, for a brief moment, he became the highest paid player in the NFL. The contract is a backbreaker for the Ravens with a cap charge of $28.5 million in 2016 and no leverage to ask for much of a paycut. Since then teams have been willing to fork over the extra money early to avoid being the next team to land in that situation. If he does excel then they have a bargain locked up for years.
Of course none of this really explains why would Tannehill go for this contract is potential riches await by playing the contract out? Tannehill would have a great deal to risk as well by not signing a contract that is going to give him a hefty raise over the next two seasons. The NFL is littered with examples of players that looked poised to earn more and then failed. Josh Freeman is out of the NFL just two years after being looked at as a possible franchise QB on a team filled with free agents. Mark Sanchez, Ryan Fitzpatrick, and Matt Schaub are three players that flamed out as soon as they signed new contracts. Had they waited they would have gotten nothing. Kaepernick’s value would have plummeted the way he played in 2014.
There also may be some roster and coaching instability with the Dolphins moving forward. The team does not have a great salary cap situation and could part ways with a number of players this year. Their left tackle may not be healthy and who knows what meltdown awaits with receiver Mike Wallace, assuming he is still on the team. If things go bad it would be a given that the team is looking for a new head coach sooner rather than later. None of those things are what you want to have happen when you are trying to negotiate a new deal.
So this is one of those deals that sounds like it has benefits for both sides if it happens. Tannehill gets some security and the Dolphins get him to give up a significant amount of free agent years to do so. But don’t get caught up the $105 million. It is doubtful that he will be any more entrenched a starter than Dalton or any of the other mid grade QBs that earn big salaries in the NFL. .
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.