Now that Cam Newton has finally signed a contract there are a number of opinions popping up about the signing. The biggest was from 49ers cornerback Richard Sherman saying that the contract, which sounds as if it is for the minimum with incentives that can reach as high as $7.5 million, was “disgusting” and disrespectful for a former MVP. So let’s take a look at some of the things that went on here.
Newton’s free agency was certainly an odd one. His former team, the Panthers, did him no favors by dangling him out there in a trade for awhile only to turn around and cut him on March 24, a full week after the start of free agency. It was a bizarre way of doing business for a player they clearly had no intention of keeping and one they had months to negotiate a trade for.
While some people blamed Covid for teams being unable to get a look at Newton there was time to share plenty of information before that. While trades could not be official until March 18 it has become a trend now to trade players weeks before free agency while having to hold off on the formality of the paperwork until the NFL allows it. By the time Newton was released pretty much every team in the NFL had made their decisions on both starters in free agency as well as the primary backup for their team. I did not understand the Panthers decision then and still don’t now. To me that was the most disrespectful part.
Was Newton still looked at around the NFL as an MVP? Probably not. Newton had not been selected to a Pro Bowl since his MVP year in 2015 and while he’s never had much of a supporting cast to play with his numbers traditionally are not that which are expected by a high end starter, as he was usually just under 60% completion percentage and 3,500 yards every year. The injury last year complicated things and just made it worse for him. That said Sherman is right that this is a pretty low number (assuming that the incentives are real incentives and not easier ones like $300,000 for every game in which he has 5% playing time) because even if we ding Newton for a few things it is not as if he is an incompetent QB- at worst he would be a decent starting QB that would make a team respectable but perhaps not put them over the top.
There are only a few examples that I could really pull from that would be somewhat comparable situations to this. One is Ryan Tannehill. Last year Tannehill, who was perennially hurt in Miami, would earn $7 million while being traded to the Titans. However, of that $7 million the Titans only paid $2 million with the Dolphins willing to pay $5 million to get a draft pick rather than cut him. His true market value is somewhere between the two numbers. Newton had been a better QB than Tannehill for his entire career. The only other recent one was Teddy Bridgewater who missed significant time and signed for $6 million with the Jets and followed it up for $7.25 million with New Orleans.
Going way back there was Mike Vick who went to prison and wound up signing a two year contract with the Eagles worth about $3.4 million a year. That would be the equivalent of a contract worth about $5.5 million a season. Kurt Warner, a former MVP, battled injuries and found himself out of a job with the Rams, eventually signing a one year contract with the Giants for $3 million and then a $4 million contract with the Cardinals the following year. Those contracts in today’s cap dollars would be worth $7.4 and $9.3 million respectively. Of those two contracts the Giants situation would be the better comparable since his Cardinals one reflected playing some of the year in NY before being benched for a young Eli Manning.
Given those numbers and some other recent contracts for bounceback type players I would say the historical “correct price” should be between $7 and $8 million for Newton once it was determined that he was not going to be given a starting job. While I am sure that number does sound low to some the fact is that QB has no middle ground. Either you get paid a lot of you do not. The biggest driver is if the NFL values you as a starter or not. Once Newton was no longer valued as a starter his price was going to fall dramatically. Still he is probably undervalued by $5 to $6 million this year.
As for why he would play for this low amount rather than wait until something better pops up I think its simple economics. To maximize your value in the NFL you need to be playing and need to be in the best chance to succeed. Sitting out a year in the NFL rarely works and in most cases means the end of a player’s career. Not only will he get a chance to play but will get a chance to earn a starting job to showcase himself. He probably would not have had that opportunity somewhere else and landing in a bad spot (i.e. getting a Jay Cutler situation when Miami plucked him out of retirement late in the summer) for more money may mean the end. With an eye on the big picture the true value of this contract can be much higher.
The going rate for a starter in the NFL is around $30 million a year. At the low end is Tannehill and the high end is currently Russell Wilson. Newton, if he is healthy and plays well would fall in that in between category. What would a four year extension maybe look like in that case? You would probably be looking at cash flow numbers of $50 million in 2021, $75 million by 2022, $100 million by 2023 and $125 million by 2024. If he lands that it would be the equivalent of signing a five year $25.2 million contract today.
This is one of the reasons why valuing these one year contracts is difficult. Now I don’t think he had many options but one year for $1 million makes far more sense than locking into a two or even three year deal that would have paid him around $8 million a season. More often than not the QB contract signed in free agency around that $8 million number runs for two or three seasons.
I’ve really only seen one contract that reasonably took the ultimate value of a long term contract into play and that was when Russell Okung negotiated a contract with the Broncos that was ultimately a one year “prove it” contract with a four year option at the market rate tacked on. That was back in 2016 and that number looked better on paper because they built in the new contract (the contract itself was ripped by the larger media because they had an issue with Okung repping himself), but that has never happened since. Would something like that have Sherman taking a different view if he was signed for $25 million even if the guarantee was low?
Newton, if he is healthy, should have a bigger market next year than this one. This was also an odd year in general if you were a QB looking for a job. A bunch of teams have questionable rookies that they are tied to for this season- Daniel Jones, Josh Allen, Sam Darnold, Drew Lock, Baker Mayfield, Dwayne Haskins, and Mitchell Trubisky- as well as some older players possibly on their last legs in Ben Roethlisberger, Philip Rivers, Tom Brady, and Drew Brees. There are also the teams like the Raiders and 49ers possibly giving it one last shot with their QB’s. While some of these QBs are going to succeed some are going to fail and at least one of them will likely pay to bring in Newton in 2021. If Newton doesn’t play well as a starter but at least looks competent he should be able to cement himself in that higher end backup role if he wants to go that route.
I would have rather seen a choice like this from Newton if there were options on the table because it would draw more attention to the big vs little picture argument that is sometimes lost when we just look at one contract number. I think the situation here would have made this right path regardless but it is inarguable that there should have been more options for him that probably would have given him a few million more in his pocket while still landing in a good destination. Im not sure if I would call it disgusting or disrespectful (and you can’t blame the Patriots for taking advantage of a situation) but I have a feeling it will be the last time we see something like this happen for a long time.
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.