At first I wasn’t going to write about the Prescott contract decision by the Cowboys and just save some thoughts for the podcast but I wound up with a number of questions on Twitter about the contract and thought it made sense to touch on them in a post as well. Most of what Ill be writing is based on a reported offer of $70 million over two years with a $50 million signing bonus and $110 million in guarantees by Dallas on a deal that averages between $33 and $35 million a year.
Why Did You Call This A Lowball Offer?
The leaked numbers, which I’ll assume came from Dallas, are designed to get a quick reaction out of people. “He turned down $70 million over two years? What is he thinking?”. Its not as bad as when Washington basically came out with a team statement but they are numbers thrown out there to make a team look better and put more of the blame on a deal not getting done squarely on the shoulders of the player.
The first thing to consider when talking about a franchise tagged player is what is the cost if the team goes tag to tag when starting the discussion of the framework of a contract. In Prescott’s case he was guaranteed to earn $31.409 million this season and would earn $37.691 million on a second tag. The total salary would be $69.1 million over two years.
For a team to make a reasonable offer they need to not be well above the two year tag number. As I’ve mentioned before I consider somewhere around a 10% raise to be reasonable for a standard franchise player. That would put a reasonable offer at $76 million over two years. You can argue that because Prescott is an exclusive franchise player (barred from free agency) he should be worth more than that but at a minimum that has to be the number.
The $76 million number would also be within the framework of the high end QB contracts in the NFL. Matt Ryan earned $75.2 million, Carson Wentz $77 million, Jared Goff $83 million, and Russell Wilson $90 million. A $70 million offer signals that the Cowboys view Prescott as less than a top level QB. It basically splits the difference between the true franchise QB and the Ryan Tannehill and Jimmy Garoppolo segment of the market (they both earn around $62 million).
The use of the tag tells me one thing while the offer says something completely different. For an extra $1 million there is no way to accept that deal. It’s simply not what you do with a franchise talent nor in line with the market either.
What About the Guarantee?
While I am not a big guarantee guy especially for this position, there are still things with the guarantee that can tell us about the offer. The first thing I would do with this contract is look at the fact that this is a five year deal versus the other players signing a four year contract. As a tradeoff for that extra year the player should get more security for the added season. The easiest way to do that is to look at the guarantee per year on the rest of the market contracts and prorate it out for five years though that also can bring about differences in ways to compare the deals.
For whatever reason guarantees in contracts are never reported as “new guarantees” (most likely because they would make the contract sound worse). We track them that way in our premium section comp modules but most just look at the total number which makes it hard to compare. For example if we use the total guarantee on a contract we have Goff at $137.5M, Wentz at $134.8M, Wilson at $133.8M, Tannehill at $113.8M and Ryan at $100M. That makes a giant gap between the players but those first three players had millions in salary on existing contracts. If we pull that out to compare apples to apples the way we compare cash flows you get Tannehill at $113.75M, Wilson at $112.5M, Goff at $103.75M, and Wentz at $101.25M. In that respect $110M is probably not a lowball number but you can not expect a number to come in under Tannehill’s.
Another point that someone pretty well versed in contracts brought up with this approach is that Prescott really had an existing guarantee since he was tagged already. I had talked before about valuing Prescott’s contract as a two in one contract before (1 + 4 year extension) so it would make sense to see what we are getting as a guarantee over those four years. Here Wilson is at $90M, Goff at $83M, and Wentz at $81M while Prescott would be at $78.6M.
Looking at it those two ways the Cowboys probably needed to up that number to $116M to get things more in line.
Can’t Dak Lose Out By Not Taking the Deal
Not really. Obviously you can not account for a catastrophic injury but at this position those are very rare occurrences so I think you go into this knowing that Prescott is going to be viewed as a starting QB in the NFL and a desirable player. While we don’t know the three year offer Ill assume based on the two year offer that it was around $100-$105M.
To reach the two year number the breakeven point for Prescott is to earn $38.591 million in 2021 and around $35 million in 2022. Any QB that earns $30 million a year would hit both of those contract metrics. So at the very least he should break even while having more upside on a new contract since the third year salary in that deal would be greater than the 4th year salary in this contract offer from the Cowboys.
What if Dallas goes tag to tag? You still are no worse off. Because the offer was a lowball offer the team was only giving an extra $1 million for the second year. So you are breaking even right away there. If they go the third tag route, Prescott’s three year earnings would be between $114.3M(a transition tag) and $123.4M(a franchise tag). If they don’t go the tag route and Dak becomes a free agent he will earn his $69M on two tags plus a new contract, blowing away any three year metric in the current offer. This is the reason that Kirk Cousins has been the highest paid QB in the NFL since he was tagged in 2016 and quite honestly the best case scenario for Prescott’s side.
There are also two other things to consider here in Prescott’s favor. The NFL will likely have more clarity on a 16 or 17 game season in 2021 or 2022. Thus far there has been almost no contract movement to take into account an added game but once its official expect players to want contract values increased accordingly to take into account the added game. Prescott is represented by a very large firm and a group that will likely need to be in front of this push.
Free agency should also be very viable for Prescott. This past year was an odd year where teams really were not looking for QBs because they are still keeping their fingers crossed that the players they drafted in 2017 and 2018 are going to be good or that their old QBs don’t break down. By next year there will be plenty of openings so don’t expect a situation like with Jameis Winston where nothing opened up. If anything there will be bidding wars for a few players.
What about the Coronavirus Impact?
What about it? QBs are going to be Covid proof because of their importance to the game. It’s a concern for other positional players. It won’t be for QBs.
Can Dallas Afford a Franchise Tag Next Year?
That’s a good question. I would lean toward yes. Teams can always open up cap room and while this is something that the virus may impact I would trust Dallas to be able to make it work on the cap. They wont have room to add much talent outside of Prescott but they should not be so pinched on the cap that they can not keep him unless the cap markdown is gigantic.
What Does this Say About Dak’s Future With the Cowboys?
That is a very good question. I was surprised this deal did not get done because I assumed that Prescott was that important to the franchise. Last year the team did the big contract for Ezekiel Elliott. They have made multiple offensive linemen the top paid player at the position. They did right by La’El Collins and essentially found a way to help him make up money from his lost draft status. They worked a deal out with Amari Cooper and DeMarcus Lawrence. You would think for the most important position on the field that this would be an easy one to finalize.
There is really no benefit to Dallas playing the tag game if they see any long term future. The only players I can think of where the tag was used to hold the rights was for Drew Brees back with the Chargers and then the two with Kirk Cousins in Washington. Brees’ tag had more to do with circumstance while Cousins first tag was due to a surprise season and the second was just bad management. Neither was a factor in the long term.
Dallas’ roster is basically in the middle of a two year window. In 2022 they can, if things go bad, begin the process of ripping apart a pretty expensive football team. Maybe they have judged that they don’t believe that Prescott is the type of QB that can succeed without the talent pool around him. Tag to tag may be the most cost effective short and long term option for Dallas and they did not want to get tied down unless it was on a bargain contract. Dallas does get a bad rep for contract management which really isn’t warranted and this may be a case where they decided to be cautious because of the costs involved.
When Should Dallas Have Locked Up Prescott?
Hindsight is always 20/20 but the time would have been in early 2019. I believe Dallas made an offer at that point but it was more of an exploratory offer than really trying to nail the contract down. In 2019 the market had not shifted to 4 year contracts nor were the prices driven up by the Wentz and Goff deals. At the time Prescott was coming off a very good season but one which really took a turn after the acquisition of Cooper. Perhaps there was enough uncertainty there plus labor uncertainty to have worked in the Cowboys favor. Things just spiraled out of control for Dallas not because of the prices of the contracts but I think because of the years on them.
The Cowboys Really Screwed This Up Didn’t They?
That seems to be the prevailing thought these days in most articles but I think it’s a situation where you take a wait and see approach. If Dallas turns around next year and signs Prescott to a four year, $40 million contract they certainly lost out. If they can’t tag him because of the cap they lost out. If they let him walk to go cheap veteran rather than high draft pick they probably lost out. In most expected NFL scenarios I think Dallas will be the loser here while Dak at worst is going to break even.
That said how many times do I read about how much of a mistake the Rams made giving Jared Goff the contract they gave him. How many times do I read about how the Vikings cant win with Kirk Cousins? How many times did I write that the Ravens made an awful mistake with Joe Flacco’s contract? Many of these contracts are perfectly fine within the NFL framework that a starter gets paid big money simply because he starts, yet we constantly criticize them after the fact because the players are not true difference makers like Patrick Mahomes and how there was a better path.
Isn’t the “better path” what the Cowboys are doing here? It’s a risky path but perhaps they see a need for a young draft pick to develop. Maybe they think there could be better value in the market next year or the year after. I like Prescott, think he is pretty good and would be very happy if the team I cheer for were to sign him, but I also don’t put him in that megastar category that houses only a few players. I think this is a case where you have to give things a bit more time to analyze how much they did screw up here.