Two Unique Contracts for Two Super Bowl QBs
On Sunday, Cam Newton and Peyton Manning will be the featured performers in the Super Bowl, reaching the NFL’s pinnacle achievement. One year ago, both had insecure—and ultimately adjusted—contract situations. Let’s examine.
Cam’s Wait for Cash
At this time last year, Newton had completed the four-year rookie contract he received as the first overall pick in the 2011 draft. Newton was the first pick in the new CBA era that drastically reduced first-round contracts, especially at the top. While no one was crying poverty for Newton, his deal—$21 million over four years—paled in comparison to the $50 million (in guarantees alone) received by the previous year’s top pick, Sam Bradford.
The Panthers then used their CBA license to apply a fifth-year option on Newton, securing his 2015 rights at a one-year number of $14.67 million. While Newton did not receive a new deal until the eve of his fifth season, several other quarterbacks were secured with extensions three years into their careers (the first point the CBA allows renegotiations). The Dolphins, Bengals, 49ers and Seahawks all negotiated extensions for their quarterbacks—Ryan Tannehill, Andy Dalton, Colin Kaepernick and Russell Wilson—before their fourth season.
Newton’s $31 million in earnings this year—between salary and bonuses—is impressive, yet it’s the same amount Russell Wilson received in his renegotiated contract after three, not four, years in the league. And while Newton was scheduled to make $14.67 million this year per his option year salary, Wilson was only scheduled to make $1.5 million, a $13 million gap.
Although Newton’s contract falls in line with other top-tier quarterback extensions in recent years, one has to wonder (1) why the Panthers took so long to reward him, especially compared to similarly situated players; and (2) as the clear regular-season MVP, with the salary cap set to rise significantly in coming years, when will his contract addressed again?
Manning’s Shifting Leverage
Having been cut—yes, cut—by the Colts, Manning became a once-in-a-generation franchise quarterback on the open market in 2012, ultimately choosing the Broncos over a dozen other teams. Manning didn’t squeeze the Broncos with his extraordinary leverage at that time, however, as agent Tom Condon told me, he actually accepted less money than offered, signing a five-year contract worth $96 million. The leverage equation that tilted heavily towards Manning in 2012, however, shifted to the team in 2015.
The Broncos wanted Manning to reduce his scheduled $19 million salary significantly, and Manning and Condon ultimately agreed to a $4 million reduction replaced with two $2 million incentives, one for winning the AFC Championship (already earned) and one for winning the Super Bowl. Although Manning was willing to trade guaranteed money for these incentives, it would have been interesting if he had declined to take a reduction. Would the Broncos have cut him? I seriously doubt that.
The Broncos and their cap manager Mike Sullivan (a former agent with whom I negotiated Aaron Rodgers’ rookie contract) have done a nice job structuring and managing Manning’s contract. The original contained zero signing bonus proration, a rare elite level quarterback contract that protects the club’s future ($7.5 million of proration was pushed out into future years in 2013). In stark contrast, the Saints’ contract with Drew Brees, also negotiated in 2012, had $30 million of future bonus proration clogging up their cap. If this is indeed Manning’s “last rodeo” (more on that next week), the Broncos will be left with the relatively insignificant charge of $2.5 million on their ledgers for Manning. That is a strikingly low number for a team with a franchise quarterback who either retires or is released or traded.
Both Cam and Peyton had contract adjustments before a season that will end in the Super Bowl. Cam was (finally) rewarded after a four-year evaluation period; Peyton was (tactfully) reduced in a precursor to potentially being (mutually) retired.
Five Things I Think about this week’s news
1. I don’t get the “criticism” of Cam Newton. Is he really different than other quarterbacks before him, or even different than he has been since entering the league five years ago? And who are these “critics,” aside from a couple of shamed letter-writers? I think there are far more people criticizing the critics than there are, you know, actual critics.
2. Were Calvin Johnson to retire, his $15.95 million salary for 2016 would go away but the Lions would be left with a dead money cap charge of $12.9 million. As for recovery of a prorated portion of Johnson’s bonus, although the Lions would have the legal right to do so—as they did with Barry Sanders—practically I don’t see them going after it. Johnson’s $115 million in career earnings are second all-time for a wide receiver to still-active Larry Fitzgerald ($130 million). Both are rare players with market-changing contracts as both rookies and veterans.
3. The Chargers’ announcement that they are returning to San Diego—at least for 2016—is no surprise. And they cannot say it as it would hurt their leverage with the city, the Spanos family truly does not want to leave San Diego after being there for 55 years. The NFL also wants them to stay, pledging $300 million (a $200 million loan and a $100 million gift) to facilitate a deal. The Chargers now have this added ammunition and the leverage of an existing agreement to move to L.A. to wrangle more from San Diego city leaders.
4. As I have said often in this space, my expectation has always been that the Chargers and the Raiders end up in the same places they have been. Rams owner Stan Kroenke does not want to share his Shangri La, and the Chargers and Raiders do not want to be the ugly stepsister of that building. Thus, pay no attention to the noise of leverage plays from the Chargers or Raiders about the partnership with the Rams, the potential of San Antonio, Las Vegas (good luck with that) or elsewhere. They’re staying.
5. The NFL’s new Thursday Night Football package for 2016-17, adding NBC as a partner along with CBS and the NFL Network, shows the continuing unalterable power of the brand. At a reported $450 million in combined annual rights fees, the new deal would represent a 50% increase over the $300 million received for TNF in 2015. And the NFL is not done, announcing they are in “active discussions” for an OTT (over the top) streaming partner, one I expect to be tech-oriented (think Netflix, Google, Apple). NFL owners never miss a revenue opportunity, and they have now strategically (diabolically?) replaced a segment of Thursday night entertainment programming on both CBS and NBC with NFL football. The inexorable march continues.