The Illusions of NFL Money
We have heard a lot about the fact the NFL salary cap is rising at a good pace, with a roughly $12 million increase to $155 million in 2016. With reports of an average of $28 million of available cap room among the 32 NFL teams, many expect a spending bonanza on this class of free agents. Sorry to rain on the players’ parade, but good luck with that.
A $12 million spending cap increase sounds good, until you realize the reality of how that surplus is soaked up by teams. Increases on upper level veteran contracts can range from $1-5 million per year, meaning five to 10 incumbent players on any given team can account for that increase through existing contract maturations. Further, players whose contracts have been previously mortgaged have prorated charges that count against the new cap. Drew Brees, for example, has a salary of $20 million but a cap number of $30 million. That $10 million charge (due to prorated bonus amounts) uses up nearly the entire cap increase for the Saints.
Despite teams being flush with cap room, I expect free agency to be the three-part event it has become in recent years: 1) a group of eight to 10 “golden ticket” winners (such as Malik Jackson’s agreement in principle to sign with Jacksonville and Kelechi Osemele’s with Oakland) will receive market-setting contracts in the first 24-36 hours of free agency, followed by 2) a larger number of mid-level contracts in the next three to four days, followed by 3) musical chairs, with players trying to get a seat at the free agency table before the money runs out. The pace of movement from one phase to the next seems to accelerate each year, with notable free-agent contracts dissipating by even the second or third day of free agency. There will be some eye-popping contracts that make headlines, but there won’t be many and they will go fast.
An increasing number of teams have been burned in free agency. Just look at the Eagles’ recent selloff of DeMarco Murray and Byron Maxwell, their big free-agent acquisitions just a year ago. During my time in Green Bay, I would ask this question about players on the market: “Why did their incumbent teams not sign them? What’s wrong here?” There’s usually a reason the player is on the market. And due to the schematic nature of football, the chances of a player transferring his full abilities seamlessly into a new system are far less than in basketball or baseball. Thus, some of the most impressive contracts handed out in recent years have been to teams’ own players, deals that were leveraged by agents creating perceptions of an inflated marketplace. (Monday’s announced deal between the Colts and tight end Dwayne Allen for a reported $30 million over four years was one of those deals.)
Better cap management does not necessarily mean more spending. It can allow for teams to better structure contracts to protect the future, which is a good thing. For example, were a team and a player to agree on a contract with $20 million in the first year of a five-year deal, a team with abundant cap room could absorb most or all of that $20 million into this year’s cap rather than loading much of it into a prorated signing bonus. Containing cap amounts in earlier contract years promotes a healthy cycle of spending flexibility. Teams like Jacksonville, Cleveland and Oakland can now give out contracts that will have minimal negative effects if things go south with a player.
For the players’ sake, let’s hope this free agency period has robust and sustained team spending. With players getting squeezed on the way into the NFL (fixed rookie contracts) and on the way out (take a look at the waiver wire over the past few weeks), this group of players is in the sweet spot. If they can’t score good contracts now, they likely never will.
Now, a look at some interesting quarterback deals that went down over the past week…
Despite the Eagles selling off most of their acquisitions from a year ago, re-signing Sam Bradford had to happen. Decisions are about options, and the team’s options beyond Bradford were limited. Thus, the Eagles turned their quarterback-lonely eyes once more to Bradford.
As noted before, the Eagles blew a painless opportunity to lock up Bradford when trading for him a year ago. In saving Bradford from either a significant pay cut with the Rams or a trade to the hapless Browns, they could have easily leveraged a contract extension around the same (or even slightly less) $13 million contract level that Bradford already had; he would have likely taken it. Once the trade was made, Bradford had no incentive to negotiate on those terms.
Now Bradford’s worst-case scenario is $22 million for one year, $2 million more than he would have received with the quarterback Franchise Tag. He receives $18 million this year—an $11 million signing bonus and $7 million salary—with a fully guaranteed $4 million next year (along with a $4 million injury-only guarantee). And if he is on the team for two years, he will receive $36 million with upside—through playoff incentives—reaching $40 million.
Bradford probably had fewer options than the team had, but the Eagles were not willing to find out if that was the case or not. Sam Bradford, the last bonus baby of the old rookie compensation system—his career earnings now at $100 million at age 28—continues to win at the business of football.
The Redskins made a lowball offer to Cousins at the start of the Franchise Tag period, causing the Cousins camp to 1) cut off negotiations, leading to the Tag, and 2) become emboldened with a negotiations starting point of $20 million. Time will tell if the Redskins “marry” Cousins or just “date” him for the year.
The team’s perception of Cousins’ softened the usual risk in using the Franchise Tag: that the player will, in a low rumble of discontent, boycott offseason activity. The Redskins knew that Cousins was intent on running the team in the offseason for the first time and on cue, Cousins signed the one-year Tag deal right away, ensuring the presence of the team’s most important player throughout the offseason and during training camp.
It is still astounding that the quarterback for whom the Redskins mortgaged the future, Robert Griffin, was released (after they could not trade him for a ham sandwich) while the quarterback selected in the fourth round of the same draft is making $20 million. What an interesting quarterback web the Redskins have weaved.
As we will see often in the coming days and weeks of free agency, NFL contracts are not what they appear to be. This was certainly the case with this week’s contract extension for Joe Flacco, with many gasping at the numbers. Let’s briefly look at the reality.
Flacco did receive a stunning $40 million bonus ($25 million paid now, $15 million due in a year) along with a $4 million salary this year. However, prior to the new contract, Flacco had three years remaining for $58.6 million. Now, Flacco’s earnings for the next three years—including the $44 million this year—are $62 million. Thus, for the critical first three years of the contract (only this year is guaranteed), Flacco’s grand total of new money is $3.4 million.
Things aren’t always what they appear to be. Keep that in mind over the next few days.
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