Joe Robbins / Getty Contributor

Though he struggled on the field last season, the Colts’ QB surpassed all expectations with his new contract

By Andrew Brandt
July 07, 2016

There was a common belief among agents and NFL executives that Andrew Luck—despite his subpar, injury-riddled season a year ago—would become the league’s highest-paid player in several important categories. Indeed, there may have been more expectations with this contract than any negotiated for a player who wasn’t a free agent, perhaps ever. Let’s examine.

The Colts’ Benevolent History

Under the stewardship of owner Jim Irsay, the Colts have never been shy about rewarding premium players with premium contracts. In fact, the frequency with which it has happened makes it appear that the team relishes doing so. Over the past 15 years, the Colts have paid players such as Marvin Harrison, Reggie Wayne, Edgerrin James, Dwight Freeney, Robert Mathis, Vontae Davis and Peyton Manning the top of their respective positional markets.

Speaking of Manning: his Colts contracts are legendary in any discussion about the business of football, as he was perched at the top of NFL quarterback pay from the moment he was the first overall pick in 1998. Following that record-setting rookie contract, the Colts applied the Franchise Tag before giving Manning a truly stunning contract, in 2004, with a signing bonus that sent shockwaves throughout the league (his $34.5 million then still exceeds Luck’s bonus 12 years later). I vividly remember many conversations involving Manning’s bonus in our board meetings with the Packers, discussing the need for more revenues to compete if contracts for star players were headed toward the Manning stratosphere.

History repeated itself in 2011 when the Colts (again) inexplicably let Manning’s contract expire and applied the Franchise Tag before rewarding him with a five-year deal that included an eye-popping $70 million over three years. Sidelined with a neck injury, Manning never played a down on that contract, which was terminated after one year (and after $26.4 million was paid to Manning) when the Colts saw a grooved path to another franchise quarterback, Andrew Luck.

Just as they repeatedly did with Manning, the Colts curiously chose not to renegotiate with Luck before his leverage increased this year as he headed into his option year. The team could have done an extension a year ago, after the third season of his undervalued four-year rookie contract (the first time the CBA would allow it), and Luck would have had a hard time turning down, say, $30-35 million guaranteed. Instead, having applied a fifth-year option on the contract, at $16.155 million, the Colts did a deal now, too late for a real discount but early enough to not face the Franchise Tag leverage that Luck would have had next year (more below).

The Deal

In analyzing any contract, I always try to find the most accurate comparables. Although some older players come to mind—Eli Manning, Philip Rivers, Aaron Rodgers, Joe Flacco—the most accurate data point to Luck is Cam Newton. The Panthers’ quarterback is another first overall draft pick who, a year ago at this time, was entering his option year prior to a contract extension. Newton’s total over the same number of years was $118.46 million. Luck’s exceeding that number by over $20 million is an impressive increment. Newton and Luck negotiated an extension at the same career point: entering his fifth-year option year (Newton’s option number was $14.7 million; Luck’s was $16.155). Here is a cash flow comparison to the two deals (in millions), and we see that Luck outpaces Newton by some healthy margins.

 

Newton

Luck

After 1 year

$31 million

$44 million

After 3 years

$67 million

$75 million

After 4 years

$82.6 million

$96 million

After 6 years

$118.47 million

$139.125 million

Now on to some key deal markers:

Total Contract Value: $139.125 million.

My Take: I usually pay no attention to overall contract value, as it is simply a number without meaning unless it has security (guarantees) attached to it. Here, however, the number has relevance in comparing to other top quarterback extensions in recent years.

There are many ways to compare deals, but the key to doing so must include an apples-to-apples comparison. With teams and agents valuing extensions, a standard seems to be “new money/new years.” Luck’s new money is approximately $123 million ($139 million minus the existing $16 million), giving him a new money/new years (5) average of $24.6 million. That eclipses the standards in this category set by Joe Flacco ($22 million) and Aaron Rodgers ($22.13 million).

I did have a vision that Luck might have had enough leverage, although not definitive leverage, to secure a fully guaranteed deal, but that was not to be (more below).

Immediate Guarantee: $47 million.

Guarantee by March: $60 million.

My Take: This is a strong number and should be celebrated, although the shine is a bit dulled by what a certain defensive tackle accomplished a year ago.

The $47 million guaranteed at signing—paid through a $32 million signing bonus, $12 million salary and $3 million guaranteed roster bonus in March—is impressive and makes Luck’s “at signing” guarantee the second-highest in league history, trailing only Ndamokung Suh’s astounding $60 million upon signing with Miami as a free agent last year. Luck, however, “catches up” to Suh by March, when $60 million of his contract becomes fully guaranteed.

Three-year earnings: $75 million.

My Take: Even including Luck’s $16 million he was scheduled to make this year, this is a record-setting number that eclipses the standard set by other comparable quarterbacks replacing contract years with similar numbers in their scheduled contracts. The $75 million compares favorably to the previous standard of the contract mentioned above between the Colts and Peyton Manning ($70 million) and the numbers for Eli Manning and Philip Rivers ($68 million) and Cam Newton ($67 million).

With the high expectations for this contract, this is about where we expected the three-year number to be.

Total guaranteed money: $87 million.

My Take: This is strong and obviously zooms past the existing market that topped out at around $64 million. And here are the trigger dates for the full guarantee to activate:

* $47 million at signing

* $60 million by March 2017

* $81 million by March 2018

* $87 million by March 2019

This is admittedly nitpicking with this deal, but there are a couple caveats. As noted above, Luck was scheduled to make over $16 million, so the real guarantee is “only” just over $70 million, a record nonetheless. And the final $6 million that brings the total guarantee to $87 million is for injury only, not very “secure” in guarantee strength.

Once the number catches up to Suh’s by next March, these numbers are all record-setters.

Great Guarantee Hope

Luck cashed in on a contract that had great expectations and lived up to most of them. Perhaps naively, I thought he might have been the great hope for NFL players and been able to match the security of NBA and MLB players in their contract strength. Readers of this space know exactly what that hope is: a fully guaranteed NBA/MLB-type deal. Could Andrew Luck have been the chosen one: the first veteran NFL player to secure full security from his contract?

Before signing, Luck was one of a handful of players in the league that had the leverage to push for a fully guaranteed deal and, as fortune would have it, the Colts were one of the few teams in the league that might have been willing to negotiate such a deal.

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Were Luck and his agent to have pushed the issue of a full guarantee, the Colts’ natural reaction would have been to point to the precedent of no one getting guarantees beyond the third or even a portion of the fourth year of a five- or six-year contract. To that Luck and his agent could have asked, “Really, you’re worried about having to cut me when I’m 31 years old?” The Colts would then respond with standard response about precedent and policy (I used that line all the time when negotiating for the Packers), to which Luck could have said, “Believe me, all the other players on the roster know they don’t have this kind of leverage.”

Having said all that, I do realize there were still negotiating obstacles in place for Luck, which brings us back, as always, to the CBA. Luck was not only under contract for a CBA-allowed option year, but also there were potential Franchise Tag years ahead. And then we are back to the discussion regarding Von Miller: the Tag, or even the potential future use of the Tag, mitigates the appearance of massive leverage.

For those of us longing for a truly guaranteed elite NFL contract, however, there might be hope around the corner. Drew Brees is entering the last year of his contract, with a $20 million cash number and $30 million salary cap number, and would require a cap-killing third Franchise Tag next year for the Saints to control his rights. In other words, he presents as a true candidate for a fully guaranteed deal, assuming a relatively short-term contract (three to four years) reflective of his age and experience.

Our lonely (fully guaranteed) eyes turn to Drew…

Question? Comment? Let us know at talkback@themmqb.com

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