- Four NFL superstars just got paid big money, but the deals are not really groundbreaking
We are winding down what may be the busiest week on the NFL calendar in the business of football. When front offices watch their teams’ opening kickoffs this weekend, they will let out a collective sigh of relief as the vast majority of work for the year has been done. After a seven-month offseason primarily concerned with the business of football, it is time to turn the teams over to the coaches and players for the actual playing of games.
In the NFL, like most business, deadlines spur action. As Week 1 approaches each year, contract (or trade) negotiations that had been dormant all offseason suddenly take on urgency, offers become more realistic, stakes are raised and deals become ripe. This is what just happened with contract extensions for four of the best players in the NFL: Aaron Rodgers, Odell Beckham Jr., Aaron Donald and Khalil Mack. These truly elite talents are now under contract for six or seven years with the Packers, Giants, Rams and Bears, respectively.
The contract extensions for these superstars certainly have staggering numbers, putting all four of these transcendent players at the top of the marketplace for their position. And media and fans have gawked at the numbers, and rightfully so. However, from this point of view, the contracts have not made the difference I was hoping they would make in the business of football. We know the numbers are eye-catching. But…
The contracts do not break new ground. They do not push the envelope on NFL player contracts and guaranteed compensation in the NFL. They do not set new standards in terms of structure and language that other star players can latch on to. They do not go where contracts had not gone before in terms of security after the early low-risk years of the contracts. They force these players—some of the best of the best—to assume all the risk on these deals.
I know what you’re saying: “But Andrew, these deals are the biggest ever for their positions!” Yes, that is true. But they could have been more impactful—perhaps not with the numbers, but with the structure and security. We didn’t see the type of change that can perhaps only happen if the players had been willing to wait instead of signing while still under contract. Here is the key point: NFL team executives are smart, and know that it takes a rare player to risk injury and roll the dice toward free agency, especially with vast sums presented to them as here.
Four-year extension value: $134 million ($33.5 million average per year)
Six-year total contract value: $174 million ($29 million APY)
Non-contingent guarantees: $79 million
Contingent guarantees: $21 million
Three-year cash: $103 million ($34.3 million APY)
I admit to bias when talking about Rodgers, someone I became close with during our three years together with the Packers. From the moment he arrived in Green Bay, I noticed his off-the-charts intelligence, innate leadership qualities, wry sense of humor and ability not to take things too seriously. And that does not even mention the on-field abilities. To me there is no debate as to who’s the NFL’s most valuable player. Now he takes his rightful place as the owner of the largest contract in NFL history. However—and I know this sounds odd talking about the biggest contract the sport has ever seen—the deal still does not break new ground with NFL player contracts.
As I wrote here last month, I did not think a contract would happen this year, with the obstacle of two years remaining on his pre-existing deal being too much of an impediment. However, the Packers offered Rodgers enough money to secure an extension without entering unknown territory that they so wanted to avoid.
There was much talk about this contract prior to its completion, some of it acknowledged by Rodgers, about it containing either (1) a “percentage of cap” annual allocation, (2) adjusting to the marketplace to ensure Aaron was always at the top of it, or (3) guarantees throughout the length of the contract, or at least close to it. As much as Rodgers deserves to be the player to break those barriers, it wasn’t going to happen with the Packers sitting on two years of a pre-existing contract.
And now they have six years of contract, only two of which are guaranteed as of now. Of course, the Packers are never going to cut Aaron Rodgers, but I remember saying the Packers would never part ways with Brett Favre. The point is … they can. Contracts are about allocation of risk, and even Aaron Rodgers assumes risk on this deal after 2019.
Instead of breaking policy and precedent, the Packers simply threw money at the problem—the most money a team has ever thrown at a player—and secured the face of the franchise for the next six years. Rodgers has record-setting cash flow after Year One, Year Three and beyond. But the Packers have their preferred structure, not venturing into new frontiers of player compensation.
And while players like Kirk Cousins and Matt Ryan are not the caliber of Rodgers on the field, they were in better positions than he was in the business of football. Cousins was a true free agent, able to negotiate with all 32 teams before securing a fully-guaranteed three-year contract at $28 million APY, and having another bite at the free agency apple in three years. Ryan, with only one year left on his existing deal, secured $94.5 million over three years, in the same ballpark as Rodgers’s $103 million.
In the NBA or Major League Baseball, it is players who crave longer deals, as they are secure and guaranteed. In the NFL, it is teams that crave longer deals, as they are rarely guaranteed past the early low-risk years of the deal. Even Aaron Rodgers could not move the needle.
Again, to be clear: Rodgers got a staggering contract on the numbers, and deserves every bit of it. However, the Packers can feel good about rewarding the face of the franchise while not crossing into uncharted territory in policy and precedent.
Five-year extension value: $90 million ($18 million APY)
Six-year total contract value: $98.5 million ($16.4 million APY)
Non-contingent guarantees: $41 million
Contingent guarantees: $25 million
Three-year cash: $52.7 million ($17.6 million APY)
I remember shaking my head in the spring at a report that Beckham would “never set foot on the field” without a new contract. Of course, he did for a few months, and now he has that contract.
The freshest data point for the wide receiver marketplace was set in March when free agent Sammy Watkins not only secured a $16 million APY deal from the Chiefs, but did so on a three-year contract. Assuming even a limited positive trajectory with the Chiefs, Watkins, 25, could leverage free agency again to have more six-year earnings from this point forward than Beckham.
Watkins is obviously not the player that Beckham is, but reached the enviable status of free agency and an ability to talk to all 32 teams. The Giants put enough money in front of Beckham and his agent to have him bypass the lure of free agency. Thus the value and structure of the contract, while lucrative, reflect that.
Beckham was scheduled to make $8.5 million this year; he will now make over $21 million—$20 million of it coming in the form of a signing bonus paid in full by February. He will make roughly $38 million over the next two years, certainly more than the $8.5 million due this year and a potential franchise tag number next year. However, as of now, Beckham only has $2.75 million of fully guaranteed money after 2019, a pittance for a contract such as this. True, Beckham has an additional $21 million of injury guarantees, which should later convert to full guarantees, but as of now, beyond that $2.75 million, this six-year contract’s security for the player does not extend past 2019. For a player of Beckham’s caliber, that is a win for the Giants.
Contract negotiations are about allocation of risk. The Giants have risk on this contract for two years. Beckham assumes the risk after that. And, in a sport with an average career length of roughly three years, Beckham is now tied up contractually through his 10th NFL season. He may never in his career have the leverage that Sammy Watkins had in March.
Again, the clear expectation is that the Giants are not going to cut Beckham after two years, or three years, or four years, or five years. The point is … they can. And when Beckham’s agent heard that from the Giants, he should have said: “Ok, I believe you, just guarantee those years then.” And maybe he did.
To be clear, Beckham got a strong deal. However, there will be better ones for lesser players—with more security—in the coming years. The Giants now have their premiere player locked up for the prime of his career at a rate that may look like a bargain in a couple of years. And if Beckham’s career goes south for some reason, due to injury or otherwise, the Giants can exit the deal with no remaining financial obligation.
Six-year extension value: $135 million ($22.5 million APY)
Seven-year total contract value: $142 million ($20.3 million APY)
Non-contingent guarantees: $50 million
Contingent guarantees: $37 million
Three-year cash: $67 million ($22.3 million APY)
After two years of negotiations and two training camp holdouts, Donald and the Rams finally found common ground in a negotiation that was, to me, always about comparing Donald to a player coincidentally now playing next to Donald—Ndamokung Suh. Suh’s free agent contract with the Dolphins in 2015 contained a staggering $60 million guaranteed at signing, a number that Donald and his agents likely focused upon, with the Rams refusing to pay “retail” for a player under contract. As it turned out, Donald could not approach that metric, but exceeded Suh’s mega-deal in other categories.
Donald’s $50 million guarantee “at signing”—without any other contingencies—is $10 million below that of Suh, yet has $87 million of total guarantees, $77 million of which have no offset language. Only four NFL players—Aaron Rodgers, Matt Ryan, Matthew Stafford and Andrew Luck, notably all quarterbacks—have more guaranteed money than Donald.
Of the $50 million initial guarantee, $40 million comes in the form of a signing bonus payable in full by March, the highest payout for a non-quarterback within that time frame. The Rams, in allocating so much to signing bonus (prorated for cap purposes), chose to preserve present cap space over future flexibility, counting only $8 million of that signing bonus on the cap this year, with the other $32 million hitting their cap over coming years.
Now three years removed from that stunning Suh contract, achieved through the leverage of free agency, perhaps the Rams felt that enough time had passed to feel comfortable paying Donald at “retail” prices rather than a discount due to an existing deal. As with all these deals discussed, the Rams threw enormous amounts of money at Donald to lure him to forego free agency, lock him up for the bulk of his career and preserve their structure and guarantee precedents.
Six-year extension value: $141 million ($23.5 million APY)
Seven-year total contract value: $154.8 million ($22.1 million APY)
Non-contingent guarantees for two years: $60 million
Contingent guarantees: $30 million
Three-year cash: $73.7 million ($24.56 million APY)
The Donald deal clearly set the stage for this contract. Despite reports of Mack passing Donald by with this deal a day later, the contracts are essentially the same due to where the players “started” on their pre-existing contracts. Donald was scheduled to make roughly $7 million in 2018, half of Mack’s scheduled $14 million. Taking into account the $7 million difference in where they started from, the value of the extension and the three-year cash flow are exactly the same.
The key difference for Mack, and one that agent Joel Segal can boast about, is that he matched the Suh contract with $60 million secured at signing. Again, however, taking into account Mack’s $7 million head start, the $10 million difference in guarantee at signing is effectively a $3 million difference. Nevertheless, Mack hit the mark of Suh that has been lingering out there as the gold standard for defensive players for the last three years.
The Bears went all-in on Mack in a way that few teams have ever done with any player. Not only did they surrender the truly precious draft capital of two first-round picks—although getting a second-round pick in return along with Mack was a deft maneuver—but they also did a companion mega-contract that sets records for defensive players. From a risk point of view, the Bears have little-to-no margin of error here. If Mack is not consistently elite, or is injured, they are not getting the value they paid for.
As with all of these deals, however, there is little security (as of now) past 2019, with only $3.7 million guaranteed past next year. Of course, the clear expectation is that the contingent guarantees will activate toward guaranteeing Year Three. And there is no security beyond that in this seven-year contract. Once again, a team—this time the Bears—has secured an elite player with eye-popping numbers without venturing into new ground with structure and guarantees.
How to break ground?
Ultimately, for Beckham, Donald and Mack—all players in their option year of rookie contracts—the discussion of not reaching maximum leverage leads us back to the CBA and the rookie pay system. Not only are all drafted players required to sign four-year contracts, but teams have a further fifth-year option on first-round picks. Thus, players like Beckham, Donald and Mack remained under contract this year at highly undervalued rates, giving the Giants, Rams and Bears some leverage. Having the fifth-year option means teams are able to secure extensions that keep players tied up for multiple years, never reaching their ultimate leverage point of free agency. The rookie compensation system is the NFL’s gift to the teams that keeps on giving.
Finally, I am often asked what it will take for NFL players to break through barriers and secure fully-guaranteed contracts in the manner of NBA or MLB players. The answer is long and complicated, and I will address it more fully in a subsequent column, but it is two-fold.
First, individual players with maximum leverage such as these players need to push the envelope. Although, as discussed above, the envelope is hard to push when there is a pre-existing contract. True gains are made when free agency is in play, as with Cousins and Suh in recent years.
Second, and this is worthy of a longer discussion, the collective agent for the players, the NFLPA, must aggressively pursue more stringent team spending requirements in the CBA. Teams are currently required to spend 89% of the cap, and only inspected on their spending only every four years. Were that, say, a 95% of the cap requirement with inspection every year, or even every two years, the player compensation landscape would look different. We would see much better “collective guarantees” for teams, obviating some of the need for individual guarantees. Teams need to be held better accountable for their spending; that would help the overall security of NFL player contracts.
The busy season of the business of football now winds down as the games begin, but—as I know better than anyone—the business of football is truly year-round. Don't worry; I’ll get us through it.
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