29 Jul 2009
by J.I. Halsell
In the valuing of NFL contracts, there are standard metrics that both clubs and agents utilize to determine the comparative value of contracts. The metrics most often publicized are guaranteed money and total contract value. While these metrics are most certainly important, particularly total guaranteed money, these are not the only metrics used.
Another metric is Average Per Year, which in the case of a free agent contract or draft pick contract is simply the total value of the contract divided by the length of the contract. However, when determining Average Per Year in a contract renegotiation or extension, the formula is total value minus the remaining money to be earned on the previous contract, divided by the total new years of the contract. In the example of a player with one year left on his contract who signs a five-year contract, there are four new years, thereby making it a four-year extension. The Average Per Year is then representative of the new money per new contract year.
The metric of Three-Year Total is simply how much money the player will have made if the team were to terminate the contract after three years. This metric speaks to whether or not a contract is front- or back-loaded. For example, two players both sign five-year contracts worth $50 million with the same guarantee. Using the Average Per Year metric, these contracts are equal. However, lets say that Player A is slated to make $40 million in the first three years and then $10 million over the final two years, while Player B is slated to make $20 million in the first three years and the remaining $30 million over the final two years. The Three-Year Total metric makes this distinction and shows that Player A’s contract is superior to Player B’s, even though the Average Per Year metric shows that they are equal.
Another metric that distinguishes contracts from one another is the Guarantee Per Year metric. This metric accounts for the length of the contract as it relates to guaranteed money. Obviously two players who both receive $20 million in guaranteed money are in a great positions; however, if Player A’s contract is for seven years while Player B’s contract is for four years, then Player B has the more favorable deal, all things equal.
As you read the analysis of the Terrell Suggs and Matt Cassel contracts below, you’ll see me reference these metrics, and those players most comparable to Suggs and Cassel in each of these metrics.
Contract Length: 6 years.
Total Guarantee: $40,000,000.
Guarantee Per Year: $6,666,666.
Total Value of Contract Guaranteed: 64 percent.
Comparable Total Guarantees at Position: MIN DE Jared Allen, $31,750,069; IND DE Dwight Freeney, $30,000,000; HOU DE Mario Williams, $26,500,000; STL DE Chris Long, $24,990,000.
Total Value: $62,500,000.
Average Per Year: $10,416,666.
Comparable APYs at Position: Allen, $12,210,012; Dwight Freeney, $12,000,000; NO DE Will Smith, $10,133,333; Long, $9,600,000.
Three-Year Total: $43,400,001.
Comparable Three-Year Totals at Position: Allen, $38,380,169; Freeney, $37,720,000; Long, $35,000,000; Williams, $29,450,000.
Analysis: Terrell Suggs’ contract set the market for pass-rushing defensive ends. Statistically, Suggs is most certainly deserving of a contract that speaks to his stature as one of the best defensive ends in football. I know that on the roster he’s considered a linebacker because of the Ravens’ 3-4 scheme, but coming out of college he was a defensive end and, practically speaking, in the Ravens’ system he’s a defensive end. With that in mind, when you compare him statistically to the other top pass rushers, Suggs measures up. Since entering the league in 2003 as a 20-year-old, Suggs ranks tied for eighth in sacks with 53. Out of that same group of pass-rushers, Suggs’ 368 total tackles since 2003 ranks him fourth, and his 40.5 tackles for loss over that time period ranks him first. Last year, Suggs led the NFL in Football Outsiders' Defeats metric (defined here) with 36. Two of those Defeats were interception returns for touchdowns. Simply put, Suggs is a disruptive force on a disruptive defense, and at 26 years of age, there’s a strong chance that, if he remains healthy, he could play the entirety of this contract and at age 32, be in line for another pay day, although probably not at the same dollar amount as his current deal.
So who’s the next player to set the market for pass-rushing defensive ends? Carolina's Julius Peppers is most certainly deserving. Since 2003, Peppers ranks second in sacks with 58.5, only trailing Miami's Jason Taylor, who despite his one disappointing season in Washington has 62.5 sacks since 2003. Dallas' DeMarcus Ware has a strong case, as he has 53.5 sacks in the first four years of his career, ranking him first of pass-rushers since 2005. Moreover, his 299 total tackles since coming into the league rank him first amongst pass-rushers, and his 30 tackles for a loss in that time rank him fourth, one and a half tackles behind leaders Suggs and Eagles defensive end Trent Cole.
If Washington defensive tackle Albert Haynesworth gets $41 million guaranteed over seven years ($5,857,143 guaranteed per year) and Suggs gets $40 million guaranteed over six years ($6,666,666 guaranteed per year), then look for Ware or Peppers to get at least $42 million to $49 million guaranteed. Regarding Ware, it is Jerry Jones we’re talking about, so Ware could push that $49 million and possibly $50 million guarantee mark.
Contract Length: 6 years.
Total Guarantee: $27,750,000.
Guarantee Per Year: $4,625,333.
Total Value of Contract Guaranteed: 44 percent.
Comparable Total Guarantees at Position: OAK QB JaMarcus Russell, $32,000,000; DAL QB Tony Romo, $29,294,118; NE QB Tom Brady, $26,500,000; CIN QB Carson Palmer, $24,000,000.
Total Value: $63,000,000.
Average Per Year: $10,500,000.
Comparable APYs at Position: ATL QB Matt Ryan, $11,000,000; STL QB Marc Bulger, $10,841,667; Russell, $10,166,667; NO QB Drew Brees, $10,000,000.
Three-Year Total: $40,500,000.
Comparable Three-Year Totals at Position: PIT QB Ben Roethlisberger, $43,500,000; Palmer, $41,750,000; Russell, $39,365,000; Brady, $37,500,000.
Analysis: As you assess Chiefs quarterback Matt Cassel’s contract, you have to compare it to those of his peers, who have also been awarded long-term franchise quarterback contracts with very little track record as NFL starting quarterbacks. The most recent examples are Green Bay's Aaron Rodgers and Dallas' Tony Romo. Cleveland's Derek Anderson could be considered in this peer group, but because his deal was only a three-year contract we’ll exclude him from this analysis.
At the high end of this specific market (from an Average Per Year perspective) is Rodgers, who, relative to this market, was the most inexperienced when he signed his contract. Prior to signing his franchise quarterback contract in November of 2008, Rodgers had only eight career starts (all of them in 2008). Despite this fact, the Packers were so sold on his future that they signed him to a seven-year contract with five new years at an average new money per year of $12,264,000. Rodgers’ guarantee per new year was $4,000,000 (total guarantee was $20,000,000), and his Three-Year Total was $28,000,000. Comparatively, despite a lower Average Per Year, Cassel received a higher total guarantee per year $4,625,333 (as well as a higher total guarantee of $27,750,000). Cassel also surpassed Rodgers’ contract in 3-Year total with $40,500,000 versus $28,000,000 and percentage of the total value guaranteed, 44 percent versus 33 percent.
The most lucrative contract of this peer group from a guarantee standpoint is that of Cowboys quarterback Tony Romo; however, Cassel’s contract is fairly similar when you compare the metrics. Prior to signing his franchise quarterback contract, Romo had 17 career starts under his belt. In October of 2007, Romo signed a seven-year contract with six new years. Romo’s average new money per year is $11,250,000, his guarantee per new year is $4,882,353, his Three-Year total is $31,000,000, and the percentage of the total value that was guaranteed was 43 percent. Comparing Cassel in these same metrics, Cassel surpasses Romo in percentage of total value guaranteed, 44 percent versus 43 percent. Cassel's Three-Year total blows away Romo, $40,500,000 versus $31,000,000, and puts Cassel at the same level as elite quarterbacks Tom Brady, Carson Palmer, and Ben Roethlisberger. However, Cassel is slightly lower than Romo in guarantee per year ($4,882,353 versus $4,625,333)and is slightly lower in average per year, $11,250,000 versus $10,500,000. So is Cassel the next Tony Romo? According to his contract, the expectation is for him to be pretty darn close, and one could make the argument that over the first three years, he's being paid to be an elite quarterback.
The next group of quarterbacks in line for franchise quarterback contracts are New York's Eli Manning and San Diego's Philip Rivers, but their contracts are going to be in another stratosphere from those signed by Cassel, Rodgers, and Romo, as these two are significantly more accomplished than the peer group analyzed here. (Chicago quarterback Jay Cutler could also be in line for a significant extension if his productivity continues in Chicago as it was in Denver.) However, Washington's Jason Campbell and Buffalo's Trent Edwards, if they prove they’re worthy of long-term deals, could potentially be in the same ballpark as Cassel, Romo, and Rodgers.
33 comments, Last at 03 Aug 2009, 1:07pm by tuluse