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15 Mar 2010

Under the Cap: Reviewing the Mega-Money Deals

by J.I. Halsell

Ten days into the uncapped year of 2010, we have seen that the spending frenzy that some anticipated with the removal of the salary cap has not materialized. This development is in line with conversations I had with cap guys prior to the new league year in which they said they anticipate teams operating not too differently from previous years in 2010 . Moreover, we saw teams such as the Steelers and Falcons come out in the media, whether directly or indirectly, saying that they were going to impose their own "internal" salary cap. My hunch at the time was that these teams were in line with the majority of teams, as most teams err on fiscal conservatism in a normal salary cap environment. Given the uncertainties surrounding an uncapped year and how the NFL would interpret the rules in this new environment, this sense of conservatism would only be heightened. An unimpressive lineup of unrestricted free agents due to the uncapped year didn't help spur any spending.

As the league year commenced, we saw players like defensive end Julius Peppers, linebacker Karlos Dansby, safety Antrel Rolle, and cornerback Dunta Robinson sign very lucrative contracts. However, these signings would have occurred at their respective price points even if there were a salary cap. None of these teams spent money well in excess of the players' market values as top-tier free agents at their positions, as the tables below illustrate.

The table below shows that, from a guarantee-per-year perspective, by giving Peppers $7 million per year, the Chicago Bears felt that he was on par with pass rushers DeMarcus Ware of the Cowboys and Terrell Suggs of the Ravens, who both received $6.7 million per year. However, Ware and Suggs were 27 years old and 26 years old, respectively, when they signed their six-year deals. Given his age, it's slightly concerning that the Bears gave the 30-year-old Peppers a similar six-year term. Although, as Peter King of SI.com pointed out, the Bears can get out of the Peppers deal before Feb. 10, 2011, while only having paid Peppers $20 million ($19.9 million of guaranteed money plus $100,000 workout bonus). The $22.1 million of his guaranteed money is guaranteed only for injury up until that date.

Peppers v. Highest Paid Starting Defensive Ends (in millions)
Player Club Age at
Signing
Sign Date New
Years
Guarantee Guarantee/
Year
Guar. % Total
New
Average
Per Year
3-Year
Total
Julius Peppers CHI 30 3/6/10 6 42.0 7.0 50 84.0 14.0 42.3
DeMarcus Ware DAL 27 10/27/09 6 40.0 6.7 51.3 78.0 13.0 45.0
Jared Allen MIN 26 4/23/08 6 31.8 5.3 43.3 73.3 12.2 38.4
Dwight Freeney IND 27 7/13/07 6 30.0 5.0 41.7 72.0 12.0 37.7
Terrell Suggs BAL 26 7/15/09 6 40.0 6.7 64.0 63.5 10.4 43.4

The table below compares newly minted Dolphins linebacker Karlos Dansby's per-year average to 2009's prized free-agent linebacker Bart Scott of the Baltimore Ravens. Dansby and Scott have moved the premier inside linebacker market to the $22-million guaranteed mark. However, Dansby's deal provides the player with slightly more guaranteed money on a slightly shorter contract. If you're 49ers Pro Bowl linebacker Patrick Willis, then you're anticipating an extension in the near future of roughly $5 million guaranteed per year, given Dansby's $4.4 million guaranteed per year. On a five-year extension, this would put Willis at $25 million guaranteed. Further, given Seahawks linebacker Aaron Curry's $5.7 million guaranteed per year, Willis could command up to $28.5 million guaranteed on a 5-year deal.

Dansby v. Scott (in millions)
Player Club Age at
Signing
Sign Date New
Years
Guarantee Guarantee/
Year
Guar. % Total
New
Average
Per Year
3-Year
Total
Aaron Curry SEA 23 8/8/09 6 34.0 5.7 56.6 60.1 10.0 35.5
Karlos Dansby MIA 28 3/8/10 5 22.0 4.4 51.8 42.5 8.5 27.0
Bart Scott NYJ 28 2/28/09 6 21.6 3.6 45.0 48.0 8.0 27.0

The Antrel Rolle contract with the Giants sparked debate regarding whether or not it was the most lucrative safety contract in NFL history. This debate highlights the importance of gauging the total value of a contract versus the number of years a player is committing himself to a team. It also highlights how short memories are. To the former point, when looking at Rolle's value relative to the number of years he has contractually obligated himself to, one will see that Rolle's average per year is $7.4 million. This average per year trails the $7.9 million per year of Rolle's former teammate Adrian Wilson and trails the $7.5 million per year of the Steelers' Troy Polamalu and Colts' Bob Sanders. To the latter point of short memories, Rolle's $37 million total value, not only falls short of Sanders' $37.5 million but also falls short of the Ravens' Ed Reed's total new money value of $38.1 million on a contract he signed nearly four years ago. Also forgotten in this debate is the Cowboys' Ken Hamlin, who got $37.5 million on his 2008 contract, which realistically is actually $39 million in value when you factor in easily achievable log escalators in the contract.

Rolle v. Highest Paid Starting Safeties (in millions)
Player Club Age at
Signing
Sign Date New
Years
Guarantee Guarantee/
Year
Guar. % Total
New
Average
Per Year
3-Year
Total
Adrian Wilson ARI 29 6/5/09 4 15.5 3.9 48.8 31.8 7.9 24.0
Troy Polamulu PIT 26 7/23/07 4 11.0 2.7 36.4 30.1 7.5 23.7
Bob Sanders IND 26 12/28/07 5 20.1 4.0 53.6 37.5 7.5 24.0
Antrel Rolle NYG 27 3/6/10 5 15.0 3.0 40.5 37.0 7.4 22.5
Kerry Rhodes ARI 25 4/10/08 5 20.0 4.0 59.7 33.5 6.7 22.5
Ken Hamlin DAL 27 7/15/08 6 15.0 2.5 38.5 39.0 6.5 19.5
Ed Reed BAL 27 7/7/06 6 15.0 2.5 39.4 38.1 6.4 18.4

Falcons cornerback Dunta Robinson's contract provides a team salary number (formerly known as a cap number) of $12 million in 2010. In subsequent years, his team salary numbers are $6.5 million, $7.75 million, $8.75 million, $10.75 million, and $11.25 million. By giving Robinson a guaranteed roster bonus of $7 million in lieu of a signing bonus of the same amount, the Falcons are taking the full amount of $7 million on their books in the current year instead of doing so over the term of the contract. If Robinson becomes a bust, the club's exposure to higher dead money is mitigated by usage of the roster bonus. While mitigating their team salary risk, the Falcons were still able to make Robinson the second-highest paid corner in the league along with the Eagles' Asante Samuel (they are both behind Oakland's Nmandi Asomugha).

Robinson v. Highest Paid Starting Corners (in millions)
Player Club Age at
Signing
Sign Date New
Years
Guarantee Guarantee/
Year
Guar. % Total
New
Average
Per Year
3-Year
Total
Asante Samuel PHI 27 3/1/08 6 23.6 3.9 41.3 57.1 9.5 32.1

DeAngelo Hall WAS 25 3/4/09 6 21.5 3.6 39.8 54.0 9.0 30.0
Dunta Robinson ATL 27 3/6/10 6 22.5 3.8 39.5 57.0 9.5 31.5
Chris Gamble CAR 25 11/28/08 6 23.0 3.8 43.6 52.8 8.8 23.3
Corey Webster NYG 26 12/15/08 5 21.0 4.2 48.3 43.5 8.7 29.5
Kevlin Haden IND 25 2/19/09 5 17.8 3.6 41.3 43.0 8.4 22.5
Marcus Trufant SEA 27 3/27/08 6 21.0 3.5 41.8 50.2 8.4 28.0

In years past, we would see lucrative free-agent contracts signed through the first week of the league year. This year, due to the watered-down market, we saw the lucrative contract period only last through a weekend. The contracts discussed above were all signed between March 6 and March 8. The second tier of free agents are now signing deals, but accordingly, none of these deals are going to put any of these players in the top ten of their respective positions. The next group to keep an intriguing eye on are this year's crop of restricted free agents (RFAs). As I've written previously, there has been very little movement in the RFA market historically. However, now that we know at what level all RFAs have been tendered (hat tip to Mac's Football blog ), we can do some "tea leaf reading" and see what players are truly viable candidates to move via restricted free agency.

Possible RFA Movement
Player Position Club Tender Compensation
John Beck QB BAL Original Round 3rd Round
Troy Smith QB BAL Original Round 5th Round
Danieal Manning S CHI Original Round 3rd Round
Rashad Jeanty LB CIN First Refusal None
Ryan Moats RB HOU Original Round 3rd Round
Clint Ingram LB JAX Original Round 3rd Round
Tarvaris Jackson QB MIN Original Round 3rd Round
Mike Bell RB NO First Refusal None
Anthony Hargrove DL NO Original Round 3rd Round
Kellen Clemens QB NYJ Original Round 3rd Round
Kirk Morrison LB OAK Original Round 3rd Round
Omar Gaither LB PHI Original Round 5th Round
Chris Gocong LB PHI Original Round 3rd Round
William Gay CB PIT Original Round 5th Round
Charlie Whitehurst QB SD Original Round 3rd Round
O.J. Atogwe S STL First Refusal None
RFAs Who Could Be Traded
Player Position Club Tender Compensation
Marcus Spears DE DAL Original Round 2nd Round
Brandon Marshall WR DEN 1st Round 1st Round
Alex Barron OT STL 2nd Round 2nd Round
Darryl Tapp DE SEA Original Round 2nd Round
Cadillac Williams RB TB Original Round 2nd Round
Carlos Rogers CB WAS Original Round 2nd Round

As a salary cap guy, when I weigh the risk in giving up a draft pick for an RFA, I see the option as being between an inexpensive third-round draft pick or lower versus an established player who I'm going to have to pay more than a draft. It is this thinking that often precludes teams from giving up draft picks for RFAs. However, given the talent in this year's RFA pool, teams could be slightly more willing to make the exchange.

As you look at the list above, you'll notice four quarterbacks who can be had for a third-round pick and one at a fifth-round pick. Given the failure rate of young quarterbacks out of college, a club may be willing to give up a mid-round pick for a quarterback, such as a Kellen Clemens or Tarvaris Jackson, who not only has had the opportunity to learn for three years at the NFL level, but even start a few games over the course of his career. Now are you likely to find your next franchise quarterback in this group? Probably not, but you probably would not have found your next franchise quarterback with the third-round pick you gave up in order to acquire one of these players either.

An interesting name on the above list who can be had for a fifth-round pick is Steelers cornerback William Gay. Last week, due to his significant playing time and low base salary, Gay received the fourth highest performance-based paycheck in the league at $325,607. Perhaps, Gay can add to his offseason earnings via an offer sheet from another team.

When looking at where players have been tendered, keep in mind that these tenders tell you how much a club values a player. For example, in lieu of giving running back Cadillac Williams the more lucrative first-round tender or first- and third-round tender, the Bucs chose to extend the original-round tender, which is for less money and would only give the Bucs a second-round pick if he were to leave as an RFA. The tea leaves tell you that the Bucs are willing to part with Williams. Given their willingness to take a second-round pick via restricted free agency for Williams, they would probably be willing to take a mid- to late-round pick for Williams in a trade. In all likelihood, a second-round pick is way too steep for another club, so the trade scenario is the more likely option for Williams to move teams. This scenario highlights that the above players can move teams not just for the RFA compensation they've been tendered at, but can also move for slightly less via trade.

Similar to Williams, fellow 2005 first-round picks Carlos Rogers and Marcus Spears are very much on the trade market, as indicated by their original-round tenders.

Follow J.I. Halsell on Twitter: @SalaryCap101

Posted by: J.I. Halsell on 15 Mar 2010

21 comments, Last at 22 Mar 2010, 11:16pm by J.I. Halsell

Comments

1
by justanothersteve :: Mon, 03/15/2010 - 3:48pm

I'm a bit confused by this. Cadillac Williams was one of the first picks in his draft and easily in the first round. Yet, his compensation is listed as second round. T Jackson and Clemens were both 2nd round QB picks and are both listed as third round compensation yet original round tender. Could someone explain what I'm missing here? Thanks.

2
by J.I. Halsell :: Mon, 03/15/2010 - 3:52pm

Very valid question, see my discussion of the "Upgraded Tender", http://www.footballoutsiders.com/under-cap/2010/under-cap-front-office-d...

J.I. Halsell
Salary Cap Analyst | "Under the Cap"
Twitter | @SalaryCap101

3
by Jimmy :: Mon, 03/15/2010 - 4:56pm

Is this explanation the same for Daniel Manning? (ie the second round tender applied to Nick Roach and possibly Jamar Williams)

Also great article.

5
by J.I. Halsell :: Mon, 03/15/2010 - 5:11pm

Yes. Roach & Mark Anderson received Upgraded Tenders, so Manning as a former 2nd rounder who received the original round tender, the Bears would receive a 3rd in return.

And thanks.

J.I. Halsell
Salary Cap Analyst | "Under the Cap"
Twitter | @SalaryCap101

8
by justanothersteve :: Mon, 03/15/2010 - 6:49pm

Thanks. Looking at the list, I was surprised to see Bell and Atogwe just have first refusal tenders. Unless there's some sort of collusion going on, I can't see some team offering a poison-pill contract to one of these two.

6
by Marko :: Mon, 03/15/2010 - 5:17pm

The heading on the third table is incorrect.

EDIT: It's now fixed.

4
by matthewglidden :: Mon, 03/15/2010 - 5:08pm

Perhaps it's living too long on the East Coast, but I'd like to see Seattle pick up a backup QB like Clemens, or even Troy Smith, if he'd had more play time.

Any Ravens fans who can comment on Smith's outlook? Happy to trade for the 5th rd pick?

7
by E. Poe (not verified) :: Mon, 03/15/2010 - 6:42pm

From what I've seen of him, Smith actually has looked fairly decent, although his decision-making and coverage-reading skills need some polishing. For a smallish QB, he seems to be able to make throws with decent consistency, but needs some patience and has a tendency to flush from the pocket (which is partially due to the Ravens' utilizing him in the "Suggs Package", thereby encouraging such behavior).

I still don't know that we've seen him in live action (and non-specialized) situations enough to be a decent judge, but I can say that I suspect most Ravens fans (myself included) would be glad to get a 5th-rounder for him, and he'd offer solid value for the pick for whichever team is handing it out. From my perspective, it seems like a favorable situation for both sides; the task now is simply finding a team that is willing to take a flier on him.

18
by matthewglidden :: Wed, 03/17/2010 - 3:06pm

Thanks! Looks like Seattle went for Charlie Whitehurst, a "vet" with an extra season of clipboard-holding experience over Smith, yet no professional passes thrown. :-/

9
by MJK :: Mon, 03/15/2010 - 7:57pm

One question that I hoped you'd address...

It feels like at least one team has thrown fiscal conservatism out the window and is spending more in the uncapped environment: the Patriots. According to Mike Reiss, and counting Vince Wilfork as a free agent (not quite right, since they franchised him, but still money that they had to spend in free agency), the Patriots have spent $84 M on just five players in the first 10 days of free agency, with $45.5 M guaranteed. It's been a bit under the radar, because all five were their own free agents (Wilfork, Faulk, Bodden, Neal, and Banta-Cain), but were free agents nonetheless, and in most years, the Patriots don't even resign their own free agents this aggressively.

Do you think this is a function of the uncapped year combined with the fact that New England is one of the "big" markets, or is it just a random confluence where the Patriots happened to have five key players they wanted to retain all hitting free agency at once?

10
by Alternator :: Tue, 03/16/2010 - 1:43am

Wilfork and Faulk were not going anywhere unless the players dug in their heels and demanded an exorbitant contract. Neal was probably going to be resigned anyway, and I don't know about Bodden. Given how much Banta-Cain got, I suspect that was a pure "No salary cap, we have the money, he's useful" situation.

11
by Bobman :: Tue, 03/16/2010 - 3:18am

MJK, They're just copying the Colts sign-your-own model, trying to be successful, you know....

;-)

Could you imagine if they actually consummated the long-rumored Peppers deal (if they were ever in it)? That would have REALLY been a "the damn has broken" offseason--close to doubling the figures you just posted. By that measure, they look positively parsimonious.

12
by blakelock (not verified) :: Tue, 03/16/2010 - 2:11pm

i know i'm missing something here but i'm trying to learn so bear with me.

it sounded to me like a team interested in cadillac williams could either (1) sign him under a new contract as a RFA which requires them to give up a 2nd round pick OR (2) they could just directly acquire cadillac through trade for a mid-late round pick. option (2) is obviously better so what am i missing?

cheers,. love the site.

13
by J.I. Halsell :: Tue, 03/16/2010 - 2:30pm

You're correct, from an acquiring team's perspective, option #2 (trade) is the more attractive option which is why I say it's the more likely scenario of the two.

J.I. Halsell
Salary Cap Analyst | "Under the Cap"
Twitter | @SalaryCap101

14
by Theo :: Tue, 03/16/2010 - 8:34pm

Blakelock wants to know why option 1 would even exist, since option 2 is obviously better.
He figured that one out all by himself.
;)

17
by blakelock (not verified) :: Wed, 03/17/2010 - 9:59am

exactamundo!
do you think i'm ready to enter the field of free agent signing now? dang, the redskins have already hired a new GM. :( maybe the lions?

16
by FourteenDays :: Tue, 03/16/2010 - 11:05pm

Think of it as a negotiation...by making the RFA offer, Tampa Bay is starting out with the demand of a 2nd round pick, but if a team really were interested in Cadillac, they could probably bargain that down.

15
by JasonK :: Tue, 03/16/2010 - 10:59pm

Here's my issue: I don't think the 30% rules apply. Looking at the CBA, I can't seem to figure out why Halsell and other writers I have read think that the 30% rules apply to the contracts currently being signed.

From Article XXIV on pp. 133-34:
Section 8. 30% Rules:
(a) No NFL Player Contract entered into in an Uncapped Year prior to the Final League Year may provide for an annual decrease in Salary, excluding any amount attributable to a signing bonus as defined in Section 7(b)(iv) above, of more than 30% of the Salary of the first League Year of the contract per year. This rule shall not apply in any Capped Year to any Player Contract that was signed in the 1993 League Year or earlier.
(b) No NFL Player Contract entered into in a Capped Year and extending into the Final League Year or beyond may provide for an annual increase in Salary, excluding any amount attributable to a signing bonus as defined in Section 7(b)(iv) above, of more than 30% of the Salary provided for in the Final Capped Year, per year, either in the Final League Year or in any subsequent League Year covered by the Player Contract. [unimportant example omitted]

2010 is an uncapped year, so subsection (b) doesn't apply, but it is also the Final League Year (the owners having exercised their option under Art. LVIII, sec. 3(a) on p. 240), so it can't be an "Uncapped Year prior to the Final League Year" covered by subsection (a). A restriction like the one you outline applies to the Final Eight teams (CBA Art. XXI, sec. 3(ii) on pp. 77-78), but I can't come up with a way to read the restrictions in Section 8(a) or (b) to apply to contracts signed during 2010 League Year by non-final-eight teams.

That said, the actual conduct of teams seems to imply either that the 30% rule still applies (as I haven't seen any contracts that would violate it were it in effect), or that players and agents prefer and negotiate for a steady stream of income rather than one that varies wildly.

Any insight would be appreciated.

19
by AdamJT13 (not verified) :: Thu, 03/18/2010 - 1:43pm

JasonK,

You are correct, and the article is inaccurate. There is no 30 percent rule that applies to new contracts this year. The only similar rule is the 50 percent down rule, which applies from the first year (2010) to the second (2011). There have been numerous contracts signed this offseason that would violate the 30 percent rule if it applied (such as those for Vince Wilfork, Jamal Williams and Marlin Jackson, to name a few).

20
by JasonK :: Thu, 03/18/2010 - 9:16pm

Thanks, Adam.

21
by J.I. Halsell :: Mon, 03/22/2010 - 11:16pm

JasonK, I'm definitely more than willing to admit when I've made a mistake; plus you guys keep me on my toes. That said, you are correct, the 30% only applies to renegotiated contracts; newly executed contracts must only considerate of the 50% rule. Great knowledge of the cap JasonK. Thanks.

J.I. Halsell
Salary Cap Analyst | "Under the Cap"
Twitter | @SalaryCap101