2016 Free Agency Cost-Benefit Analysis

by Andrew Healy

When the Jaguars signed free-agent defensive end Malik Jackson, they likely had visions of Muhammad Wilkerson dancing in their heads. In his best moments of 2015, Jackson played near the level of the Jets' 3-4 end, a two-time second-team All-Pro who is just three months older than Jackson. It's hard to think Jackson will be better than Wilkerson has been over the last three years, but squint hard enough and you can see a future where he just hits that mark. Maybe.

And that's the problem with the Jaguars' decision to make Jackson one of the richest men in football. His contract (five years, $85.5 million, $42 million guaranteed) will be a wash -- meaning, he will be worth about what they paid -- if he plays like the beast who appeared in glimpses in 2015 after three years mostly not even starting for the Broncos. The downside to the Jackson contract? Almost limitless.

If we apply cost-benefit analysis, the Jackson contract beats last year's Byron Maxwell deal to be the worst free-agency decision of the last two seasons. For the Jaguars, Jackson joins a parade of poor value propositions from last season. No team came close to the Jaguars last year in expected value lost by overpaying for free agents.

To analyze this year's contracts, I'll again be looking at the expected value of each deal on the day it's signed. I don't claim to be able to predict future performance with stats any better than talent evaluators can with scouting information. I'm just using a rough estimate of likely future value to evaluate the contract. Rather than the projection of future performance, the more interesting number in the contract evaluation is the benchmark the player would have to hit to live up to the deal. Consider the result for Malik Jackson:

Based on his recent performance (according to Pro-Football-Reference's Approximate Value) and his age, I'm projecting Jackson to be a 7.78-AV player going forward. (For an idea of what that means, here is a list of players with exactly 8 AV in 2015. Jackson was worth 9 AV last season.) Jacksonville would certainly disagree with that projection, and they may well be right. But if there's a bunch of uncertainty about how well Jackson will play going forward, there is much less about how well he needs to perform to live up the deal. That key number above is 13.68 AV -- about Muhammad Wilkerson's average mark over the last three seasons. We can use these ideas to evaluate any free agent contract.

Methods

Based on work by Chase Stuart, I estimate a replacement-level veteran as providing 3.36 AV. Extrapolating Stuart's estimates of the value of salary cap dollars to the current salary cap, I have $1.587 million as the value of a one-unit increase in AV.

Let's start by looking at Malik Jackson. First, I adjust his contract for the amount of guaranteed money to come up with an adjusted average of $17.122 million. (Last year, I just used the annual average, but I wanted to improve on that, since the contract's value depends in large part on the amount of the guarantee. Olivier Vernon's contract, for example, provides more value than Jackson's despite a slightly lower annual average.) That number is close to the actual average of $17.1 million because Jackson's guarantee was about what you'd expect for a contract of that amount and length.

Jackson's adjusted average of $17.14 million is $16.38 million more than the veteran's minimum of $760,000. I estimate that Jackson thus needs to generate 13.68 units of AV to be worth his contract.

To project Jackson's performance for future years, I used a regression that looked at his performance over the last three years and his age. The regression accounts for potential nonlinearities in the relationship. From this projection, I get Age-Adjusted Value, my estimate of the value that a contract either creates or destroys. Malik Jackson's Age-Adjusted Value of -5.90 projects him to produce 5.90 AV less than he needs to in order to justify his contract.

A few notes:

1) After a suggestion last year, I checked out whether it made sense to include the idea that jumping from 19 AV to 20 AV is more valuable than jumping from 4 AV to 5 AV. In other words, even the marginal jump might be worth less at the lower end of performance than at the upper end. I checked this out a variety of ways and found no clear evidence for that idea. But I do think there is something to the idea that AV overvalues poor starters. For example, this year Chargers defensive end Kendall Reyes racked up 7 AV in large part just by starting 15 games. For this reason, I think the analysis works best outside of the bottom of free agency where some contracts that look like bargains are really just proper value for poor starters. As a result, I'm projecting only players who got at least $3,000,000 in average salary.

2) I've adjusted things across positions so the average running back contract is close to zero, the average cornerback contract is close to zero, etc. This is particularly important for running backs, who tend to be overvalued by AV.

3) I'm leaving out the quarterbacks since there aren't enough contracts at that position in the last two years to draw any meaningful conclusions, and they really need a separate model.

4) All contracts included are found in Spotrac's free agent contract database as of 11 p.m. Eastern on March 15. If anyone was either not included in those data because their contract terms were not yet included (e.g., Chris Long and Kelvin Beachum) or because they were not yet signed, they are excluded from Age-Adjusted Value calculations.

5) I've gone with the Spotrac data everywhere, both on guaranteed money (where they sometimes disagree with overthecap.com) and on player position.

The Good Deals

These are the major free agent contracts that Age-Adjusted Value rates as bringing value to the signing team. Thinking of this as one piece of the puzzle that should include what we see on film, a bunch of contracts jump out to me as particularly appealing, offering big upside to the signing team. The numbers love getting Jaye Howard at the price the Chiefs paid, and so do I. And Howie Roseman has had one incredible offseason. Not only has he obtained something in return for dumping contracts that have negative value, he has also made two of the best value signings in free agency, getting 25-year-old safety Rodney McLeod and 26-year-old linebacker Nigel Bradham at numbers that offer lots of upside.

The analysis may be a little tilted towards loving the Derrick Johnson deal since his second-team All-Pro honor gives a big boost in PFR's estimate of his performance. Age-Adjusted Value's five favorite contracts averaging over $7 million per season belong to Johnson, Marvin Jones, McLeod, Damon Harrison, and Tashaun Gipson. Yes, props to the Jags for the Gipson deal.

The Bad and Ugly Deals

A bunch of very good players appear on the list of the deals that leave the signing team worse off for signing them. At the right price, any team would be thrilled to add players such as Alex Mack or Eric Weddle. But Age-Adjusted Value finds the 30-year-old Mack not worth his big deal ($28.5 million guaranteed), nor 31-year-old Eric Weddle worth his ($13 million guaranteed).

The Jets' signing of Bilal Powell didn't move the needle much, but it was one of the most perplexing moves of free agency. Age-Adjusted Value ranks the contract for the eminently replaceable Powell as the third-worst value of free agency so far. (The Age-Adjusted Value would be somewhat higher if we replace Powell's projection with replacement-level play.)

But it's the Jets' co-tenants at MetLife Stadium who are so far challenging the Jaguars in failing to get a bang for their free-agent buck, even with the value in the Damon Harrison contract. The Giants paid Janoris Jenkins an average salary that is only $1.5 million less than what the Seahawks gave Richard Sherman last season. Age-Adjusted Value thinks that's too much for Jenkins even as he enters his prime seasons. And Age-Adjusted Value is almost as down on the Olivier Vernon contract as it is on the Malik Jackson deal. With the huge guarantee, the contract is effectively even richer than Jackson's. To live up to his deal, Vernon needs to become one of the five or six best defensive ends in football.