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06 Aug 2009

Under The Cap: Eli's Extension

by J.I. Halsell

On Wednesday, word broke of a new contract extension for Giants quarterback Eli Manning. Unlike free agent contracts or draft pick contracts, when one determines the value of an extension contract, they must subtract from the total value of the contract, the amount of money the player was due to earn on their previous contract over the common years of both contracts. In the case of Manning, 2009 was the final year of his rookie contract, in which he was due to earn $9.4 million. The contract signed by Manning this week was reported as a seven-year agreement with a total value of $106.9 million. Subtracting out the $9.4 million of old money and the old year of 2009, Manning's contract is valued as six new years with a new-money value of $97.5 million.

Another interesting aspect of contract extensions is that they often lead to the lowering of a player's cap number; Manning's 2009 cap number of $13.8 million could possibly have been reduced as a result of a contract that has made him a richer man. How does this happen, you may ask? Often the money that is guaranteed to the player is accounted for in the future years of the new contract, thereby reducing the player's impact on the club's cap in the first year of the deal. Given that the Giants, as of the date of this posting, have only $4 million in cap space, I'm almost certain that Manning's new contract is providing the club a few million in cap relief.

Below is an analysis of Manning's contract relative to other quarterbacks who have signed contract extensions. You'll see that it's definitely a lucrative contract and a top-market deal, but it may not necessarily be the market-setting contract that it's being made out to be.

QB Eli Manning

Club: NYG

Analysis Peer Group: Quarterback contract extensions.

Contract Length: Six new years

Total Guarantee: (reported) $35,000,000. (Peers: IND quarterback Peyton Manning, $34,500,000; PIT quarterback Ben Roethlisberger, $33,200,000.)

Guarantee Per Year: $5,833,333. (Peers: NE quarterback Tom Brady, $6,625,000; Roethlisberger, $5,533,333.)

Guarantee vs. Total New Money Value: 35.9 percent. (Peers: DAL quarterback Tony Romo, 43.4 percent; Roethlisberger, 37.7 percent.)

Total New Money Value: (reported) $97,500,000. (Peers: Manning, $98,000,000; Palmer, $97,000,000.)

Average Per Year: $16,250,000. (Peers: Palmer, $16,166,667; Roethlisberger, $14,664,417.)

Three-Year Total: (estimate) $50,000,000. (Peers: Palmer, $55,500,000; Roethlisberger, $52,686,501.)

Analysis: As I looked at putting quarterback Eli Manning's six-year, $97.5 million contract into context, it really made me appreciate the contract that Bengals quarterback Carson Palmer got in 2005. Four seasons ago, Palmer got a six-year extension worth $97 million in new money; fast forward four seasons and Manning essentially gets the same contract with the difference being the guaranteed money. Palmer's 2005 contract awarded him $24 million guaranteed, while Manning's contract awards him $35 million.

Given the $40-plus million guarantees of defensive tackle Albert Haynesworth and number-one overall pick quarterback Matthew Stafford, one would think that a franchise quarterback extension would garner Manning a guarantee in excess of $40 million. However, coincidentally or not, if you analyze Haynesworth's $41 million guarantee over his seven contract years, it gives you a guarantee per year of $5.86 million. Comparatively, Manning's $35 million guarantee over six years equates to $5.83 million; so it would appear that $5.8 million per year is a data point that equates to elite guaranteed money. Some say that Patriots quarterback Tom Brady is underpaid, but given his four-year extension signed in 2005, he did pretty well from a guarantee per year standpoint, with a figure of $6.625 million.

Manning's Three-Year Total (which represents the amount of new money the player will have earned over the first three new years of the contract)has not been reported, but if Palmer got $55.5 million in 2005 and Roethlisberger $52.7 million in 2008, then one would imagine that Manning's Three-Year Total has to be in excess of $55 million. Roethlisberger's Three-Year Total versus his Total New Money of $88 million gives you 59.9 percent of Roethlisberger's new money being paid in the first three new years of the deal. Using that 59.9 percent figure and applying it to Manning's $97.5 million contract gives you $58.4 million of Manning's new money being paid in the first three years if it's similar to Roethlisberger's. It'll be interesting to find out what Manning's actual Three-Year Total turns out to be and how similar or dissimilar it is from his peers.

So what does this contract mean for Chargers quarterback Philip Rivers? Since becoming the Chargers' starter in 2006, Rivers has been by far the more prolific quarterback of the 2004 quarterback draft class (Manning, Rivers, and Roethlisberger). Since 2006, Rivers ranks fifth in cumulative quarterback rating (93.5), while Roethlisberger (85.7) and Manning (78.9) rank 17th and 28th respectively. Clearly, Roethlisberger's two Super Bowl rings and Manning's one set these two quarterbacks apart from Rivers; however, Rivers' 33-15 record as a starter shows that he's not just putting up numbers but also leading his team to victories, just like his quarterback peers of the 2004 draft class. Given the contracts given to Manning and Roethlisberger and given Rivers' statistics and win-loss record, it would not be unreasonable for a Rivers contract to approach $40 million guaranteed and $100 million in new money. Sounds a lot like the Haynesworth contract; however, while the Haynesworth deal is seven years in duration (although it's truly a four-year, $48 million contract before a hefty bonus for the remaining three years), the Rivers deal I would expect to be a six-year contract as this seems to be the popular contract term for quarterbacks. Romo, Roethlisberger, Cassel, and Palmer all signed six-year extensions.

Being a quarterback in the insatiable media market that is New York City is a tough undertaking; not to mention the pressures that come with being a number one overall pick and being the sibling of the most prolific quarterback of this generation. Thus far, winning a Super Bowl has arguably been Manning's only saving grace, because statistically his numbers don't exactly equate to elite quarterback status. Yet the Giants awarded Manning a contract that pays him at an elite level. With this new contract, there's a certain renewing of the pressure on Manning to live up to lofty expectations; I'm sure the New York media will be watching closely.

Posted by: J.I. Halsell on 06 Aug 2009

28 comments, Last at 13 Aug 2009, 3:17pm by tuluse


by Temo :: Thu, 08/06/2009 - 10:41am

So final conclusion is that this contract isn't market-setting if you consider Manning to be an elite QB, but if he's not an elite QB... then the guys who prove to be elite (Rivers, I guess) can expect to see even more money than his predecessors (Palmer et al)

by JasonK :: Thu, 08/06/2009 - 10:57am

I'm surprised that there's nothing in here adjusting the past contracts for the percentage increase in the cap since they were signed.

by roguerouge :: Thu, 08/06/2009 - 11:34am

I'd suggest cost of living increases being incorporated as well.

by starzero :: Thu, 08/06/2009 - 11:48am

at this price point, what does cost of living matter? at what point is $40 million really worth more than $35 million?

by Pat (filler) (not verified) :: Thu, 08/06/2009 - 8:06pm

Well, when the contracts involved span 4-5 years, it's more like the difference between $50M and $40M. So yeah, it can be a big deal.

I think at the very least the "comparable contracts" should list the years the players were signed. Peyton Manning getting $34.5M in 2004 is just ludicrous. That right there shows you exactly how valuable the Colts knew he was.

by J.I. Halsell :: Fri, 08/07/2009 - 3:37pm

That's a great point. When valuing contracts we also take into consideration the year the deal was done. So to your point, the fact that Peyton was able to get 34.5M back then really puts his deal into perspective.

J.I. Halsell

by Danish Denver-Fan :: Thu, 08/06/2009 - 12:04pm

"however, Rivers' 33-15 record as a starter shows that he's not just putting up numbers but also leading his team to victories"

I love your work, JI, but I think you should know your audience a bit better. There are so many things wrong with "QB-record", that I won't even begin naming any - and if there ever was a audience that knows this - it's that of FO.

by Key19 :: Sun, 08/09/2009 - 1:49am

While your point is true, I would say that him throwing in that point is not at all ridiculous. You have to remember that we're talking about contracts here, and contracts are determined by front offices and agents. These people are not always very up on debunked football myths and as a result they often live by the myth. Some are knowledgeable, but even if they are you know they'll always use whatever boosts their argument, whether its true or not. You don't think for one minute that Rivers' agent wouldn't cite that exact record statistic as a bargaining chip? Of course he would. Is it a well-supported bargaining chip? No. But is it effective in this day and age in most cases? Yes. Therefore it is relevant in this piece.

by Danish Denver-Fan :: Thu, 08/06/2009 - 12:06pm

This also got me thinking: How about Cutler's contract in Chicago? How does that shape up relative to Eli's?

by Kibbles :: Thu, 08/06/2009 - 12:14pm

Cutler's contract in Chicago is *SIGNIFICANTLY* smaller than Eli's. Eli's making $15 million a year, while Cutler's probably making $1-2 million... because Cutler's still under his rookie contract.

When Cutler does sign an extension, I suspect he's going to be the new "highest paid player in history".

by Billingham (not verified) :: Thu, 08/06/2009 - 12:07pm

Has anyone done similiarity scores of Eli Manning that I've missed? I'd really be curious.

by Bjorn Nittmo (not verified) :: Thu, 08/06/2009 - 4:42pm

I was really hoping this article was going to have more information about how the contract affects the Giants' ability to retain or sign players. That to me is the crucial piece of information in helping decide whether this was a good move by the Giants or not. Clearly an extension was inevitable, but did they do so in such a way to maximize their payroll flexibility?

by Sifter :: Thu, 08/06/2009 - 6:53pm

I was indeed interested to see Palmer's numbers. I had no idea...

by Downtown (not verified) :: Fri, 08/07/2009 - 1:38am

Ive been a Giants fan since diapers. I think that Eli has been overpaid here. In numbers shown, maybe the money compares to Worthlessberger and Palmer, but Eli is one lucky break and tremendous catch away from being another QB that lost the Super Bowl.
I was unbelievably thankful and surprised (to be honest) when they defeated the Pats...I just dont believe Eli is going to produce the numbers (especially with his current receiving core) to justify such a paygrade.

by Danish Denver-Fan :: Fri, 08/07/2009 - 7:50am

Two breaks really. Asanta Samuel dropping that INT won't happen very often. I'll be generous and say that there's a 5% chance of both those bplays going in favor of the Giants. And without that ring, Eli wouldn't have much to negotiate with...

by Oscar (not verified) :: Fri, 08/07/2009 - 10:40am

How about the Ravens dropping 4 INTs against Peyton Manning in the divisional round in 2006? Everybody gets their breaks.

by Danish Denver-Fan :: Fri, 08/07/2009 - 11:19am

Sure, but Peyton has, believe it or not, convinced me of his elite-ness. And it's not because of the ring.

by Eddo :: Fri, 08/07/2009 - 12:16pm

I don't know, an interception being dropped is nowhere near the miraculous magnitude of Tyree's catch. Throw in that Samuel had to jump and still would have had to pick off that pass with outstretched arms, and I think it was a 50/50 chance of being intercepted, at best.

I'm not saying Eli's elite, or even that beating the Patriots didn't require luck, just that I think you're overstating how lucky Eli was to ever have a chance to throw the ball to Tyree a few plays later.

by qqq (not verified) :: Fri, 08/07/2009 - 1:44pm

Eli made a pretty good play himself on the Tyree catch. People seem to forget that.

by Danish Denver-Fan :: Sat, 08/08/2009 - 1:14pm

Maybe I was overstating a bit, but I don't think it's unreasonable to expect that Tyree drops that ball 6 out of 10 times, and that Harrison bats it down/intercepts it 3 of 10 times. That's 10% chance of a completion - you can multiply that with your 50/50 and you'll get 5%. I'm not saying that's the odds - just that I don't think it's unreasonable.

by tuluse :: Fri, 08/07/2009 - 1:08pm

If Samuel managed to catch that ball and come down in bounds it would have been the play of the game.

by chowder (not verified) :: Sat, 08/08/2009 - 2:09pm

Samuel has snared tougher balls than that, and let's not forget Meriweather's nada pick. That one should have been a gimme. The odds that Eli escapes, Tyree holds on, Samuel misses, Meriweather bungles and Hobbs stumbles ALL on the same monumental drive... those can't be good odds. Having seen what i saw i still probably wouldn't bet on it.

by karl (not verified) :: Fri, 08/07/2009 - 2:21pm

Interesting: First round rookie contracts (and probably second round also for that matter) are increasing anywhere from 5 to 12% year on year. Yet franchise QB contracts have remained basically stagnant since 2004.

At what point does the NFLPA agree to a rookie pay scale as a concession in the CBA negotiations? All other things remaining equal (i.e. Salary Cap, required spending minimum, etc.), this would seem to be a solution that favors both owners and not only the players currently in the union but those who conceivably contribute the most to it financially. Owners reduce risk. Veteran contracts grow.

Then again I don't think contract size at other positions have remained static over the same time period - thinking LT, DT, DE, CB..

by Temo :: Fri, 08/07/2009 - 4:14pm

Whoa, wait a minute now. Eli getting a comparable deal to Peyton's in 2004 is a significant inflation of value.

by RoyFlip (not verified) :: Tue, 08/11/2009 - 12:25pm

Watch.the.slo-mo.replay. The ball that everyone says Samuels "drops" is a fastball that glances off the fingers of one hand. I don't think he had time to even fully extend.
As to Tyree's miracle catch, most NFL receivers would have caught it cleanly with their hands. Tyree is a great special teams player but only a fair receiver who was probably the 4th option on that play and for a good reason. The reason he caught the touchdown pass earlier is that Rodney Harrison and the rest of the defense didn't seem to think he was worth covering.
I will leave it for much more inside Outsiders to actually lay out the statistics, but how do you fairly compare Eli's and Roethlisberger's stats against Rivers when he gets to play Oakland, KC and Denver twice a year.

by nat :: Wed, 08/12/2009 - 1:59pm

So you don't think you've been ignored...

...how do you fairly compare Eli's and Roethlisberger's stats against Rivers when he gets to play Oakland, KC and Denver twice a year?

You use a defense-adjusted statistic, such as DVOA or DYAR. Both of these show Rivers being much more effective than either E. Manning or Roethlisberger over the last three years - maximum, minimum, average, and median.

If you want to convincingly argue for Eli Manning over Rivers, you would do better to claim that Eli's weaker numbers are due to the poor quality of the players around him. DVOA and DYAR don't adjust for teammates (how could they?) so there's still room discussion on that point.

by RoyFlip (not verified) :: Thu, 08/13/2009 - 2:38pm

Thanks for the answer. Feels a bit like a homework assignment though. As to the method of comparing the relative quality of teammates, one can quickly become a face-painting, jersey wearing, logo tattooed, mouth breathing homer. "My team is actually better than yours because yours has better players..." Right, gotcha. Even adjusted for defenses, Rivers numbers are better? Interesting. I mean, damn.

by tuluse :: Thu, 08/13/2009 - 3:17pm

Of course DVOA is far from perfect especially in the "defense-adjusted" portion.

Which just raised a question to me. Does facing a slate of tough defenses lower a players performance more than you would expect from looking at each week as a discreet event?