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29 Jul 2009

Under The Cap: Suggs, Cassel Contracts

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.

DE Terrell Suggs

Club: BAL.
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.

QB Matt Cassel

Club: KC.
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.

Posted by: J.I. Halsell on 29 Jul 2009

33 comments, Last at 03 Aug 2009, 1:07pm by tuluse


by ammek :: Wed, 07/29/2009 - 11:43am

As well as Peppers and Ware, what about Aaron Kampman? He's a similar case to Suggs in that he is officially going to play OLB, although up to now he's been a DE. (More unusually for a converted DE, he's going to play LOLB.) Bill Banrwell's stats show that he's been an elite end these last few years, although as a second-day pick he doesn't have the name recognition of his peers. And his contract is up for renewal at the end of 2009. Thoughts?

by Vasilii :: Wed, 07/29/2009 - 11:55am

I'd say Kampman is a bit of a different case because the defense he's playing in is transitioning from 4-3 to 3-4, moving him from DE to OLB, and he's not happy about it, plus it's unknown how well he'll play in the new system.

One would think Kampman himself might be happier to leave to play in a system he feels more comfortable with, but maybe his new position will work out really well for him.

by Jeff M. (not verified) :: Wed, 07/29/2009 - 2:02pm

Well, isn't it also pretty unusual for a LDE to be converted to OLB at all? 4-3 RDE and 3-4 ROLB are pretty much the same position--try to beat the LT on pass rush, don't break contain on runs. LDE and LOLB have some similarities (holding up against double-team on power runs to right being an important task), but it is a little different since the LOLB probably has to spend some time in pass coverage on the TE (though maybe GB's scheme will make this primarily the SS's responsibility).

by Scott C :: Thu, 07/30/2009 - 2:31am

Kampman may be missing from the list, but I wonder why Shawne Merriman wasn't mentioned, his contract is up soon and will likely be way up there. Seems the obvious elephant in the room ...

by J.I. Halsell :: Thu, 07/30/2009 - 8:20am

I agree that both Merriman and Kampman should be in the discussion. However, my reservation with Merriman is how does he recover from his knee injury of 2008. If he comes back to his "Lights Out" form of 2005-2007 in which led the league in cumulative sacks over that period, then yes he's in line for a huge contract. Regarding Kampman, my concern is two-fold, one, how will his productivity be impacted by GB's move to the 3-4 defense and two, he'll be 30 years old this year.

But again, both players, if they can overcome the uncertainty, are candidates for market-setting contracts.

J.I. Halsell

by DrewTS (not verified) :: Wed, 07/29/2009 - 11:44am

ESPN said that Cassel's 3-year total was more like 40 million. Is that not the case? If not, how do these numbers get figured so differently by different people?


by Karl Cuba :: Wed, 07/29/2009 - 12:10pm

Nice article again. What is interesting is the number of high draft picks that seem to be earning the biggest money. Does this validate the late Gene Upshaw's contention that the huge salaries at the top of the draft are acting to inflate salaries accross the league or not? I can't arrive at a decision on that.

My other major query concerning systematic effects in the NFL's pay structure is the role of the franchise tag. Again, is it acting to increase or attenuate sararies league wide?

by Mr Shush :: Wed, 07/29/2009 - 3:03pm

If there is an effect along the lines you suggest, it's inflating the salaries of the stars at the expense of the rank and file, not increasing pay across the board. That was CAA and the super-agents speaking through Upshaw, not a rational analysis of the bulk of NFLPA members' interests.

by Danish Denver-Fan :: Wed, 07/29/2009 - 4:01pm

I'm not exactly on home turf when it comes to salary discussions, so bear with me.

How is it possible to inflate salaries across the board? I mean in a capped league, the total salary of all players is prety much fixed, therefore; if you inflate somebody's salary, you must lower somebody else's.


by dbt :: Wed, 07/29/2009 - 7:41pm

What is paid today in certain kinds of bonuses can be applied against the cap over multiple years, thus basically front-loading your cap and paying out more money today. As the cap gets raised annually, you can basically do this forever (or until you crash your cap by cutting players with future cap money already tied up).

by dryheat :: Wed, 07/29/2009 - 12:42pm

JeMarcus Russell....Chris Long....another reminder of how out-of-whack the rookie pay scale is at the very top of the draft.

by Bobman :: Wed, 07/29/2009 - 2:10pm


by DrewTS (not verified) :: Wed, 07/29/2009 - 2:48pm

Agreed, but don't neglect the fact that Matt Ryan and (I think) Mario Williams are also on their rookie contracts. Gotta take the good examples with the bad.

by dryheat :: Wed, 07/29/2009 - 4:02pm

I wouldn't call it a good thing that Matt Ryan or Mario Williams are among the most highly compensated players in the league.

by DrewTS (not verified) :: Wed, 07/29/2009 - 4:34pm

One could credibly argue that Mario Williams is a top 10 player at his position, and it's a highly valued position. Probably Matt Ryan too.

I wasn't arguing the point with you, just pointing out the counterpoint.

by Mr Shush :: Wed, 07/29/2009 - 5:52pm

I think it would be pretty hard to credibly argue that Mario Williams is not a top ten player at his position. Dude's put up 12+ sacks in back to back seasons while playing for a mediocre team with no other credible pass rushing threat of any description to draw attention from him, and is solid against the run. He was clearly the best DE in the AFC last year, and was second team all pro the year before that. And why on earth would anyone have a problem with elite young players being paid what they're worth? If Williams, or Ryan, or Calvin Johnson were cut by their teams tomorrow (possibly because Matt Millen is actually an AI life form made of animatic poly-alloy, sent back from the future to kill football teams, and has secretly taken the place of their real GM) the contract they would then receive would pay them significantly more than they currently get. When good front offices get top ten draft picks to play with, they almost always nail them. When bad front offices exercise those picks, they frequently don't. The overall results make top picks look a lot worse than they are, because those picks are inevitably exercised by bad front offices far more often than good ones. Millen and his ilk would screw those teams up whether they had high picks eating cap space or not.

by Danish Denver-Fan :: Wed, 07/29/2009 - 4:04pm

But then again, it's not like those guys are overachieving their contract by a lot. They are more like living up to it. The point is; you have to hit an absolute homerun on your top-5 pick to ever get value for your money.

by DrewTS (not verified) :: Wed, 07/29/2009 - 4:42pm

What's wrong with living up to your contract? I think most teams would love it if their big-money players actually did that. I'm pretty sure the Rams and Saints would be thrilled if Marc Bulger and Will Smith would do that.

by Theo :: Wed, 07/29/2009 - 5:12pm

A sane man can not dispute that NFL rookie contracts for high draft picks are out of whack .
Look at the Lions. They've busted their top 5 picks for a decade now and see what they've become.

by DrewTS (not verified) :: Wed, 07/29/2009 - 5:35pm

I don't think anyone is disputing that the salaries for top 5 draft picks are out of whack. The issue is why. My opinion is that it's not the salary "scale" itself, but the fact that front offices are not nearly as smart or diligent as we like to give them credit for.

Plenty of top 5 rookies DO live up to their contracts, so it's clearly possible for them to do so. The issue is that teams are stupid, headlined by the aforementioned Lions.

The Lions are not in the shape they're in because they got screwed by high draft pick contracts (which they agreed to, by the way). They're in the shape they're in because their front office made piss poor decisions at every opportunity and squandered a lot of good draft picks. The salary system is made to appear even more out of whack than it is because we like to use the Charles Barkley logic that because a player was taken high, he must be good. In reality, taking a guy second in the draft doesn't make him the second best player in the draft. Guys like Charles Rogers and Mike Williams had obvious red flags that the Lions chose to ignore.

I mentioned Will Smith and Marc Bulger before to point out the other oft-forgotten fact -- teams make crappy deals all the time, not just with draft picks. For every Charles Rogers, there's a Nate Burleson. For every Vernon Gholston, there's a Jason Taylor. First round draft picks don't have a monopoly on being grossly overpaid.

by Mr Shush :: Wed, 07/29/2009 - 5:37pm

Not to mention Calvin Johnson, Joe Thomas, Ryan Clady, Demarcus Ware, Phillip Rivers, Jay Cutler . . .

High drafty picks may be a risky proposition, but on average they're worth it. It's far more true that low draft picks are horrendously underpaid.

by dryheat :: Thu, 07/30/2009 - 9:02am

Well, IIRC, Clady, Ware, and Cutler were all picked in the 11-19 range, so they didn't get the high-falutin' rookie deal that guys picked in the top 5 did.

However, the point is that just because Johnson, Thomas, Manning, etc turned out to be good players doesn't mean the system's not broken. Should Mario Williams have been given a contract that paid him more than Pro Bowl tackles without playing a down? Is signing a quarterback to a rookie deal that will pay him more than Drew Brees or Matt Hasselbeck before throwing pass 1 a smart move, whether it be Matt Ryan, Alex Smith, Matt Stafford or JeMarcus Russell? As a GM, you're paying the Rookie to be the very best, or at least among the very best, at his position. The best said Rookie can do is live up to his contract. It's like going to a Sports Book and placing a large sum of money on Team A to win the Super Bowl at 1:1 odds. The best you're going to do is break even, even if you consider Team A to be a lock. I think the Smart GMs try to get out of the top 8 or so picks if at all possible. I think we would probably agree on this, hence the "fixing the draft" extra point that happens every couple of years.

by Eddo :: Thu, 07/30/2009 - 9:38am

"It's like going to a Sports Book and placing a large sum of money on Team A to win the Super Bowl at 1:1 odds. The best you're going to do is break even, even if you consider Team A to be a lock."

Not true; "1:1 odds" means that you'll profit $1 for every $1 you bet.

And while it's true that top-five picks are overpaid, I don't buy that "Smart GMs try to get out of the top 8 or so picks if at all possible." The reality is that usually, the only way to get a likely franchise player (without getting lucky on a Brady/Romo) is to pick early. Smart teams just make sure they pick the right player when they have a high pick, and if there isn't a player they feel is worth it, then they trade down.

by dryheat :: Thu, 07/30/2009 - 12:21pm

One of us is off-base on gambling odds. I'm fairly certain that a theoretical 1-1 is that you get back your money if you win -- which is why you never see 1-1 odds. If I were to box the 1990 Mike Tyson tomorrow, the odds would be in the neighborhood of 1.0000000000000000000001 to 1. That's why apparently lopsided matches (without a spread) have odds like 9/5...or 1.8 to 1 odds. 2-1 odds mean you win a dollar for every dollar you wager.

Not being a big gambler, I suppose I could be wrong, but that's the way I understand it.

by DrewTS (not verified) :: Thu, 07/30/2009 - 12:54pm

Not trying to be a jerk here, but you have it wrong. 1-1 means you would get one dollar for every dollar you bet, PLUS your bet back. If you bet $1000 on a coin flip at 1-1 (you'd have a gambling problem) and won, you'd get your $1000 back plus $1000 in winnings.

If you were to box Iron Mike in his heyday, the odds would probably be listed at something like 1,000,000-1 for a bet on you to win. Or more likely, no reputable sports book would even take odds for it.

by Mr Shush :: Fri, 07/31/2009 - 6:14am

Yeah, when odds are listed as ratios, the ratio in question is that between the stakes each party is risking, so 1:1 (also called "even money") equates to a supposed 50% chance of winning. Where the estimated win percentage is greater than 50%, the bet is described as "odds on", and the odds may be expressed as either x:y or y:x on. So for example, "2:3" and "3:2 on" are synonymous, and both indicate a nominal win probability of 60%. Odds are also sometimes expressed as a per unit return, eg. $4.00. In this case, the return includes the original stake money, so $4.00 is equivalent to 3:1, and $1.50 is equivalent to 2:1 on or 1:2.

Back on topic, it is simply not the case that top draft picks attract the same salaries as the best veterans at their position. Let's take two recent examples where players at high value positions who could credibly be argued to be the best in the league at those positions signed new contracts in the same year that a rookie was drafted first or second overall at their position. In 2004, Peyton Manning signed a 7 year, $99.2m contract. His brother, the first overall pick in the 2004 draft, signed a 6 year deal with a maximum value of $54m - roughly $5m a year less than Peyton. In 2008, Jared Allen signed a 6 year, $73m contract, while Chris Long, the #2 overall pick, inked a 6 year, $56.5m deal - a difference of roughly $3m per annum. It's worth noting, too, that neither Peyton nor Allen was a free agent at the time; it's fair to say their value in an open market would have been even higher. And that, of course, is the crux of the issue. The very highest value players never, ever hit the open market. Top draft picks have a better chance of turning into one of those players than any other kind. That's why it's worth handing them a boatload of cash, even when pricing risk into it. The issue is that mid-round picks are grossly underpaid, not that high first rounders, on average, are over-paid.

Think of it this way: do you suppose that there is any GM in the entire NFL - Belichick, Polian, Newsome, anyone - who would trade away the first overall pick straight up for any other draft pick? If not, do you believe that even the best GMs in the league are irrational/misguided in this respect?

by Monkey Business (not verified) :: Sun, 08/02/2009 - 11:08pm

I can't speak for the Patriots or Ravens, but I'd be willing to bet that Polian would take one look at the cost of drafting a number one overall draft pick and be on the phone to the other 31 GMs so fast his phone would catch fire. If he couldn't get rid of it, he'd probably pass until the late teens, early 20s, because he firmly believes that for most positions that's where you get the most rookie value.

But straight up? #1 for like #10 or #20 or something? I don't think that's even possible. Otherwise someone would have done it by now. The best you could do would probably be to keep passing and wait it out until it got into a range you were more comfortable with.

by DrewTS (not verified) :: Mon, 08/03/2009 - 9:24am

"But straight up? #1 for like #10 or #20 or something? I don't think that's even possible."

What do you mean? Of course it's possible. Any pick can be traded for any other pick if both parties agree. The reason no one's done it before now is what the previous poster was getting at -- it's not a smart thing to do for the team with the #1 pick, even factoring in the high cost of signing a top pick.

Speaking as someone who follows the Colts, I believe that if they had the #1 pick, Polian would explore all options for it. But ultimately, he would either trade it (for something more than one draft pick of lesser value), or use it. Passing on it, especially all the way into the teens, would be a last resort. Ask yourself why no one has passed on a pick since the Vikings' misadventures a few years ago. That even worked out OK for them, and still no one has done it since. And no one has ever done it with a #1 overall pick.

Having the #1 pick is a high risk, high reward situation to be in. Sometimes you end up with Peyton Manning; sometimes you end up with Tim Couch. The money involved is steep, but if you get it right, the gamble pays off. Ultimately, if you're not willing to trust your instincts, scouts, and research in that situation and make a pick, you have no business being a GM.

by tuluse :: Mon, 08/03/2009 - 1:07pm

Right, it's not like Polian has used the #1 pick, the #4 pick or the #11 pick.

by Theo :: Wed, 07/29/2009 - 7:07pm

Sad thing is, this goes all out of the window when they go to the 'no cap season' and I don't hear anyone about it.
My guess is that is is the most important thing since the forward pass.

by bubqr :: Thu, 07/30/2009 - 7:49am

Whatever Ware gets, Merriman, as a free agent, will get more (even though he is not as valuable IMO). And it will probably be an awful, awful lot of money.

And I can't wait to see who, between Eli and Rivers, will get the bigger contract. should be fun.

by Monkey Business (not verified) :: Sun, 08/02/2009 - 11:09pm

Eli. Bigger market, won a Super Bowl. Rivers, although better numbers wise, hasn't advanced past the AFC Championship game yet.

by Bowl Game Anomaly :: Mon, 08/03/2009 - 9:44am

If I was a Chargers fan, I'd be very happy if that logic was used to justify paying Rivers less than Eli.