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14 Apr 2010

Under the Cap: Projecting McNabb's Contract

by J.I. Halsell

Now that the Redskins have traded for a new franchise quarterback in Donovan McNabb, the next item of business is a contract extension. McNabb is in the final year of his contract that was traded from the Eagles. Under this deal he is due a guaranteed $6.2 million roster bonus and a $5 million salary with $3.5 million is guaranteed.

The challenge for the Redskins is to come up with a contract that secures McNabb beyond 2010 and also protects the club’s interests from a financial investment and team salary management perspective. Remember that several years ago, the Redskins traded for wide receiver Brandon Lloyd, who was under contract for one year. Upon trading for Lloyd, the Redskins promptly signed him to six-year extension with $10 million guaranteed. Lloyd lasted only two seasons in Washington.

The lesson from the Lloyd failure is that a club does not want to compound the loss of draft picks for a player who does not fit the organization by adding a significant financial investment. Surely, the Redskins would have been disappointed by trading away draft picks for Lloyd, but the mistake would have been easier to stomach had they not made such a significant investment in Lloyd.

Similarly, the Redskins want to mitigate their potential financial and salary cap risks in executing an extension with McNabb. (Obviously, the issue with McNabb is not character, as it was with Lloyd, but rather age.) To this end, a great structure for a McNabb deal is the "pay as you go" structure. It is this same structure that the Packers used with quarterback Brett Favre in his final years there. Because the "pay as you go structure" doesn't use or minimally uses signing bonuses that prorate into future years, it limits the club's exposure to dead money if it terminates the contract. The Redskins could use this structure to account for McNabb’s guarantee entirely in the uncapped 2010 league year by virtue of a combination of guaranteed salary and roster bonus. In subsequent years, the contract could provide McNabb with significant upside in the form of substantial salaries or a combination of salaries and roster bonuses, none of which would be guaranteed. Of course, all of these numbers would have to be compliant with the 30 percent rule. However, by using this structure, there would be limited or no dead money issues if the Redskins discover that McNabb is not the quarterback they expected.

As for the market value of a McNabb contract, if Kurt Warner can get $15 million guaranteed and Jake Delhomme can get $19 million guaranteed in 2009, then McNabb can surely expect a guarantee in that ball park, if not closer to $20 or $22 million. From an average-per-year perspective, the going rate for elite veteran quarterbacks not named Brady or Manning (Peyton that is) seems to be in that $12 million to $12.5 million range. Quarterbacks in this range include Favre and McNabb, so it would make sense that McNabb could receive an extension in that same range. Over five new years, that would equal a total package of roughly $62.5 million.

Follow J.I. Halsell on Twitter: @SalaryCap101

Posted by: J.I. Halsell on 14 Apr 2010

4 comments, Last at 15 Apr 2010, 5:48am by tuluse


by Jimmy :: Wed, 04/14/2010 - 1:11pm

uses singing bonuses that prorate into future years

As fun as singing bonuses might be to have in the contract (especially pro-rated ones) I imagine they will use boring old signing bonuses.

Otherwise nice article, I guess we will see how the internet's premier salary cap oracle has fared when the actual contract is announced.

by Shattenjager :: Wed, 04/14/2010 - 5:15pm

Based on Deion Sanders, I am against any singing bonuses in NFL contracts.

by tuluse :: Thu, 04/15/2010 - 5:48am

but the Super Bowl Shuffle

by shanafan (not verified) :: Wed, 04/14/2010 - 1:21pm

I wonder what Cerrato would have negotiated for McNabb? First, the extension would have been done at the time of the trade. "Why wait and negotiate when you can overpay now" - that was Vinny's mantra. Also, the guaranteed money would have been massive (irresponsibly massive).

I think players are more upset about not having Vinny in a GM role in the league more than the RFA loophole of the uncapped year (or even the prospect of an 2011 lockout!)

Its nice to see patience and sound financial planning return to the league's most profitable franchise.