Friday, May 29, 2009

The Skins Add Another Player to the Top 10 Dead Money List

For some the Redskins termination of veteran RT Jon Jansen came as a surprise; yours truly would be part of that group that was surprised. However, some would make the argument that Jansen's skills had diminished significantly; while others would say that he's been a rock on that offensive line for 10 years. Similarly, some would say he was a leader on the team, while others would argue otherwise. The fact of the matter is that whether you loved him or not, the Skins are now sattled with Jansen taking up $6.1M on their '09 cap; whereas if they were to have kept him, he'd only count $4.5M.

When you add Jansen's dead money amount with Brandon Lloyd's amount ($5.3M) counting this year, you have $11.4M of cap space being taken up by players no longer on the team. Add Shawn Springs ($2.5M) and Marcus Washington ($2M) to that amount, and you then have nearly $16M in dead money on the Skins' books this year.

At a minimum, people (including Jansen himself probably) figured that Jansen would at least have the opportunity to compete for a starting position in training camp; however, given his recent history of being injury-prone, I'm guessing the club didn't want to risk Jansen suffering a Phillip Daniels-like training camp injury which would then essentially guarantee his salary in 2009.

Reports indicate that Jansen wasn't unemployed for long, with his signing with his home state Detroit Lions; kudos to Dan Snyder for feeling compelled to fly Jansen to Redskins Park to tell him face-to-face of the team's decision to let him go.

Tuesday, May 19, 2009

Salary Cap 101 Webinar on 05.30.09

On Saturday, May 30th, from 10am - 12 noon, I'll be conducting a live Salary Cap 101 webinar via The seminar will be completely interactive and will provide for Voice-Over-IP (VOIP), which will allow the registrants to not only hear my voice as I take you through the salary cap powerpoint presentation, but also communicate with me via audio to ask questions. Topics that will be discussed include: the components of a player contract, how contracts are accounted for within the parameters of the salary cap, and how clubs & agents measure the value of a contract. It should definitely be an interesting and informative presentation via the marvel that is the internet. For more information and to register for the webinar, visit:

Saturday, May 16, 2009

The Early Extension of Young Players' Contracts

As we all know Sheldon Brown of the Philadelphia Eagles is currently disgruntled with his contract and has openly voiced his opinion in this regard. The Eagles have a long history of giving extensions to young players who may only be 2 to 3 years into their rookie contracts. In the case of Brown, in the middle of his 3rd season, he accepted & signed a contract for 9-years, $7.5M guaranteed, and an average per year over those 9 years of $2.82M/year. At the time of signing the contract, Brown was 25 years old; therefore, he agreed to be contractually bound to the Eagles until age 34. Now at age 30, Brown plays in the defensive backfield with a fellow corner in Asante Samuel, who inked a Free Agent contract for 6 years, $23.6M guaranteed, averages $9.5M per year, and binds Samuel to the Eagles until he’s 33.

Had Sheldon Brown decided to pass on Philly’s offer of an extension in 2004, he would have become an Unrestricted Free Agent after the 2005 season (unless Philly chose to Franchise him at $5.89M guaranteed for 1 year). In the off-season leading up to the 2006 season, free agent corners Brian Williams and Will Allen inked UFA contracts respectively with JAX and MIA. Williams’ UFA contract with JAX was for 6 years, $10M guaranteed, and $5.33M per year; while Allen’s UFA contract with MIA was for 4 years, $4.5M guaranteed, and $3.25M per year. So when you look at Brown compared to the corners who he would’ve hit the market with, he not only is under contract until a later stage of his career, but on a per year basis he’s making less in total contract value and less, in the all important, guarantee money. Simply put, in retrospect, it would have probably been in the best interest of Brown to be patient for another season and a half and then contemplate either an extension with the Eagles at that point or explore the free agency market, as one would think he would’ve gotten a better deal than the one he’s currently saddled with.

The thing about locking yourself into a deal for so long is that, while you’re “stuck” at $2.82M/year in the case of Brown versus the corner market, the market for corners, and all positions for that matter, continues to escalate. The increase in the corner market is illustrated in the increase of the Franchise tender from $5.89M in 2006 to $9.96M in 2009, that’s a 69% increase in 3 seasons.

When you consider, from the player’s perspective, the pros & cons to signing an early extension, there are not too many pros to signing an extension with the length of Sheldon Brown’s extension. Surely receiving $7.5M in guaranteed money is hard to pass up, when the total value of your rookie contract isn’t even worth $7.5M; so you’re presented with the opportunity to receive an amount of money that is truly tantalizing. However, when put into perspective, is this $7.5M today worth the under-compensation over the course of the contract in the long run? Definitely not, but it illustrates how a club can use the emphasis of guaranteed money on the part of players and agents against them. The biggest issue with Brown’s contract is the duration of the deal. The fact that he sacrificed his ability to hit the market until age 34 is an egregious mistake on Brown’s part and his agent.

From the club’s perspective, the pro to doing these types of extensions is obvious, in that you’re getting players, who you anticipate to be a significant part of your team, at a compensation rate below market. So as the cap increases and as the players’ respective position markets increase, you’ve locked in your labor at below market compensation, thereby allowing you freedom in your cap management to pursue the Asante Samuels of the world in free agency. Conversely, the con to doing these deals is that you run the risk of giving a player a significant amount of guaranteed money after they’ve only shown their ability for 2 years and the player could in the long run end up not living up to your expectations. An even bigger concern is that you eventually end up with players like Lito Sheppard and Sheldon Brown, who eventually realize that they’re being paid below market and become disgruntled as a result. So if players were simply assets without emotions, then this early extension concept would be perfect; however, since we’re talking about athletes who are sensitive about their income status, this concept leads to acrimony in the locker room which doesn’t exactly lend itself to the perceived harmonious team concept of winning teams. To their credit, Philly is doing something right, they’ve been a consistent winner for the past decade (all be it without a Super Bowl ring). Having a legitimate franchise quarterback in McNabb helps (he may not be Peyton Manning but he’s no Bobby Hoying), after all if you look around the league, those teams with solid & consistent quarterback play are the teams that succeed. The quarterback in Philly, by the way, also signed an early extension in his career and has since played under a contract that has paid him $5.75M per year; while quarterbacks like Marc Bulger, Matt Schaub, and David Garrard make in excess of $8M/year, not to mention Matt Stafford’s $12M/year. So to his credit, McNabb has done a good job of biting his tongue for the most part and being a good company guy.

This concept of early extensions isn’t unique to the Eagles; the Eagles have simply employed it more frequently than other teams. In Arizona, Anquan Boldin’s grief is as a result of an early extension that now under pays him; it doesn’t help that every time he lines up, he sees on the other side of him a WR in Larry Fitzgerald who’s making $10M/year, while he’s making $3.92M/year and other top tier receivers are making $9M/year. Kevin Williams in Minnesota may be a happy camper today, but when Albert Haynesworth is getting $41M guaranteed and $14.29M/year; he could easily have an Anquan Boldin type attitude in a few seasons.

The moral of the story is that no one put a gun to the heads of these players who have signed these early extensions; therefore if you and your agent allow yourselves to be “bamboozled” by the early extension offering of a club (particularly one that defers your free agency until age 34), then you have no one to blame but yourself and you should honor your contract. Instead of signing a 9 year contract, go the route of Bart Scott, who played out his rookie contract, signed a 3 year extension contract that guaranteed him $6.5M, but more importantly positioned him, due to the fact that it was only 3 years in duration, to receive another big pay day this year at age 29 that pays him a guarantee of $13.5M.

Switching subjects, yours truly will be conducting a Salary Cap 101 webinar on Saturday, May 30th, 2009 from 10am – 12 noon. For more information and to register, visit .

Saturday, May 9, 2009

When a Draft Pick Suffers a Season-Ending Injury Prior to Signing a Contract

As some of you may know, NE 3rd round pick LB Tyrone McKenzie blew out his knee last weekend at the club's minicamp; similarly, it's being reported that Saints rookie 4th round LB Stanley Arnoux has ruptured his Achilles, which could have potentially ended his rookie season before its even begun. So the question is then, what happens now since they haven't signed contracts?

As PFT correctly articulated this week, prior to participating in rookie minicamps, drafted rookies "without contracts" sign Injury Protection Letters which basically say that in the event that the player suffers a season-ending injury, the club will still negotiate a contract in good faith as if the player weren't injured.

I say "without contracts" because if you were to look at your favorite team's salary cap today, you'd see that your draft picks are actually counting against your team's cap, meaning they are indeed contractually bound to the team right now. You may ask how are they contractually bound to the team without a contract? It's called a rookie tender. When a player is drafted, the club technically tenders the player a 1-year contract for the salary minimum of a player with 0 minimum salary credits (in 2009, this amount is $310,000). So all draft picks with the exception of Matt Stafford, have P5 salary amounts of $310,000 right now; until they negotiate their real contract. Without these rookie tenders, the player would not be contractually attached to the team.

Back to NE's McKenzie and NO's Arnoux, their circumstances aren't unique, FS Sean Jones, who signed a UFA contract with Philly this off-season, as a 2004 2nd Round pick of the Browns tore his ACL in minicamp. Similarly, WR Drew Carter as a draft pick of the Carolina Panthers also tore up a knee prior to negotiating his rookie contract. So it's not a unique occurrence, and the precedents set by these examples and others show that team's do indeed negotiate in good faith and that there aren't any differences in their contracts because they're injured at the time of the negotiation.

In 2008, the Eagles drafted in the 4th round DB Jack Ikegwuonu, who prior to the draft blew out his knee while preparing for the combine. If you look at Ikegwuonu's contract compared to the Eagles' other two 4th round draft picks in 2008, you'd see that his contract is structured the exact same and doesn't standout in any way as result of the player's injury.

I'm sure McKenzie and Arnoux are disappointed about their injuries, but from a contractual standpoint, they can rest assured that their injuries will not impact their deals.

Friday, May 8, 2009

Salary Cap 101 Live Webinar on 05.30.09

On Saturday, May 30th, from 10am - 12 noon, I'll be conducting a live Salary Cap 101 webinar via The seminar will be completely interactive and will provide for Voice-Over-IP (VOIP), which will allow the registrants to not only hear my voice as I take you through the salary cap powerpoint presentation, but also communicate with me via audio to ask questions. It should definitely be an interesting and informative presentation via the marvel that is the internet. For more information and to register for the webinar, visit:

Sunday, May 3, 2009

Putting Stafford's Contract Into Perspective

This is going to be my first entry on the column entitled "Under The Cap."

Before we compare Stafford’s contract to the preceding #1 contracts of Jake Long and JaMarcus Russell, lets take a look at how his 6-year contract is structured. Per league and agent sources the contract breaks down as follows:

- Year 1 P5 (salary): $3.1M
- Year 2 P5: $395K
- Year 2 1-Time NLTBE (Not-Likely-To-Earned) Bonus: $9.105M
- Option Bonus: $17.4M
- Year 3 P5 Guarantee: $9M
- Year 4 P5 Guarantee: $2.7M of $10.5M

- Year 4 Non-Guaranteed P5: $7.8M
- Year 5 P5: $11.5M
- Year 6 P5: $11M

- Guaranteed Money: $41.7M
- Non-Guaranteed Money: $30.3M

- Base Contract Value: $72M
- High-End Performance Escalators: max $6M

YEAR-BY-YEAR TOTALS (accrued totals year-by-year):
- Year 1: $41.7M
- Year 2: $41.7M
- Year 3: $41.7M
- Year 4: $49.5M
- Year 5: $61M
- Year 6: $72M

So in short, Stafford is guaranteed to make at least $41.7M over the first 3 years of his contract. If he were to be cut after Year 4 he would have made at least $49.5M. Over 6 years, he’s going to make at least $72M, but could earn a maximum of $78M over that same term.

In any negotiation, the best deals are those in which both sides feel like they walked away with a deal they can feel good about; the Stafford deal is definitely one that falls into this category.

From the perspective of Tom Condon and CAA, if your primary interest is maximizing your client’s guarantee money, then, simply, the fact that you got your client the most lucrative rookie contract in history bolds well for your future recruiting of the next Stafford (hello, Sam Bradford). Moreover, the fact that you got your client $12M per year; while Jake Long from a year ago got $10M/year and Matt Ryan got $11M/year, also bolds well for your argument.

From the perspective of the Lions, you knew going into it that you were going to pay a King’s ransom for Stafford. However, you can feel good about getting a deal done ahead of the draft (unlike JaMarcus Russell) and maybe more importantly you can feel good about limiting the increase of the “% Increase” of the guarantee to only 1.5% from Long’s 14.3% and in exchange for this you’re willing to give up a higher per year base contract value ($12M/year for Stafford vs. $10M/year for both Long and Russell). Just as agents are interested in maximizing guarantee money, clubs are interested in limiting it in anyway possible; relatively speaking, Detroit did a good job in this regard.

Player Term Guaranteed $ Guarantee/Year % Increase
Russell, JaMarcus 6 $31,500,000 $5,250,000
Long, Jake 5 $30,000,000 $6,000,000 14.3%
Stafford, Matthew 6 $41,700,000 $6,950,000 15.8%

You see that Stafford’s increase was 1.5% more than Long’s; however, last year’s premier rookie QB, Matt Ryan got an even higher increase than his predecessor at #3. Ryan’s increase was 3.3%.

Player Term Guaranteed $ Guarantee/Year % Increase
Young, Vince 5 $18,765,000 $3,753,000
Thomas, Joe 5 $23,000,000 $4,600,000 22.6%
Ryan, Matt 6 $34,750,000 $5,791,666 25.9%

As aside, looking the last three #3 overall picks, Tyson Jackson should be going to the Pro Bowl as a rookie.

So now begs the question, what does this all mean for Mark Sanchez at #5? The history of the #5 slot is as follows:

Player Term Guaranteed $ Guarantee/Year % Increase
Hawk, A.J. 6 $16,112,500 $2,685,417
Brown, Levi 6 $18,050,000 $3,008,333 12.0%
Dorsey, Glenn 5 $17,961,500 $3,592,300 19.4%

So maybe Sanchez gets a 6 year contract with at least $25M guaranteed ($4.17M/year of guaranteed money). We’ll see….