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 http://www.salarycap101.com/ .