Tuesday, July 28, 2009

Is Matt Cassel the Next Tony Romo?

In the valuing of NFL contracts there are standard metrics by which 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 3-Year Total is simply how much money will the player 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 in player A’s contract he’s slated to make $40 million in the first three years and then slated to make $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 3-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 Matt Cassel contract below, you’ll see me reference these metrics and who the players are that are most comparable to Cassel in each of these metrics.

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%
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 (APY): $10,500,000
Comparable APYs at Position: ATL QB Matt Ryan, $11,000,000; SL QB Marc Bulger, $10,841,667; OAK QB JaMarcus Russell, $10,166,667; NO QB Drew Brees, $10,000,000

3-Year Total: $40,500,000

As you assess Chiefs quarterback Matt Cassel’s contract, you have to compare his contract to his peers, who have also been awarded long-term franchise quarterback contracts with very little track record as an NFL starting quarterback. The most recent examples are Green Bay quarterback Aaron Rodgers and Dallas quarterback Tony Romo. Cleveland quarterback Derek Anderson could be considered in this peer group, but because his deal was only a 3-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 the future of Rodgers 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 3-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 $30,500,000 versus $28,000,000 and percentage of the total value guaranteed, 44% versus 33%.

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, and Three-Year total, $40,500,000 versus $31,000,000. 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.

The next group of quarterbacks in line for franchise quarterback contracts are New York quarterback Eli Manning and San Diego quarterback Phillip Rivers, but their contracts are going to be in another stratosphere from those signed by Cassel, Rodgers, and Romo, as these two quarterback 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 quarterback Jason Campbell and Buffalo quarterback Trent Edwards, if they prove they’re worthy of a long-term deal, could potentially be in the same ball park as Cassel, Romo, and Rodgers.

Possible Contract Structure for Mike Vick

With Michael Vick’s conditional reinstatement, the question is now what club will take a chance on him. Clearly, the question marks that revolve around Vick are what type of player is he today, given that he hasn’t played in the NFL since 2006, and then, from a PR standpoint, how is the fan base going to react to a Vick signing. That said, it’s inevitable that a club is going to take a flyer on Vick, the talent of his past is too enticing for a club not to.

The structuring of a Vick contract is an intriguing dilemma. On one hand, you want to guard against Vick being washed up; while at the same time serving your best interest if Vick doesn’t skip a beat and returns to his Pro Bowl form.

Without talking about the dollar amounts, one way a Vick contract could be structured is similar to that of the contract signed by Saints quarterback Drew Brees when he arrived in New Orleans. Remember when Brees came to New Orleans in 2006, he was coming off a shoulder injury suffered in his final game as a Charger in 2005. The injury required surgery and five months of rehab. It was under those circumstances that Brees signed a one year contract with an option for five additional years. The spirit of this structure was for Brees to prove in 2006 that he was fully recovered from the shoulder injury and capable of being the franchise quarterback that they had hoped for, which would in turn lead the Saints to pay Brees’ 2nd year Option Bonus amount. However, if Brees proved to not be the same quarterback he had been, then the Saints simply would not exercise the Option for the additional five years, resulting in Brees becoming a free agent after one season in New Orleans. In terms of how this structure impacted Brees’ compensation, he was paid an $8 million signing bonus, a 2006 salary of $1.9 million, and a $100,000 workout bonus, meaning if the Saints chose to walk away after 2006, Brees would have cost them $10 million. However, if the Saints chose to exercise the option, they would pay Brees a 2nd year Option bonus of $12 million and have him under contract for an additional five years.

In the case of Vick, you have a player, who, due to incarceration and not injury, has been away from the game for two seasons. However, similar to Brees, Vick has to prove he still has the ability to be a starting quarterback in this league. That said, it would not be far-fetched to think that a club would want to structure a “prove it” contract for Vick that allows the team to try the “Mike Vick experiment” for one year, without obligating them contractually or financially for an extended amount of time. If Vick proves that he still has it, then, similar to the Brees deal, Vick’s contract could be structured to include an Option bonus that compensates him as a starting quarterback and contractually binds him to a team for multiple seasons. Regarding that Option bonus, clubs are unable to collect forfeiture on Option bonuses paid to players who default on their contract. Given this dynamic, clubs now insert language into their bonus language that allows the club to convert this option bonus to signing bonus, as clubs can collect forfeiture on signing bonus amounts in the event of default.

In the case of Brees, his bonus money of $20 million was split 40-60, $8 million in signing bonus (40% of bonus money) and $12 million in Option bonus (60% of bonus money). Given the Vick circumstances, maybe his split is 25-75 or even less, but this structure allows a club to keep its options open.

Monday, July 27, 2009

Suggs' Contract Analysis & the Future of the Pass-Rushing Defensive End Market

Club: BLT
Contract Length: 6 years

Total Guarantee: $40,000,000
Guarantee Per Year: $6,666,666
Comparable Total Guarantees at Position: MIN DE Jared Allen, $31,750,069; IND DE Dwight Freeney, $30,000,000; HST DE Mario Williams, $26,500,000; SL DE Chris Long, $24,990,000

Total Value: $62,500,000
Average Per Year (APY): $10,416,666
Comparable APYs at Position: MIN DE Jared Allen, $12,210,012; IND DE Dwight Freeney, $12,000,000; NO DE Will Smith, $10,133,333; SL DE Chris Long, $9,600,000

3-Year Total: $43,400,001
Comparable 3-Year Totals at Position: MIN DE Jared Allen, $38,380,169; IND DE Dwight Freeney, $37,720,000; SL DE Chris Long, $35,000,000; HST DE Mario Williams, $29,450,000

Defensive end Terrell Suggs’ contract is a market setting contract for the pass-rushing defensive end market. 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. That said, 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. Of that same group of pass-rushers, Suggs’ 368 total tackles since 2003, ranks him fourth, and his 40.5 tackles for a loss over that time period ranks him first. Not to mention last season, he intercepted two passes and took them both back 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, Suggs 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 defensive end Julius Peppers is most certainly deserving. Since 2003, Peppers ranks second in sacks with 58.5, only trailing Miami defensive end Jason Taylor, who in spite of his one disappointing season in Washington, has 62.5 sacks since 2003. Dallas defensive end 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 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.

Thursday, July 16, 2009

Why do players get cut when draft picks get signed?

I know its been a minute since I've posted an entry here and on FootballOutsiders for that matter. The month of June through mid-July is the league's downtime as folks try to recharge their batteries prior to the opening of training camps and the season. So from a news perspective, it's a slow time in the league (aside from Cassel & Suggs' new deals). Anyway, I just wanted to post something real quick.

I was reading how the Browns recently signed three of their draft picks, and as a result of their signing, the Browns cut three players. In the offseason clubs have an 80-man active roster limit to account for clubs wanting to have as many players as possible to compete for roster spots. When clubs select players in the April draft, not only do they sign a contract tender, but the draft picks go on the "Reserve/Selection List" list. The result is them not counting towards this 80-man roster limit, as they are not considered "Active." However, college players who are not drafted and subsequently sign an undrafted rookie free agent contract with a club count as Active and therefore count against the 80-man limit.

So when a drafted player signs his contract, the tender that he signed after the draft goes away and his newly signed contract takes affect; and from a roster count perspective, he moves from Reserve/Selection List to the Active roster. Therefore if a club is at its 80-man limit, a player must be waived from the Active roster in order to make room for the draft pick.

The decision to figure out who to waive is not always a simple decision because clubs like to go into training camp with a certain number of players at a given position to account for saving the legs & reps of veteran players. For example, some clubs like to have 10 wide receivers at the start of camp so as to not burn out the legs of your valuable wide receivers, but having 10 receivers may mean having one less offensive lineman in camp and, to their chagrin, more reps in practice for your veteran offensive linemen.

So signing a draft pick to your Active roster is simple roster management, but you don't want to waive that one player who turns out to be a solid contributor elsewhere thereafter.