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.

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