The Affluent Quarterback Class of 2004

Class of 2004 Quarterback Contract Extensions
Player	Roethlisberger	Manning	Rivers
Club	PIT	NYG	SD
Sign Date	3/3/2008	8/14/2009	8/25/2009
New Years	6	6	6
Guarantee	$33,200,000	$35,000,000	$38,150,000
Guarantee/Year	$5,533,333	$5,833,333	$6,358,333
Guarantee vs Total New Money	37.7%	35.9%	41.6%
Non-Guaranteed Money	$54,786,502	$62,500,000	$53,650,000
Total New Money	$87,986,502	$97,500,000	$91,800,000
Average Per Year	$14,664,417	$16,250,000	$15,300,000
Three-Year Total	$52,686,501	$50,850,000	$50,250,000
Guarantee vs Three Year Total	63.0%	68.8%	75.9%

One could make the argument that what the 1983 Quarterback draft class is to Hall of Famers, the 2004 Quarterback draft class is to hefty contract extensions. With Philip Rivers signing his contract earlier this week, it makes sense to compare the contracts of this highly compensated group of quarterbacks.

Given the unguaranteed nature of NFL contracts, I’m of the opinion that guaranteed money is the most important metric by which to judge contracts. With that in mind, when one compares the three contracts, Philip Rivers’ deal comes out on top. In my Eli Manning analysis article from earlier this month, I wrote that Rivers’ contract could “approach $40 million guaranteed and $100 million in new money…Sounds a lot like the Haynesworth contract.” While Rivers did not get nearly $100 million in new money, he did get $38.15 million guaranteed - $3 million more than Manning and nearly $5 million more than Roethlisberger. Another good metric is to look at how much guaranteed money a player is getting compared to the number of years they are obligating themselves to; in the case of Rivers, his guarantee per year of $6.36 million easily exceeds Manning and Roethlisberger and Haynesworth ($5.86 million) for that matter.

The give and take of Rivers’ contract appears to be that in exchange for his high guaranteed money, he sacrificed the total value of his contract. Of the three contracts, Manning’s contract easily has the highest total new money value, $97.5 million; however, Manning also has the lowest percentage of his contract guaranteed, 35.9%. Conversely, Rivers has a total new money value that is nearly $6 million less than Manning, but the 41.6% of his contract that is guaranteed is the highest amongst this group. One could surmise that the fact that so much of Manning’s contract, relative to his quarterback peers of 2004, is non-guaranteed reflects the inconsistency of his play compared to that of his peers.

The three-year total metric is often the most utilized and practical barometer of total contract value since the likelihood of a player making it to the latter years of a deal isn’t very likely. That said, Roethlisberger is going to make the most new money over the first three years of the contract, $52.67 million, while Rivers is going to make the least of this group of quarterbacks, $50.25 million. However, Rivers’ 75.9% of his three-year total being guarantee leads this group, which goes back to the point that Rivers sacrificed non-guaranteed money for more guaranteed money.

So what does this mean for the Tom Bradys and Peyton Mannings of the world? Given that quarterbacks can play well into their 30’s, perhaps six year extensions can be in their futures despite their ages (Brady, 32; Manning, 34). Moreover, if the quarterback class of 2004 is getting around $6 million per year in guaranteed money, then Brady and Manning could easily command $7 million per year in guaranteed money (particularly if Matthew Stafford got $6.95 million per year). Another possible structure could be an average new money per year of nearly $20 million per year, but with roughly 25% of the total new money guaranteed (roughly $30 million guaranteed on a six year deal). This is the approach the Packers took with 31-year old Brett Favre in 2001; it’s called the “pay as you go approach,” which seems fitting for a player heading towards the perceived twilight of their career.

With the rare exception of the Albert Haynesworth’s of the world, it’s clear, and not necessarily a surprise, that quarterback is the money position in the NFL. Many front offices believe that a legitimate franchise quarterback single-handedly gives your club a better chance of succeeding; which makes the trade of Jay Cutler somewhat of an eyebrow raiser, but the subscription to this philosophy is also reflected in the value of the quarterback market. The 2004 quarterback draft class exemplifies this fact; stay tuned to see if in 2014, the 2009 quarterback draft class of Stafford, Sanchez, and Freeman cash in like their 2004 predecessors.

How Clubs Have Unprecedented Leverage by the Looming Uncapped Year

Once the cash honeymoon of a young player’s rookie contract has subsided, young players in the league who have made a name for themselves then turn their attention towards earning that lucrative second contract via a contract extension or unrestricted free agency. Philip Rivers, Eli Manning, Roddy White, Matt Cassel, and Albert Haynesworth all cashed in this off-season with lucrative second contracts. However, it remains to be seen if players like Shawn Merriman and DeMarcus Ware also cash in, or if their respective clubs utilize the unprecedented leverage created by the looming uncapped year.

The 2010 league year, if uncapped as a result of a failure to negotiate a new Collective Bargaining Agreement, will change the rules of free agency. As has been widely reported, the uncapped year will change the requirement for unrestricted free agency from four accrued seasons to six accrued seasons; meaning unlike today where a player hits the open market prior to their fifth NFL season, a player will not hit the market until they are entering their seventh season. Similarly, and most impactful to players in the 2005 and 2006 draft classes whose rookie contracts are expiring after 2009, the requirement for restricted free agency in an uncapped year goes from three accrued seasons to three through five accrued seasons. As an example, DeMarcus Ware is on track to become an unrestricted free agent after the 2009 season; however, if 2010 is uncapped, then Ware instead becomes a restricted free agent.

Restricted free agency simply gives Club A the right of first refusal should another team extend an offer to Club A’s restricted free agent. In the event that Club A chooses not to match the offer of Club B, then depending upon which one-year restricted free agent tender Club A extended to its player, that will then determine what draft picks Club A receives in return from Club B. For example, prior to signing him to a contract extension, the Cowboys utilized the 1st & 3rd Round tender on running back Marion Barber, meaning if another club had signed Barber to an offer sheet, then, if the Cowboys chose not to match the offer sheet, they then would have received a 1st & 3rd round pick from the club that signed Barber. However, if a restricted free agent is not signed to an offer sheet and instead plays under the one-year tender, then depending upon the tender extended, in 2009, the player will earn one of the salary amounts below.

2009 RFA Tenders: Salary*
- Right of First Refusal (ROFR) only: $1,010,000
- ROFR + Original Round: $1,010,000
- ROFR + 2nd Round: $1,545,000
- ROFR + 1st Round: $2,198,000
- ROFR + 1st & 3rd Round: $2,792,000
* Note: Greater of amount listed or 110% of Previous Year’s Salary

Going into an uncapped 2010 League Year, if a club is uncertain as to the long-term future of a player such that they are unwilling to commit to a long-term extension, they can then retain the player’s exclusive rights by offering him a restricted free agent tender. The upside for the club is that if a club signs this player to an offer sheet and the club chooses not to match, then they receive draft pick compensation for a player who they were uncertain of from a long-term perspective. If the player isn’t signed to an offer sheet, then the club keeps this player at a relative bargain. The downside to this approach is that a club runs the risk of having a disgruntled player walking around their facility, as surely the player will be frustrated by the club’s utilization of this change in the free agency system which ultimately postponed the player’s next big payday. It is this leveraging of the change in the free agency rules that some clubs are considering when determining whether or not they are going to extend players in 2009.

In the case of, say, Washington cornerback Carlos Rogers, the Redskins could sign Rogers to a 2nd Round tender, which would give Rogers a 2010 tender salary of $1.684 million. This proposition works out as a win-win for the club, as they either get Rogers, a cornerback who some front office personnel rate highly in spite of his lack of interceptions, at a bargain rate for one year relative to the current cornerback market, or they get a second round pick for him if he were to leave via restricted free agency. All of this said, front offices recognize the unique leverage presented by the uncapped year in this regard; accordingly, some are willing to utilize this technique to further the long-term goals of the organization, even if in the short-term it results in a disgruntled player. Atlanta was not willing to go this route with Roddy White, but one can be assured that a club will utilize this technique with a player and acrimony will exist thereafter as a result.

Much like Roddy White and Steelers tight end Heath Miller, one would think that players like Merriman and Ware will receive contract extensions in the near future, as they have proved to be integral members of their respective clubs. However, the following players could find themselves disgruntled and disappointed by an uncapped year:

· NO left tackle Jammal Brown
· NE guard Logan Mankins
· WAS quarterback Jason Campbell
· WAS cornerback Carlos Rogers
· SD wide receiver Vincent Jackson
· CLV wide receiver Braylon Edwards
· DEN wide receiver Brandon Marshall
· HST linebacker DeMeco Ryans
· SD left tackle Marcus McNeill

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The Contracts of Mike Vick & Roddy White

Vick’s Contract Structure
On the first night of the first full weekend of pre-season football, the games of the evening took a backseat to the signing of quarterback Michael Vick by the Philadelphia Eagles. While the numbers are generally being reported by various outlets as $1.6 million for year one and $5.2 million for the option year of year two, I’ll reserve comment on the compensation aspect of the deal until I can get the specific details of the contract, as the numbers reported are very vague and tell one nothing about how those amounts are broken out amongst guaranteed and non-guaranteed money.

Regarding the reported structure of the contract, in an article that I penned for the The Washington Post, I discussed the advantages of signing Vick to a one-year “prove it” contract with a club option for multiple years thereafter. In the end, Vick and the Eagles did indeed agree to this type of structure, but instead of an option for multiple years, Vick’s agreement is only for one option year. Without re-hashing the Washington Post article, the spirit of the “prove-it” option structure is that it allows the club to get a one year evaluation of the player, without the commitment of a substantial amount of guaranteed money and contractual years, and more importantly, this structure allows the club to be in complete control should they decide they would like to retain the player after year one. In his one year with the Patriots, Donte Stallworth signed a one year “prove it” contract with an option for multiple years thereafter; the Patriots chose not to exercise the option. Conversely, Saints quarterback Drew Brees also signed a contract with this structure after coming off of off-season shoulder surgery; the Saints opted to exercise Brees’ option.

In short, if the player stinks, then with this structure the club doesn’t pay the option bonus and the player becomes a free agent, but if the player turns out to be good, then the club pays the negotiated option bonus and retains the services of the player. If the retention of the player equates to multiple years, then this is to the advantage of the club, as they’ve locked in the future value of the player’s contract. To this point, it makes sense that Vick’s option is only for one additional year. Assuming Vick proves to be a high-level player, then the agent’s responsibility is to get his player to free agency as soon as possible, hence the one option year agreed to by Vick’s agent Joel Segal in lieu of multiple years. If Vick is playing at a high level through 2010, he’ll be in line for a potentially lucrative deal as he enters 2011. However, if Vick proves otherwise, then the club has protected its interests by not committing a lot to Vick beyond 2009.

All in all, the contract structure agreed to by Vick and the Eagles seems to be mutually beneficial. Given the well documented history of the Eagles’ propensity for locking up players for an extended amount of years, it’s interesting that Segal was able to obtain an agreement to one option year. One would have thought that the Eagles would have wanted the option to secure Vick’s services for a longer period of time after the “prove it” year.

Coincidentally, or maybe not, both Eagles starting quarterback Donovan McNabb’s and Vick’s contracts expire after 2010, assuming a Vick option. Come 2011, it’ll be interesting to see which one of these two end up with a new contract with the Eagles as the starter, or if neither is the 2011 starter or on the team for that matter.


Roddy White Analysis
While the NFL news headlines are filled with the signing of a former member of the Atlanta Falcons, lets take a look at the contract signed by current Falcon wide receiver Roddy White.

Wide Receiver Roddy White
Club: ATL
Analysis Peer Group: Wide Receiver Contract Extensions

Contract Length: Five new years

Total Guarantee: $18,600,000 (Peer: BUF Wide Receiver Lee Evans, $18,250,000; New England Wide Receiver Randy Moss, $15,000,000)
Guarantee Per Year: $3,720,000 (Peers: CHI Wide Receiver Devin Hester, $3,750,000; NO Wide Receiver Marques Colston, $3,333,333)
Guarantee vs. Total New Money Value: 43.5% (Peer: ARZ Wide Receiver Anquan Boldin, 44.1%)

Total New Money Value: $42,720,000 (Peers: HST Wide Receiver Andre Johnson, $42,600,000; MIN Wide Receiver Bernard Berrian, $42,000,000)
Average Per Year (APY): $8,544,000 (Peers: DAL Wide Receiver Roy Williams, $9,000,000; Evans, $8,250,000)

Three-Year Total: (estimate) $31,120,000 (Peers: ARZ Wide Receiver Larry Fitzgerald, $33,000,000; Moss, $27,000,000)
Guarantee vs. Three-Year Total: 59.8% (Peers: ATL Wide Receiver Michael Jenkins, 63.4%; Moss, 55.6%)

Analysis:
The first thing that stands out about the contract extension signed by Falcons wide receiver Roddy White is his three-year total of $31,120,000. At the wide receiver position, this amount is only rivaled and surpassed by the contract of Arizona wide receiver Larry Fitzgerald, $33,000,000. This three-year total is an aspect of the contract that White’s agent Neil Schwartz can hang his hat on when selling this contract to the media or prospective clients.

However, from the club’s perspective, this is a good deal because even though Roddy White can earn a lot of money over the course of this contract, particularly over the first three years; he’s going to have to do just that, earn it via salary and not guaranteed money. While players like Saints wide receiver Marques Colston and Bears wide receiver Devin Hester are guaranteed in excess of 85% of the first three years of their contract, White is only guaranteed 59.8% of his three-year total. In the case of White and the Falcons, this agreement benefits the club in that the player should be satisfied with a guarantee amount as a whole that is going to pay him as an upper-tier wide receiver but at the same time doesn’t over expose the club from a guaranteed compensation standpoint should Roddy White’s development regress. Sounds like a win-win deal.

Eli Manning: Elite Quarterback?

On Wednesday, word broke of the contract extension of Giants quarterback Eli Manning. Unlike free agent contracts or draft pick contracts, when one determines the value of an extension contract, they must subtract from the total value of the contract, the amount of money the player was due to earn on their previous contract over the common years of both contracts. In the case of Manning, 2009 was the final year of his rookie contract, in which he was due to earn $9.4 million. The contract signed by Manning this week was reported as a seven year agreement with a total value of $106.9 million. Subtracting out the $9.4 million of old money and the old year of 2009; Manning’s contract is valued as six-new years with a new money value of $97.5 million.

Another interesting aspect of contract extensions is that they often lead to the lowering of a player’s cap number; meaning Manning’s 2009 cap number of $13.8 million could possibly have been reduced as a result of a contract that has made him a richer man. How does this happen you may ask? Often the money that is guaranteed to the player is accounted for in the future years of the new contract, thereby reducing the player’s impact on the club’s cap in the first year of the deal. Given that the Giants, as of the date of this posting, have only $4 million in cap space, I’m almost certain that Manning’s new contract is providing the club a few million in cap relief.

Below is an analysis of Manning’s contract relative to other quarterbacks who have signed contract extensions. You’ll see that it’s definitely a lucrative contract and a top-market deal, but it may not necessarily be the market setting contract that it’s being made out to be.

QB ELI MANNING
Club: NYG
Analysis Peer Group: QB Contract Extensions

Contract Length: 6 new years

Total Guarantee: (reported) $35,000,000 (Peers: IND QB Peyton Manning, $34,500,000; PIT QB Ben Roethlisberger, $33,200,000)
Guarantee Per Year: $5,833,333 (Peers: NE QB Tom Brady, $6,625,000; Roethlisberger, $5,533,333)
Guarantee vs. Total New Money Value: 35.9% (Peers: DAL QB Tony Romo, 43.4%; Roethlisberger, 37.7%)

Total New Money Value: (reported) $97,500,000 (Peers: Manning, $98,000,000; Palmer, $97,000,000)
Average Per Year (APY): $16,250,000 (Peers: Palmer, $16,166,667; Roethlisberger, $14,664,417)

Three-Year Total: (estimate) $50,000,000 (Peers: Palmer, $55,500,000; Roethlisberger, $52,686,501)

Analysis:
As I looked at putting into context quarterback Eli Manning’s 6-year, $97.5 million contract, it really made me appreciate the contract that Bengals quarterback Carson Palmer got in 2005. Four seasons ago, Palmer got a 6-year extension worth $97 million in new money; fast forward four seasons and Manning essentially gets the same contract with the difference being the guaranteed money. Palmer’s 2005 contract awarded him $24 million guaranteed, while Manning’s contract awards him $35 million.

Given the $40-plus million guarantees of defensive tackle Albert Haynesworth and number-one overall pick, quarterback Matthew Stafford, one would think that a franchise quarterback extension would garner Manning a guarantee in excess of $40 million. However, coincidentally or not, if you analyze Haynesworth’s $41 million guarantee over his seven contract years, it gives you a guarantee per year of $5.86 million. Comparatively, Manning’s $35 million guarantee over six years equates to $5.83 million; so it would appear that $5.8 million per year is a data point that equates to elite guaranteed money. Some say that Patriots quarterback Tom Brady is underpaid, but given his four-year extension signed in 2005, he did pretty well from a guarantee per year standpoint, with a figure of $6.625 million.

The Three-Year Total, which represents the amount of new money the player will have earned over the first three new years of the contract, of Manning’s contract has not been reported, but if Palmer got $55.5 million in 2005 and Roethlisberger $52.7 million in 2008, then one would imagine that Manning’s Three-Year Total has to be in excess of $55 million. Roethlisberger’s Three-Year Total versus his Total New Money of $88 million gives you 59.9% of Roethlisberger’s new money being paid in the first three new years of the deal. Using that 59.9% figure and applying it to Manning’s $97.5 million contract, gives you $58.4 million of Manning’s new money being paid in the first three years if it’s similar to Roethlisberger. It’ll be interesting to find out what Manning’s actual Three-Year Total turns out to be and how similar or dissimilar it is from his peers.

So what does this contract mean for Chargers quarterback Philip Rivers? Since becoming the Chargers’ starter in 2006, Rivers has been by far the more prolific quarterback of the 2004 quarterback draft class (Manning, Rivers, & Roethlisberger). Since 2006, Rivers ranks fifth in cumulative quarterback rating (93.5), while Roethlisberger (85.7) and Manning (78.9) rank 17th and 28th respectively. Clearly, Roethlisberger’s two Super Bowl rings and Manning’s one set these two quarterbacks apart from Rivers; however, Rivers’ 33-15 record as a starter shows that he’s not just putting up numbers but also leading his team to victories just as his quarterback peers of the 2004 draft class. Given the contracts given to Manning and Roethlisberger and given Rivers’ statistics and win-loss record, it would not be unreasonable for a Rivers contract to approach $40 million guaranteed and $100 million in new money. Sounds a lot like the Haynesworth contract; however, unlike the Haynesworth deal which is seven years in duration (although it’s truly a four-year, $48 million contract before a hefty bonus for the remaining three years), the Rivers deal I would expect to be a six year contract as this seems to be the popular contract term for quarterbacks. Romo, Roethlisberger, Cassel, and Palmer all signed six year extensions.

Being a quarterback in the insatiable media market that is New York City is a tough undertaking; not to mention the pressures that come with being a number one overall pick and being the sibling of arguably the most prolific quarterback of this generation. Thus far, winning a Super Bowl has arguably been Manning’s only saving grace because statistically his numbers don’t exactly equate to elite quarterback status. Yet, the Giants awarded Manning a contract that pays him at an elite level. With this new contract, there’s a certain renewing of the pressure on Manning to live up to lofty expectations; I’m sure the New York media will be watching closely.