Under the Cap: Top 10 Starting Wide Receiver Contracts

To view this analysis, go to:
http://www.footballoutsiders.com/under-cap/2009/under-cap-top-ten-wide-receivers

Follow J.I. Halsell on Twitter: @SalaryCap101

Under the Cap: Top 10 Starting Running Back Contracts

To view this analysis, go to:
http://www.footballoutsiders.com/under-cap/2009/under-cap-top-ten-running-backs

Follow J.I. Halsell on Twitter: @SalaryCap101

Under the Cap: Top 10 Starting Quarterback Contracts

To view this analysis, go to: http://www.footballoutsiders.com/under-cap/2009/under-cap-top-ten-quarterbacks

What Free Agency Will Look Like in an Uncapped Year: The Final Eight Plan

In my August 26th entry titled “Uncapped Leverage” on FootballOutsiders.com I discussed the change in the Accrued Season requirement from four seasons to six seasons in order for players to be eligible for free agency. This change is mandated by the Collective Bargaining Agreement to take effect in the uncapped year, currently slated for 2010. As I discussed in my earlier column, this tremendously hinders free agency from the players’ perspectives by forcing them to wait longer for their much anticipated second pay day. The uncapped year obviously presents the players and clubs with an environment without a salary cap or team salary minimum; this environment has been discussed extensively in the media. However, another aspect of the uncapped year that has received very little coverage in the media is what is called the Final Eight Plan; this change mandated by the Collective Bargaining Agreement completely changes the rules of free agency for clubs.

As it is today with a salary cap, when free agent season begins in March, all 32 clubs have the opportunity to acquire unrestricted free agents (UFA) in an open, competitive market. In an uncapped year of 2010, the Final Eight teams in the 2009 playoffs, meaning those teams participating in the Divisional round in both the AFC & NFC, will be limited in their ability to acquire free agents in the offseason after their post-season run.

For the four clubs that make it to the Conference Championships in the 2010 offseason, they can sign the following three types of UFAs: any UFA who became a free agent by virtue of their contract being terminated before its expiration; any of the club’s own UFAs; and a UFA to replace each UFA lost by the club. Regarding this one-for-one UFA replacement, the contracts signed by the UFA replacement player must fall within the following parameters: the first year salary must not exceed the first year salary contained in the new contract of the UFA lost by the team; salaries in the future years of the replacement UFA’s contract may not increase by more than 30 percent of the first year’s salary; and the contract cannot be renegotiated until one year after the signing date.

For the four clubs that lose in the Divisional round, they can sign the same three types of UFAs as the clubs that advanced to the Conference Championships. However, additionally, these four clubs may also sign one UFA for a first year salary of more than roughly $6 million and any number of UFAs for first year salaries of no more than approximately $4 million. The $6 million and $4 million amounts are approximations because they will be determined by projected Total Revenues in the uncapped year.

So lets say the Arizona Cardinals lose in the Divisional round of the 2009 playoffs, and they subsequently lose their kicker Neil Rackers via free agency to a contract that has a first year value of $3 million. Under this scenario, the Cardinals could sign a replacement UFA to compensate for Rackers’ departure. This replacement UFA does not have to be a kicker and their first year salary cannot exceed $3 million. Moreover, the replacement UFA’s contract cannot provide for annual increases in excess of $900,000 in order to comply with the 30 percent provision. Additionally, in free agency, the Cardinals would be able to sign the other types of UFAs available to Divisional round clubs.

Another rule applied to the Final Eight clubs is a prohibition of the those clubs from trading for UFAs they otherwise would not be eligible to sign as a result of the rules of the Final Eight Plan.

The Final Eight Plan takes the NFL from an even-playing-field version of free agency to an unleveled playing field that is designed to be in the favor of the 24 clubs that do not make it to the Divisional round; the spirit of which is to try to keep some level of competitive parity in an uncapped world. Essentially, the Final Eight Plan, amongst other things, places a salary cap on free agency for the final eight clubs, despite the non-existence of a league-wide salary cap. It’ll be a brave new free agent world in the 2010 uncapped year; should be very intriguing if we get to that point.

Follow J.I. Halsell on Twitter: @SalaryCap101

Injury Settlements for Waived Players

The deadline to cut down to 53-man Active rosters is upon us; meaning clubs will have to waive or terminate 22 players. For those players who are vested veterans, upon being cut they instantly become free agents. For non-vested players, they must first pass through waivers, where they can be claimed by another team, before becoming a free agent. But what about those players who may have gotten hurt in their final preseason game and are subsequently waived by their club?

In this case, the club will waive the player with the designation "Waived-Injured." This designation means that if the injured player clears waivers, then that player will revert to the club's Reserve-Injured list. So in the case of Redskins quarterback Colt Brennan, who tweaked his hamstring in the club's preseason game against Jacksonville, if the club were to waive Brennan (and I'm not saying that Brennan's going to get waived), then, upon the certification of the athletic training staff, the club would waive Brennan injured. Assuming he passes through waivers, he would then revert to & remain on the club's IR list until he's given a clean bill of health.

In an effort to cut ties with the player and to allow him to pursue opportunities once he's healthy, the club and agent will then initiate Injury Settlement negotiations. So in the case of Brennan, if he's diagnosed with a 4-week hamstring injury, then the club and agent will work towards a settlement that compensates Brennan for those 4 weeks; once a settlement is agreed upon, then the club can waive Brennan with the designation "Waived-Injury Settlement," which then severs ties between the player and club. Brennan can then pursue opportunities with another club.

Sometimes a player who is compensated for, say, a 4-week injury by virtue of his injury settlement, may sign a contract with another team within those 4 weeks because he (surprise, surprise) got healthier faster than expected. To manage this scenario, a lot of clubs will put "off-set" language in their settlements that articulate that the club will no longer be responsible for the amount of money due to him while he's receiving payments from his new club as a result of his new deal. This prevents the player from "double-dipping," meaning receiving payments from his old team and new team simultaneously.

With these settlements available to players who are on the bubble, there's a certain up-tick in the number of players who report to the training room the day after a club's final preseason game. There are definitely legitimate injuries, but one would be naive to think that some "injuries" are in the "milk-this-thing-as-long-as-I-can" vain.

It's definitely an interesting dynamic to the weekend of final roster cut-downs.

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

Follow J.I. on Twitter @SalaryCap101