It is no secret that the quarterback position is the most vital one in football. It can also be argued that with the various rule changes in the last decade designed to protect quarterbacks’ safety and promote the passing game, the quarterback is more important than ever. Consequently, QBs make more money than any other position. But with the meteoric rise in QB salaries compared to only modest increases in overall team salary caps in recent years, could we potentially see a bursting of the quarterback salary market bubble similar to that of the housing market or looming college tuition market?
[DISCLAIMER: EVEN THOUGH THIS IS A PIECE ON BUBBLES, FORTUNATELY THIS WILL BE THE ONE AND ONLY REFERENCE TO THE HORRIBLE VH1 SHOW "POP-UP VIDEO."]
Flacco Getting His Scrooge McDuck On
Let’s
take a deeper look. The biggest NFL
headline this week is Joe Flacco's historic contract which amounts to $120.6 million over six years with $52
million guaranteed, making him the highest paid player in the league. Upon signing the deal, Flacco will
immediately get $29 million cash in his pocket plus another million in base
salary during the 2013 season. Let’s be
clear that this figure is different than the cap hit Baltimore will incur this
season. Flacco will only count a modest
$6.8 million towards Baltimore’s cap this year and a reasonable $14.8 and
$14.55 million in 2014 and 2015, respectively.
However, his cap charges through 2016-2018 will be a whopping $28.55,
$31.15, and $24.75 million. To be fair,
we won’t know the overall team salary cap limits in those years, especially
with the influx of TV revenues that will ultimately boost team caps, but it
will still represent an astronomical percentage of the team’s salary cap. In terms of average payout per year, Flacco’s
$20.1 million alone accounts for over 16% of the Ravens cap.
Some
will argue that this is an absolutely ridiculous contract for a player who has never finished higher than 7th
in QB rating, never passed for 4,000 yards, never threw more than 25
touchdowns, and has never made a Pro Bowl.
Others will argue that he just carried his team to a Super Bowl to the
tune of a sizzling 117.2 playoff QB rating and could not have any more leverage
than he does now. But does either point
really matter? Salary cap gurus such as Jason Fitzgerald at overthecap.com believe that this is really no different
than Eli Manning’s 2009 then record-setting contract which paid him an average
of $16.25 million per year, thus making him the league's highest paid player at the time. Neither Manning nor Flacco has ever been confused with Tom
Brady or Peyton Manning, but what they are doing is resetting the market for
future free agent QBs looking to cash in themselves. Eli’s contract set the tone for his brother’s
contract as well as Drew Brees’s (which we will get to later). Flacco’s contract will now set the tone for
Aaron Rodgers and Matt Ryan, two quarterbacks with a better track record who
will almost certainly ask for more than Flacco.
In other words, while Flacco is the highest paid player today, things
will quickly change. Consider him the
trendsetter, not the king.
“Show Me The Money”
So
how does this compare to recent years?
Albert Breer of NFL Network wrote an interesting article last week that
investigated the top average QB salaries in 2007 versus those in 2013. In 2007, each team’s salary cap was set at
$109 million. The average cap hit of the
top five QBs was $10.73 million, representing roughly 9.8% of a team’s salary
cap. In 2013, each team’s salary cap has
risen to $123 million; however, the average cap hit of the top five QBs is $19.14
million, representing a staggering 15.6% of a team’s cap.
Consider
it like this: While the overall team
salary caps have risen by just under 14% in the last six years, top quarterback
salaries have risen by a whopping 78%.
Sooner or later, something is going to have to give or certain teams
might pay the price. Even crazier is
that at the time of the Eli Manning extension in 2009, the last salary capped
year in the old Collective Bargaining Agreement, allotted team salary caps were actually $5 million higher than today. So
while Eli Manning’s $16.25 million per year seemed wacky at the time, his
deal only represented 12.7% of the Giants salary cap, still a much lower
proportion than Flacco’s current deal.
If Manning’s deal is akin to Cosmo Kramer, Flacco’s is like"Crazy" Joe Davola.
Peyton Manning and Drew Brees – Guinea Pigs?
Peyton Manning and Drew Brees, two quarterbacks with far
superior résumés than Flacco, both signed hefty deals last offseason. Manning’s average payout per year is $19.2
million while Brees’s is $20 million.
While both future Hall of Famers are on the back ends of their careers
unlike Flacco, we can still use their average yearly payouts to compare to
Flacco; however, as we delve deeper, Manning’s contract starkly differs from Brees’s,
so each deal will have a differing effect on its team’s salary cap structure.
Considering Manning’s age (he enters his age-37 year in
2013) and his risky medical history, the Broncos took a cautious pay-as-you-go
measure to his five year contract. His second and third year salaries are only
guaranteed if he passes a physical on March 13th, and his fourth and
fifth seasons are only guaranteed if he is still on the roster at the end of
each previous season. Even if Manning
passes the physical next week, the Broncos can easily cut bait after year three
with zero financial repercussions.
On the other hand, the Saints deal with Drew Brees, who
enters his age-34 year, involved a prodigious $37 million signing bonus that
gets prorated over the life of the contract.
In other words, cutting Brees before the contract ends is virtually impossible
from a cap perspective. Brees has
volunteered to restructure his contract to create more space this year for the
fiscally precarious Saints, but pushing money to later years is the ultimate “cutting
off the nose to spite the face” move.
His three cap hits after 2013 are $18.4, $26.4, and $27.4 million. There is simply no room to budge.
While the Saints current and future financial situation is
dire compared to the Broncos, the underlying commonality is that the large
salaries doled out to each player will have an impact on which core players
each team can retain. As a result, both
teams could find themselves in “all-in” situations for 2013, but in fairness to
the Broncos, they could conceivably make one more push in 2014.
In
Denver’s case, they have a slew of key players who are due up for a new
contract soon. Ryan Clady, Eric Decker,
and Wesley Woodyard are all entering the last year of their deals, while Von
Miller and Demaryius Thomas have only two years remaining. The latter two players will command mega
paydays above $10 million per year.
Older players like DJ Williams and Champ Bailey can come off the books
soon to alleviate some of the burden, but Denver is going to have to let some
high quality players walk unless they want to stretch themselves thin at other
spots. Trying to pay everyone is a
calculated risk that can easily backfire, especially if the team suffers a
significant injury or two. It’s
basically the equivalent of trying to ford the river in Oregon Trail.
Don't worry, Broncos fans. Nobody will drown or die of dysentery as a result, but your team could be taking a major risk by trying to retain all of these key impending free agents.
New
Orleans is in a much trickier place. The
Saints are still $5 million over the 2013 salary cap despite restructuring the
contracts of Curtis Lofton, David Hawthorne, Jahri Evans, Ben Grubbs, and
Marques Colston, all players who just signed last year. Those moves might create cap space now, but it causes future
cap pains. While restructuring appears
to be an immediate help, all it does is procrastinate and exacerbate your problems. Evans, Grubbs, and Colston will all be in
their 30s next year and guaranteed to be on the roster (thanks to the restructures) simply because of their
large dead money totals if cut. Furthermore, their 2014 cap situation is even
worse than 2013, and that’s before even worrying about re-signing impending
free agent Jimmy Graham, the team’s best young commodity. And this isn’t even taking into account the
glaring holes and ineptitude on the defensive side of the ball.
Jump to Conclusions Mat
It is still too early to truly tell if the growing bubble
will eventually burst for certain teams or if the market will adjust accordingly, thus pinching
pennies out of the lesser heralded positions and players. The point remains, however, that front
offices across the NFL are going to have to perform extra due diligence when pondering
these pricy quarterback investments, especially if quarterback salaries
continue grow at a rate superior to team salary caps.
For the handful of top franchise quarterbacks, teams likely do not
have a choice. For Green Bay, an
organization known for never overpaying free agents, they will be forced into giving
Aaron Rodgers a king’s ransom simply because the opportunity cost of letting
him walk is too high, even if he wants close to $25 million per year.
But what about the starting caliber quarterbacks who are not
at a Pro Bowl or All-Pro level? Will
they make $15-16 million per year? Or
more appropriately, will they deserve that?
Will teams be virtually powerless and not have a choice but to pay them?
This is especially relevant for average
QBs such as Josh Freeman (free agent in 2014), Andy Dalton (2015), Christian
Ponder (2015), and Sam Bradford (2016).
That might actually be the true litmus test, especially if one team
shells out closer to the $18 million range if one of those quarterbacks happens
to post a career year right before free agency a la Flacco. Personally, I do not think those players are
worth anywhere from 1/8 to 1/7 of a team’s cap, but with the high level of difficulty
in finding and developing legitimate starting quarterbacks, some franchises
will naturally disagree.
The domino effect of this will be the extra added emphasis
on sound drafting, something a wisely run franchise like Green Bay already does
because rookie contracts are far cheaper than free agent contracts. For front offices, one of the many positives
of the new Collective Bargaining Agreement is the rookie wage scale which pays
higher picks at a much lower rate than in the past. Another caveat is that rookies cannot
restructure or get extensions until after year three. For a team like Seattle, that means Russell
Wilson will be making less than $1 million for the next two years. For San Francisco and Houston, it means elite
pass rushers Aldon Smith and JJ Watt will be making under $4 million this
season, a third of what QB bust Mark Sanchez makes and a quarter of what fellow
pass rusher Mario Williams will make. Meanwhile
teams like the Saints, which have not had great success drafting cost-efficient
players the last few years, are finding themselves as a giant bubble waiting to
burst in Rev. Run’s bathtub because of
bloated contracts. Then again, the
Saints did win a Super Bowl in the process.
For that, I will leave Saints fans a Rev. Run quote in case they are
perturbed at their grim future: “When you’re grateful, you have no time to be
mad or hateful.”
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