If you’re an NFL fan paying attention to free-agency news, you’ve likely been inundated all week with breathless reports of interest and consideration and the occasional chatter about monster deals. (Monster!) You’re also probably seeing a lot of financial figures getting tossed around, and many of them turn out to be misleading. It can be confusing.
You’ve got questions. I’ll do my best to provide some answers, but I’ve also enlisted the help of Jason Fitzgerald, the founder of the indispensable cap/contract depository overthecap.com and the co-author (with Vijay Natarajan) of Crunching Numbers: An Inside Look at the Salary Cap and Negotiating Player Contracts. (Disclosure: I gave the book a positive blurb a couple of months back.) Jason’s answers will be indicated in quotes throughout.
So ... when did free agency actually begin?
Officially, it began today at 4 p.m. (EST), which was the start of the 2017 league year. That’s the time when all expiring contracts expired, and free agents officially became free agents and could officially sign with other teams. Because it’s official.
How did Brandon Marshall sign with the Giants before today?
Marshall didn’t have an expiring contract. Since the Jets released him, he was already a free agent, so he could sign wherever and whenever. The same goes for any players who decided to re-sign with their current teams.
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Wait. If players couldn’t sign till 4 p.m. (EST) today, why did I see all those NFL scoop hounds reporting a bunch of deals before then?
There’s plenty of dealin’ going on well before the official start. As of noon (EST) on Tuesday, teams were permitted to “legally” negotiate with reps for any pending free agents. I say “legally” because while the NFL frowns on tampering—and has punished teams for it—in actuality a lot of talks (wink wink) began long before Tuesday. Pretty much every agent and every team personnel person was at the combine last week in Indianapolis, and it’s understood that lots of looming free agency discussions took place over steaks or drinks there, if not sooner. The so-called “legal tampering” period is the euphemism the NFL likes to use to pretend all these discussions began on Tuesday. Whatever. This is the system that’s in place. Just play along.
That Mike Glennon deal: What the fuck?
Ley did a good job breaking down what it more or less means, but we’ll know what’s what once the actual contract details become available. That won’t happen until the paperwork is filed with the league and the NFLPA in another day or so. It’s important not to jump the gun because NFL deals aren’t guaranteed.
Why are deals reported the way they are, with all the big-ass money that often turns out to be a mirage?
Most of the time, it’s coming from agents, and agents’ primary interest is in pumping the fact that that they got the maximum deal possible for their clients. The contract scoop business is a hyper-competitive one for reporters, and a lot of agents know this, too. What some agents will do, in exchange for forking over the info, is dictate the details they want a particular reporter to disseminate. This is not to suggest that every reporter covering the NFL is ethically compromised. It’s just that free agency season has a way of becoming stenography season. It’s a big part of the cost of having access and being able to break news, which is a big part of the job for any beat reporter.
Is there a good way to judge the value of a deal?
I ran this one by Jason. His reply:
“Often when contracts get reported the numbers are grossly inflated because of incentives that have little chance to be earned or because of excessive contract years that won’t likely be seen. For contracts that extend beyond three years the best way to really value those contracts is to look at the three-year salary and use that as the baseline for the real value of the contract. The fully guaranteed portion of a contract is also often useful to understand how much a team is really committing to a player.”
This is why the details of Glennon’s deal will be revealing. His guarantees likely will run out before Year 3, at which point the Bears can cut his ass with no cap consequences. But how much of a guaranteed commitment is he getting beyond Year 1? That’s the question.
Why do I sometimes see shit about skill, cap, and injury guarantees?
As Jason explained to me, teams frequently will guarantee large sums for injury, with injury in such cases meaning something catastrophic that would keep a player off the field for an entire season. It’s a rare occurrence.
What’s deceiving is that a lot of initial contract reports—which, again, frequently come from agents—conflate injury guarantees with skill/cap guarantees. But injury and skill/cap guarantees are not the same thing. And in many cases, teams will create a future vesting date—typically in March, right around the start of each new league year—in which skill/cap guarantees kick in for the upcoming season. That’s why you’ll see teams with tight cap situations starting to cut veterans around this time of year. Right, Jets?
Like Darrelle Revis?
Exactly. Revis’s last Jets deal is a pretty good guide to a lot of standard contracts. He signed an eye-popping five-year, $70 million deal in 2015, which looked like a lot of money for a cornerback. It included $39 million in full guarantees. Revis made $16 million in base salary in ’15 and $17 million last year, with $6 million of his $13 million 2017 salary fully guaranteed. But he had a $2 million roster bonus payable March 10, which essentially gave the Jets a deadline. By cutting him today, the Jets were able to void the final three years of the deal while only paying out the $6 million he was still due. Plus, the Jets included offset language on that $6 million, which means if Revis signs with another team, anything up to $6 million he might get paid this year can be wiped from their books for cap purposes.
How many contracts are honored by teams through their maximum length and value?
Jason estimated that just 15 to 20 percent of all deals make it all the way through. “This year there are only eight veteran players who were playing on multi-year contracts of $4 million or more who will actually have played out their contract and are getting another crack at free agency,” he said. It’s a rough business.
What’s the significance of a signing bonus?
A signing bonus is a device teams can use to pay a player up front (though some teams will spread these payments out for as long as two years) while simultaneously spreading out the salary cap impact.* For example, a team might give Player X a five-year deal that includes a $10 million signing bonus. The player gets that $10 million immediately—which players like—but the team can prorate that $10 million against its cap across the life of the contract, up to five years. For cap purposes, that $10 million in 2017 counts for just $2 million in each of the first five years, and there’s no way to make that money not count.
Let’s say Player X is cut after two seasons. At that point, only $4 million of his signing bonus has been accounted for as far as his team’s cap. But for 2019, the remaining $6 million will accelerate onto the team’s books as a cap charge.
Is that dead money?
That would be dead money, yes. It’s money that has to count against the cap even after a player has been cut, because it’s already been paid and has to be accounted for.
That sounds rough on teams.
Well, there is a way for teams to soften the blow. Tony Romo’s situation in Dallas is a great example. In a nutshell, Romo’s got a $19.6 million dead money charge that will stay with the Cowboys no matter where he ends up, whether he’s cut or traded. But the Cowboys can massage the impact by designating him a post-June 1 cut, which is permitted for two players on every team.
Jason explained: “If released after June 1 only his current year’s prorated salary remains on the salary cap for the current year and the team will defer the balance of the charges to the following year.”
In other words, because $10.7 million of Romo’s $19.6 million pro-ration counts for 2017, that’s the amount that will count against the Cowboys’ 2017 cap if he were to be designated a post-June 1 cut, with the remaining $8.9 million appearing on the books in 2018.
What if he’s traded?
Jason can take this one:
“The Cowboys would not have to pay any more of Romo’s salary if they decide to trade him rather than release him. They can offer to pay some of his salary to facilitate a trade, but that would only increase his dead money and given how high it already is I don’t think the Cowboys would benefit from that approach unless they were getting a very high draft pick in return.”
With a trade, the Cowboys are still stuck with $19.6 million in 2017 dead money because that’s up-front money they’ve already paid Romo. But because he was due to count $24.7 million against Dallas’s cap (his $14 million salary plus the $10.7 million in signing bonus proration), the Cowboys would actually save $5.1 million against their cap by trading or cutting him.
What’s the difference between a restricted and an unrestricted free agent?
A restricted free agent is a player with exactly three accrued NFL seasons. A player gets credit for an accrued season by being on a regular-season roster for at least six games. A team can extend an RFA a one-year qualifying offer, which would allow for a right of first refusal on any competing offers, along with some level of draft-pick compensation if the RFA were to sign elsewhere. An RFA who is not tendered by the start of the league year becomes an unrestricted free agent who is free to sign anywhere.
Is that where poison pills and escrow come into play?
Poison pills were basically phased out by this collective bargaining agreement, and escrow isn’t something to really worry about anymore, either. Teams used to use poison pills by drawing up contracts for restricted free agents in ways that made it impossible for those free agents’ current teams to match. The Jets famously did it to the Patriots with Curtis Martin by including a roster bonus that would have messed up the Patriots’ salary cap. The Vikings later did this to the Seahawks with a deal for guard Steve Hutchinson that mandated he be the highest-paid lineman on his team. According to Crunching Numbers, the Browns signed wideout Andrew Hawkins away from the Bengals in 2014 by front-loading Hawkins’s three-year deal in a way that made the two-year cash flow above what the Bengals wanted to pay.
Escrow came up when Tom Brady redid his deal with the Patriots in 2014 in a way that freed up cash (as opposed to cap). This is because teams have to guarantee that any money guaranteed for skill (as opposed to injury) can be funded. But as Jason told me, this is an anachronism because owning an NFL team is essentially a license to print money these days. “Because the cash outlay could be very large, teams are able to use this rule as a way to avoid fully guaranteeing salary in a negotiation,” Jason said. “It’s a rule that really has no place in today’s NFL.”
Why are some teams rarely active in free agency?
The Packers, especially, prefer to build through the draft and rarely make any noise in free agency. The Steelers and Bengals also use the draft to stock up while often treading lightly in free agency. The Ravens in recent years operated this way, too. It’s an organizational philosophy thing—“There are a handful of teams that don’t really believe that free agency is anything more than an expensive way to acquire talent that other teams are giving up on,” Jason said—but teams that lose free agents also usually position themselves to acquire compensatory draft picks, too.
“If you are a team that thinks free agents don’t perform at a high-enough level to justify the cost, this is a bonus benefit for those teams,” Jason said of compensatory picks, which get added to rounds 3 through 7 through a complex formula the league keeps to itself.
On the flip side, the Giants and Raiders spent a fortune last year and quickly transformed themselves into playoff-caliber teams. Po-tay-to, po-tah-to.
The salary cap this year is $167 million. Does that mean that’s what each team has to spend?
Hardly. We all know salary caps are artificial inducements to keep labor costs down. Plus, teams can hoard cap space and roll it over into the following year. More and more teams are doing this, in fact. It’s why the Browns went into free agency with roughly $100 million in cap room, and were able to spend $16 million to get a second-round pick, and why all but five teams (Ravens, Cowboys, Chiefs, Rams, and Eagles) had at least $10 million in cap space at the start of the day, according to NFLPA records.
The current collective bargaining agreement does contain a provision for a cash-spending floor, though that floor only requires teams to spend 89 percent of the total cap in four-year increments from 2013-16 and 2017-20. The cap has risen roughly 36 percent since 2013 (the result of a giant spike in television revenues), but we’re also at the start of a new four-year increment. There’ll be plenty of money going to high-end free agents, but expect teams to carry a lot of their cap forward, too. Because they can.
* This sentence was updated to indicate that some teams spread out signing bonuses, rather than pay them in full up front.