Contract talk: Gronk vs. Graham

One of the top stories in the NFL this week was New Orleans Saints tight end Jimmy Graham signing a four-year, $40 million contract. There have been plenty of Graham versus Rob Gronkowski comparisons since both entered the NFL in 2010 – Graham as a third-round pick, Gronkowski as a second-rounder – and here are some thoughts on their contracts.

Graham’s deal: 4 years, maximum value of $40 million

Gronkowski’s deal: 6-year extension, maximum value of $55.2 million

Timing makes a difference. Gronkowski signed his extension in 2012 with two years still remaining on his rookie deal. The extension was tacked on to the final two years of the rookie contract, with bonus money added up front. In retrospect, Gronkowski was smart to ensure financial security at the time given some of the injury issues he’s since had. In doing so, one concession he made was on the length of the overall contract, which is through 2019. Graham is signed through 2017.

Option bonus looms with Gronkowski. As part of Gronkowski’s contract, the Patriots have a $10 million option bonus that would pick up the 2016, 2017, 2018 and 2019 seasons of the pact (around $37 million of the total $55.2 million deal). The deadline to pick up that option is any time before the final day of the 2015 league year. If the Patriots don’t pick up the bonus, they are prohibited from using a franchise or transition tag on Gronkowski and Gronkowski would become a free agent in 2016. There is no such option bonus in Graham’s deal, which gives him a bit more control over his contractual status. The decision to pick up the option bonus, while not a factor for the Patriots for at least another year, could be hotly debated if Gronkowski is once again sidelined by injuries at times over the ’14 and ’15 seasons.

Signing bonus edge to Graham. As part of his new contract, Graham received a $12 million signing bonus. With a $1 million base salary for 2014, Graham is guaranteed $13 million for this year and will make another $8 million in 2015 between base salary, roster bonus and workout bonus. So that’s $21 million over the next two years, a nice haul. Meanwhile, Gronkowski’s signing bonus at the time of his extension was $8 million. By the end of the 2015 season, before a decision must be made on his option bonus, Gronkowski’s cash running total from his contract extension will be about $17-18 million. That’s often part of the concession a player makes when agreeing to an extension earlier – taking the immediate security versus a bit more financial upside. Graham, after all, assumed contract-based risk that Gronkowski did not the last two years. But Gronkowski, from our view, looks smart in cashing in early given his run of injuries.

Comparing final two years of each deal. Gronkowski’s base salaries spike in the final two years of his contract – to $8 million in 2018 and $9 million in 2019. His cap hits are $11 million in 2018 and $12 million in 2019. When a contract spikes like that, there is always some question as to whether the player will see that money, as NFL contracts aren’t guaranteed. Graham also has an increase in the final two years -- $8.9 million in 2016 and $7.9 million in 2017 (in addition to a $2 million roster bonus). It seems more likely Graham will see those final two years, but it will be interesting to revisit this comparison at that time.