Monday, March 17, 2014
Inside Slant: Owners protect 'guarantees'
By Kevin Seifert
Aqib Talib's deal technically has $26 million in guarantees, but the reality could be much lower.
NFL free agency was at a crossroads late last month. Three consecutive years of a flat salary cap had limited its rewards to a sliver of players, leaving the rest to scavenge the remaining financial scraps. A clear pattern emerged: In most cases, players were advised to take their incumbent team's best offer before the free-agent market opened.
The burgeoning approach gutted the heart of the free-agent concept: That players with at least four years' experience could shop their skills on a genuinely open market. Of course, you know the rest of the story. Without warning, and still without a full explanation, the league's salary cap -- a negotiated percentage of total revenue -- pushed $320 million of new cap space into the marketplace on the eve of free agency.
New questions emerged. Would the market paradigm shift? Would owners allow a competitive frenzy of precedent-changing contracts? And most importantly, how would it all affect the competitive balance of the NFL?
Here's what we can say on the third Monday of March: During the initial three-day "frenzy," players actually changed teams at the same rate they did in 2013. We did see growth in both the paper value of the contracts and the guarantees advertised within them, but in most cases, owners left themselves important protection in those deals that could eliminate a chunk of the windfall, if desired.
The facts as we know them:
During the first three days of the open market last week, 73 players changed teams. The figure for 2013 was 72 (courtesy ESPN Stats & Information). These numbers don't reflect players who were released and signed with new teams before the market opened -- defensive lineman Red Bryant, for example -- but provide the best comparison we can generate for the "frenzy" portion of free agency.
The total value of those 73 contracts last week was nearly $1 billion, according to ESPN.com senior writer John Clayton. More than a third of that total fell under the umbrella of "guarantees/bonus." Depending on the way you tally contracts and compare them, those figures are anywhere between twice to three times the 2013 totals.
Here is where the analysis gets tricky, however. We all know that few players receive the total value of contracts, and most of us are trained to focus on guarantees, or their three-year averages, to determine the level of a team's commitment.
NFL FREE AGENCY
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But this spring, to a greater degree than in recent years, "guarantees" haven't always been what they seem. In many cases, teams can get out of these multiyear contracts after one year either without owing another cent, or by paying a fraction of the total remaining in the contract.
There are plenty of examples. Consider the six-year, $57 million deal that cornerback Aqib Talib signed with the Denver Broncos. The deal technically has $26 million in guarantees, but in truth, Talib is guaranteed nothing beyond his 2014 compensation as long as he remains healthy, based on a review of his deal via ESPN Stats & Information.
In the NFL, there is a difference between "fully guaranteed" and guaranteed for "skill" or "injury" only. In Talib's case, the Broncos fully guaranteed a $5 million signing bonus, his $4.5 million base salary and a $2.5 million roster bonus he is due this week. That adds up to $12 million in 2014 compensation and is the true guarantee of this deal.
Why? Talib's 2015 guarantees, and beyond, are all qualified. His 2015 base salary of $5.5 million is guaranteed for injury only, meaning the Broncos would owe it to him only if they release him at a time when he can't pass a physical. Otherwise, they can cut ties prior to the start of the 2015 league year and avoid all future payments. His roster bonuses in 2015 and beyond all require being on the active roster.
In other words, the Broncos could release Talib in February 2015 without owing him more money. In reality, that makes his contract a one-year deal worth $12 million.
Tampa Bay Buccaneers cornerback Alterraun Verner's four-year contract has nothing fully guaranteed beyond his $8 million in compensation this season. Broncos safety T.J. Ward will earn $7 million in 2014, but he'll need to be on the roster in 2015 to get paid beyond then. New Orleans Saints safety Jairus Byrd, who signed a six-year deal worth $56 million, will receive $12.3 million this season but is fully guaranteed just $6 million more beyond that.
Don't get me wrong. The additional salary-cap space has had a positive impact for players, who are now protected by a spending floor that requires teams to spend 89 percent of their cap space in cash during a four-year period. We've seen that requirement surface most notably in the case of two aging pass-rushers. DeMarcus Ware (31) and Julius Peppers (34) collected a total of 13 sacks in 2013, but they will earn a combined $21.5 million from their new teams in 2014.
Would the Broncos have committed $13.5 million to Ware without a cap increase? Would the Green Bay Packers have even considered paying Peppers $8.5 million this season? Probably not. Veterans over 30 were perhaps the biggest victims of the previous three years in free agency.
There is always a rush to identify winners and losers for a given time period. In this case, as with many, the truth is in the middle. Players who have switched teams this spring have received more money than they would have in previous years, but teams still hold important pieces of long-term leverage over most of them.