Whether it’s Colin Kaepernick getting a 2,500 percent salary increase or the Chiefs grappling with the idea of handing Alex Smith $15 million, teams everywhere are feeling the effects of the 2011 lockout and seeing an unmistakable trend emerging.
(Michael Regan/Getty Images)
I feel a bit silly for potentially making light of real-life societal plights like widening income disparity and shifting tax burdens, but the gradual and perceptible erosion of America’s middle class is analogous to the sporting world’s most valuable position over the last three years — NFL quarterbacks.
Take a look at the average annual values (AAV) of the 32 projected starters in 2014*:
Only three players reside between Matt Schaub’s $6.75 million and Sam Bradford’s $13 million AAV on this scale — Carson Palmer (8.0), Alex Smith (8.42), and Ben Roethlisberger (12.51). Three! And among those, Palmer is 34-years-old, Smith is up for an extension that could double his salary, and Roethlisberger, like fellow 2004 draftees Eli Manning (16.25) and Philip Rivers (13.63), signed his last deal several years prior to the summer of 2011; such a contract is now essentially archaic.
When the league’s owners and the NFL Players Association agreed to install a rookie wage scale as part of the new collective bargaining agreement, an artificial ceiling was placed on what a young quarterback could earn in his first deal. Following Bradford’s record-setting, $78 million deal in 2010, Andrew Luck once seemed poised to push the $100 million mark … but he’ll reel in barely a fifth of that in his first four seasons. And due to the extraordinarily productive play of the recent crop of young passers on such bargain salaries — Luck, Nick Foles, Cam Newton, and Russell Wilson are still playing for pennies — these players now boast the most valuable contracts in the NFL. And they’ll become even more desirable as the salary cap bloats to $150 million over the next few years.
But what’s happening to the guys that are ready for extensions? Well, we just saw Kaepernick go from a sub-million-dollar salary to becoming the league’s fifth $20 million AAV player, and Jay Cutler was given a deal that was worth the same amount of guaranteed money ($54 million) as Aaron Rodgers’. Here is a chronological listing of the post-lockout quarterback extensions:
— Drew Brees, New Orleans Saints, July 2012: 5 years, $100 million, $60 million guaranteed (20.0 AAV)
— Joe Flacco, Baltimore Ravens, March 2013: 6 years, $120.6 million, $52 million guaranteed, (20.1 AAV)
— Tony Romo, Dallas Cowboys, March 2013: 6 years, $108 million, $55 million guaranteed, (18.0 AAV)
— Aaron Rodgers, Green Bay Packers, April 2013: 5 years, $110 million, $62.5 million guaranteed (22.0 AAV)
— Matthew Stafford, Detroit Lions, July 2013: 3 years, $53 million, $41.5 million guaranteed (17.67 AAV)
— Matt Ryan, Atlanta Falcons, July 2013: 5 years, $103.75 million, $59 million guaranteed (20.75 AAV)
— Jay Cutler, Chicago Bears, January 2014: 7 years, $126.7 million, $54 million guaranteed (18.1 AAV)
— Colin Kaepernick, San Francisco 49ers, 6 years, $126.0 million, $61 million guaranteed (21.0 AAV)
Brees and Rodgers are future Hall-of-Famers, and Romo and Ryan can comfortably call themselves top-ten signal-callers. But what’s happening here? Cutler, Flacco, and Stafford are far from great quarterbacks, and Kaepernick has just 23 regular-season starts under his belt. Shouldn’t these guys be paid closer to Palmer and Smith than all-time greats like Brees and Rodgers?
With NFL offensive philosophies skewing ever more pass-happy, as evidenced by falling records and declining utility in tailback draft stock, it’s becoming clear that teams are placing a premium on simply being competent. The Bears didn’t want to give Cutler over $50 million in guarantees, but they really didn’t want to go fishing for another quarterback when their offense is finally a premier unit. The Lions weren’t going to let a 25-year-old passer with Stafford’s numbers walk, and the Ravens were backed into a corner following Flacco’s unfathomably good playoff run. With exceedingly few exemptions (see: Brees, Drew), young franchise quarterbacks cannot be found on the free agent market, and these teams weren’t about to dump viable options for unproven rookies.
But for those that nail their draft pick, they are rewarded with at least four years of a cut-rate commodity before having to pony up to keep him**. Adam Schefter immediately forecasted what was on the horizon after Kaepernick signed his megadeal:
If Kaepernick’s contract serves as a benchmark for 2011-and-onward draftees, then it’s safe to say that none of the young guns will find themselves in that shrinking middle class. You’re now either a $100 million quarterback or not, it seems, and $50 million guaranteed may very well become the new baseline for extending a franchise-caliber player in his mid-20s. Thanks to the monumental difference between a quarterback’s first and second contracts under the new CBA, teams have incentive to play their draft picks early and see what they’re working with; to stash them behind a veteran is to waste the precious few years that they come as cheap. The Jaguars and Vikings are happy that they got enough of a sample size from Blaine Gabbert and Christian Ponder to cut their losses after just three seasons — both have already been replaced by fellow first-rounders and are no longer in anyone’s long-term plans.***
I suspect that this augmented evaluation process will contribute even further to the loss of a quarterback middle ground in favor of megadeals and starters on rookie contracts. With so many young passers being pushed into service early — Andy Dalton, Luck, Newton, Ryan Tannehill, and Wilson have all started every game for their teams since being drafted — future suitors for those picks that fail should have more than enough tape and data available to decide if a reclamation project is a worthy investment. For example, Jason Campbell was shipped out from Washington after five lackluster seasons and still got a guaranteed starting role in Oakland, but I think such a scenario will be unlikely in the future when a quarterback-desperate team can find a less expensive and higher upside option in the draft. The Raiders didn’t want to break the bank for a non-Sam Bradford prospect in the 2010 edition, but now a first-round investment checks in at no higher than 44 percent of Bradford’s guaranteed figure … and that’s if he’s the No. 1 pick.
To sum up, this is an epidemic that doesn’t seem to be stopping any time soon. If the salary cap stops rising after 2016, then the bubble will eventually pop on good-ish quarterbacks earning elite money — Cutlers can only be paid similarly to Rodgers for so long before the market corrects itself — but front offices have little incentive to take on Palmer or Schaub-esque contracts under the new CBA. Employing a placeholder is simply bad for business in today’s environment.
If you have a quarterback that you believe you can win a Super Bowl with, then you’ll pay him handsomely for that future return. If you don’t, then you’re probably playing the wait-and-see game with the current guy under center or are trying to find someone to begin that process with. Welcome to the era of instant gratification!
* Yes, I anticipate that Johnny Manziel will beat out Brian Hoyer and start week one for Cleveland. The Browns’ attempts to lower his expectations are as transparent as they are unconvincing.
*** Of course, the Jaguars dumped Gabbert and decided to take it slow with his replacement, but Blake Bortles seems to be a rare mix of tantalizing upside and awful mechanics that make a high pick worthwhile and a benching necessary.
Brandon (@BrandonMagner) is a recent graduate of the University of Kentucky and is currently enrolled in the Gatton College of Business and Economics. He plans to earn his MBA before attending law school in fall of 2015.