Rams defensive tackle Aaron Donald became the charter member of the $20 million-per-year non-quarterback club in September 2018. He was the first to break the barrier when the Rams gave him a six-year, $135 million contract extension ($22.5 million per year) with $86.892 million of guarantees. His $40 million signing bonus is the largest ever for a non-quarterback.
The $20 million-per-year mark is starting to become routine for non-quarterbacks. There are now 24 members of what used to be a very exclusive club. Donald is no longer among the NFL‘s 10 highest-paid non-quarterbacks. That’s a problem because Donald is arguably the league’s best player regardless of position.
News about a possible Donald retirement was revealed by NBC Sports’ Rodney Harrison in the Super Bowl LVI pregame broadcast. As a former agent, I immediately attributed the retirement talk to the three-time NFL Defensive Player of the Year wanting his contract adjusted because he is underpaid.
A couple of days after the Rams won the Super Bowl, ESPN reported that Donald was looking to become the league’s highest-paid defensive player with a 15% markup to keep playing. Steelers edge rusher T.J. Watt, the reigning NFL Defensive Player of the Year, currently has that distinction with the four-year, $112.011 million extension, averaging $28,002,750 per year, he signed as the start of the 2021 regular season was approaching. A 15% markup would be approximately $32 million per year.
Rams general manager Les Snead acknowledged about a month ago that the plan was to come up with a “win-win” solution with Donald allowing the team to compete at the highest level. Head coach Sean McVay gave an update in a video conference with the local media as the offseason workout program started this week. He said there had been “good dialogue” with Donald and wide receiver Cooper Kupp, the 2021 NFL Offensive Player of the Year and Super Bowl LVI MVP. New deals for Donald and Kupp are offseason priorities for the Rams.
Donald has three years remaining on his contract worth $55 million, which includes a $5 million second day of the 2022 league year roster bonus that was earned on March 17. He is scheduled to make $14.25 million in 2022 consisting of the March roster bonus and a $9.25 million base salary where his salary cap number is $26.75 million. There is $19 million and $21.75 million in 2023 and 2024. Donald’s 2023 and 2024 cap numbers are $23.5 million and $26.25 million.
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How contracts are valued
It is rare for a player to get a new contract with three years left. Typically, the existing deal isn’t ripped like a player wasn’t already under contract and replaced with a new one when there is a significant amount of time remaining. That’s exactly what the Browns did when acquiring Deshaun Watson from the Texans last month. Watson had four years worth $136 million remaining on the four-year extension, averaging $39 million per year, he signed in September 2020. As a part of the trade, the Browns gave Watson a fully guaranteed five-year, $230 million contract.
It’s hard to imagine the Rams applying the same basic concept to Donald. Proposing a new five-year contract (running through 2026) for a $150 million will likely get dismissed pretty quickly by the Rams. Since Donald has $50 million remaining in his three existing contract years because the March roster bonus has already been earned, the Rams would view this deal as a two-year, $100 million extension averaging $50 million per year. Similarly, it would be surprising for the Rams to agree to pay Donald a total of $90 million through 2024 when his current contract expires. He would be getting $35 million of new money without giving the Rams any new contract years. Every deal I did in my numerous years as an agent was over how much new money and how many new contract years when a player had contract years remaining.
There are two examples that can be used as a guide. The Dolphins dealt with All-Pro cornerback Xavien Howard’s deal that had three years left about three weeks ago. He is now under contract for $90 million over five years.
David Canter, Howard’s agent, took issue with a suggestion on social media that Howard wouldn’t be happy with Browns cornerback Denzel Ward just signing a five-year, $100.5 million extension. He pointed out that Howard’s new money average was $25 million per year. Actually, it’s a two-year extension averaging $25,345,359 per year because Howard had $39,308,823 in his three existing years before the new deal.
The Cardinals addressed All-Pro wide receiver DeAndre Hopkins‘ contract with three years for $39.915 million remaining in 2020 several months after acquiring him from the Texans. He signed a two-year, $54.5 million extension averaging $27.25 million per year right before the 2020 regular season started. When signed, he was under contract for $94.415 million over five year. The last two numbers of the five-year total ending in “15”, as in his three remaining years, indicates the negotiation was over the new money. The five-year total being $94.5 million or $95 million could have been used to suggest otherwise.
The only way to know the parties intent in these negotiations would be to have access to the proposals that were exchanged to know how the offers were being characterized. Based on my experience as an agent, I suspect the proposals were referred to as two-year extensions where the new money was calculated.
Donald contract considerations
Donald’s six-year extension was extremely front-loaded where he made $80 million over the first three new years. He would be justified in insisting that he get the same $80 million for the existing three years if two new years running through 2026 are added. This would be Donald getting $25 million of new money through his existing contract running through 2024.
Assuming the Rams are comfortable with giving Donald close to the 15% markup where it’s a two-year extension for $64 million ($32 million per year in new money), having $25 million of the new money through the existing years would be consistent with what happened in Hopkins’ case.
Hopkins has nearly 37% of new money through the three remaining contract years for 2022. Donald getting $25 million of new money through 2024 would be 39.06% in a two-year extension averaging $32 million per year. Hopkins also has just over 72.5% of the new money through the first new contract year of 2023.
The Rams lost an opportunity to maximize the salary cap room that could be gained from a new Donald deal by not getting an extension done before the $5 million roster bonus was due. Since the $5 million has already been earned, it can’t become part of the signing bonus Donald would receive in an extension and prorated over the life of the contract, up to a maximum of five years, to help lower his current $26.75 million 2022 salary cap number. Because of this, Donald’s signing bonus will need to be significantly less than his last one of $40 million for the Rams to have any real 2022 cap savings.
The signing/option bonus structure the Rams used in quarterback Matthew Stafford’s recent extension and Brandin Cooks‘ 2018 extension might be a necessity because of the smaller signing bonus. A benefit of this structure is the cap numbers in the initial years are more manageable because an option bonus is prorated over the life of a contract up to a maximum of five years, including the option years, beginning in the league year when the option is exercised. The drawback is the cap numbers will eventually have a big spike because of the extra bonus proration due to the option bonus.
Potential Donald deal
One way to fit a two-year extension into these constraints would be for Donald to get a $20 million signing bonus where his 2022 base salary drops to a fully guaranteed $1.25 million, whereas $4 million of 2022 cap space would be created. Donald’s new 2022 cap number would be $22.75 million.
The 2026 season would be an option year that would be picked up during a small window in the first couple of days of the 2023 league year next March. A $25 million payment (i.e.; option bonus), which would be prorated on the salary cap for four years running from 2023 through 2026, would be necessary for the 2026 contract year. Initially, Donald’s 2023 base salary would be a fully guaranteed $26.25 million that would reduce to $1.25 million when the option is exercised with the $25 million option bonus. The Rams would gain $7.5 million of cap room because Donald’s 2023 cap number would be $16 million instead of $23.5 million, which it is currently.
There would be big spike in Donald’s 2024 cap number to $42.25 million because his 2024 base salary would be $27.5 million. This $27.5 million would be guaranteed for injury at signing and become fully guaranteed on the third day of the 2023 league year. A $42.25 million cap number would be a $16 million increase over Donald’s existing 2024 cap number.
Unsecured $19.5 million salaries in 2024 and 2025 would be the rest of the deal. Five million of the $19.5 million these years could be $5 million second day of league year roster bonuses, like in the latter years of Donald’s existing contract. The cap numbers in these years would be $29.75 million.
There would $47.5 million fully guaranteed at signing consisting of the $20 million signing bonus, $25 million option bonus and $1.25 million base salaries in 2022 and 2023. The first two years would be fully guaranteed, excluding the $5 million roster bonus already earned in March. The total guarantee would be $75 million, which is the money in the first three years besides the roster bonus.
What approach the Rams ultimately take with Donald’s contract remains to be seen. Regardless of the approach, expect Donald to drive a much harder bargain than Kupp with a new deal. Kupp stated on Tuesday that he’s looking for something fair and doesn’t need to reset an exploding wide receiver market.
Donald’s previous contract negotiations with the Rams were acrimonious. The Rams won the battle in a contest of wills during the 2017 preseason when Donald ended his lengthy holdout as a three-year veteran right before the regular season began without getting a new contract. It took a second holdout in 2018, lasting until the end of the preseason, before Donald become the league’s first $20 million-per-year non-quarterback. During the second holdout, the Rams dramatically reset the running back market with Todd Gurley when he had only played three NFL seasons, which wasn’t done with Donald. The dynamics from the past shouldn’t be ignored.