Wednesday, August 10, 2022

2022 NFL contract drama: How an old rule favors rich owners and could impact Joe Burrow, Justin Herbert deals

No market inflates quite like the quarterback market in the NFL. If you’re an above-average starter, you’re going to get paid. If you’re a superstar, odds are you’ll soon be the richest player in league history.

This offseason alone has proven as much: the Packers extended Aaron Rodgers for an average of $50 million per year despite him approaching 39; the Raiders and Vikings extended Derek Carr and Kirk Cousins with top-10 deals, respectively, despite their lack of playoff success; and the Browns committed a record $230M in fully guaranteed money to Deshaun Watson as part of a blockbuster trade, even while the former Texans star faced 22 civil lawsuits alleging sexual misconduct.

The NFL Players Association has championed Watson and Cousins in recent years for netting fully guaranteed deals. But an old funding rule, woven into the NFLPA’s collective bargaining agreement with the NFL, could soon dictate that only certain teams are able to compensate QBs as such. More specifically, only the richest NFL owners might be able to afford the best QBs.

The NFL’s salary cap, which prevents teams from spending over a certain amount on player salaries each year, is partially in place to maintain competitive balance across the league. And it does help; consider that rebuilding teams like the Bears, Falcons, Giants and Texans are projected to have some of the most money to spend in 2023. But the dynamic changes when you’re committing monstrous sums of guaranteed money over four, five, six or, in the rare case of the ChiefsPatrick Mahomes, 10 whole seasons. Salary cap or not, it’s possible, if not probable, that certain NFL owners won’t just be uncomfortable but unable to properly keep up with the market for long-term QB deals.

Here’s why: the aforementioned funding rule requires teams to pay a portion of guaranteed contracts in advance, via an escrow account, with a third party temporarily holding funds until they are to be paid to the player. This practice was established, ProFootballTalk reports, at a time when NFL owners weren’t nearly as wealthy as they are today, and it was possible that a franchise could’ve run out of money to fulfill future guarantees.

This is why, PFT posits, Kyler Murray’s recent extension with the Cardinals contains a reported $70M less in total guarantees than the Watson deal: “For Watson,” Mike Florio writes, “Browns owner Jimmy Haslam must deposit $169M into an escrow account by March 31, 2023. … (That’s) quite possibly a check that Cardinals owner Michael Bidwill can’t afford to write.” CBS Sports’ Joel Corry, a former NFL agent, echoed the sentiment this week, noting that “a fully guaranteed contract never seemed like a realistic possibility for Murray because the Cardinals aren’t considered a cash-rich team.”

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It’s unlikely the NFL and NFLPA would renegotiate the CBA solely to amend the funding rule, especially when it’s built to protect future guarantees for players beyond the QB position. So what does that mean for the future of QB contracts? Just because the teams with the most liquid assets are best positioned to buy premium passers doesn’t mean the elite QBs will always — and only — follow the money. Take the BuccaneersTom Brady, for example, who is currently — and absurdly — the 16th-highest-paid QB, relying on additional outside income to offset a below-market deal for the sake of team-building. Or the CowboysDak Prescott, who signed a four-year extension in 2021 rather than play under a second franchise tag and then test free agency.

While title-winning QBs are almost always one of the highest-paid players on their respective teams, research also shows there is an optimal range for a QB’s average annual salary: somewhere between 10.6% and 12.3% of a team’s total salary cap. The perfect formula, recent history shows, is not avoiding highly paid QBs so much as avoiding an imbalanced distribution of resources. And, better yet, knowing when to pull the plug on a QB, even if it means entering a season of uncertainty. New Vikings general manager Kwesi Adofo-Mensah, unabashedly analytically minded, hit on this very dilemma in recent comments about his own QB, Cousins, lamenting the fine line between paying big bucks for a “good QB” and “burning it down” to find a great one.

Still, it’s easier said than done, if you’re the Cardinals, for example, to convince your coaches, players and fans that you’d be better off reallocating resources than committing huge money to Murray at QB. At some point, you’ve got to make a gamble, one way or another: pay the price of a mega-QB deal, or the price of restarting the search for a QB worth paying. The fortunate teams organically identify and acquire said QB, with a playoff-caliber supporting cast already in place or on the way.

That leads us to the QBs most likely to be impacted next, down the road — the ones who could be tasked with either settling for something less than the market says they’re worth, or cashing in with a franchise ready and able to meet the funding rule’s demands. It’s not hard to identify the candidates, both of whom hail from a stacked AFC: Joe Burrow and Justin Herbert.

Two other AFC stars, the BroncosRussell Wilson and RavensLamar Jackson, are also eligible for new deals in the near future. Regardless of whether Denver or Baltimore hesitates to lock up their big names, each franchise is financially equipped to dole out record guarantees. New Broncos owner Rob Walton, heir to the Walmart fortune, has the highest estimated net worth ($60 billion, per Forbes) of any NFL ownership group, and Ravens owner Steve Biscotti ($5.7B), falls just outside of the top 10.

Burrow and Herbert, meanwhile, could almost assuredly command even more money than Wilson and Jackson, considering their meteoric rise as young MVP candidates. And yet their team owners aren’t nearly as awash in cash. The BengalsMike Brown, who notoriously still leans on “antiquated” contract structures, according to Corry, last had an estimated net worth of about $925M, the lowest figure among all owners. The Chargers‘ Dean Spanos, who’s rebutted lawsuit claims by his sister of “financially ruinous” ownership, is estimated at $2.4B, ranked just outside of the bottom 10.

That’s not to say neither the Bengals nor Chargers are presently incapable of properly extending their star QBs. The Cardinals, for example, rank among the bottom 10 teams in terms of ownership value, and they just signed Murray to a massive deal. It’s just that the trend of QB contracts could present significant difficulties in negotiations, assuming Burrow and Herbert remain on their own trajectories and seek potentially record guarantees in their inevitable extensions. And that’s not accounting for any other factors in terms of team-building, such as what Burrow and/or Herbert think of their teams’ respective coaching staffs, supporting casts, etc. when it comes time to put pen to paper.

For reference, here’s a look at all the NFL ownership groups, using Forbes data, as well as their current QB:

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