Joe Flacco is the highest paid QB in NFL history. He is making $100,000 more per year on his contract than Drew Brees is. In fact, he basically one-upped Brees’ contract on just about every level. It is quite obvious that Flacco’s agent, Joe Linta, was using Brees’ contract as the baseline for the negotiations. I’m actually quite surprised that Ozzie Newsome agreed to such a hefty contract.
As I’ve said before, the total money of the larger NFL contracts is fairly irrelevant. Very few big contracts ever reach their final years without be restructured or renegotiated. What we want to focus on when assessing contracts are guaranteed money and bonuses. We then have to delve a little deeper to determine what the guaranteed money is for (skill, injury, or both) and what type of bonuses are in the contract, as well as when they kick in. Structure of the contract means a great deal.
Let’s look at the numbers of Flacco’s deal and we’ll dig deeper after…
6 years, $120.6 million with a $29 million signing bonus and $52 million “guaranteed.”
Of that $52 million guaranteed, $30 million is fully guaranteed. The final $22 million is “guaranteed for injury.” What this means is that should Flacco get hurt, he’s owed that $22 million. He does not get that extra $22 million if he is cut.
Flacco received a $29 million signing bonus. He has a 2014 “Option Bonus” for $15 million and a 2015 option bonus for $7 million. The option bonuses make up the $22 million that is “guaranteed for injury.”
We’ve discussed signing bonuses but not option bonuses. An option bonus is simply a bonus that is paid to a player should the team decide to keep him on the team. These bonuses are triggered when a player is still under contract when the new league year begins in early March. Teams use these to help alleviate cap hits early in the contract. Instead of paying Flacco extra money in 2013, the option bonus pushes that cash and cap hit into a later year. Option bonuses are prorated like signing bonuses are. Remember, the max length of proration is 5 years, per the NFL collective bargaining agreement.
2013: $1 million
2014: $6 million
2015: $4 million
2016: $18.2 million
2017: $20.6 million
2018: $20 million
This is where the details can get murky. We have a $29 million signing bonus that will be prorated over the max 5 years, for a total of $5.8 million per year for the first 5 years of the contract.
The 2014 option bonus of $15 million is prorated over 5 years for a total of $3 million per year from 2014 through 2018 (so to the end of the contract).
The 2015 option bonus of $7 million is prorated over the final 4 years of the contract at $1.75 million from 2015 through 2018.
Then we take the salaries and add them in for those years.
2013: $1M salary + $5.8M signing bonus (SB) = $6.8 million cap hit.
2014: $6M salary + $5.8M SB + $3M for 2014 option bonus (2014OB) = $14.8M cap hit
2015: $4M salary + $5.8M SB + $3M 2014OB + $1.75M 2015 option bonus (2015OB) = $14.55M cap hit
2016: $18.2M salary + $5.8M SB + $3M 2014OB + $1.75M 2015OB = $28.75M cap hit
2017: $20.6M salary + $5.8M SB + $3M 2014OB + $1.75M 2015OB = $31.15M cap hit
2018: $20M salary + $3M 2014OB + $1.75M 2015OB = $24.75M cap hit
So let’s clean that up a bit with a nifty chart, thanks to the guys at overthecap.com :
|Base Salary||Prorated||Cap Charge||Dead Money||Cash Flow|
They’ve also included the “dead money” that would be charged to the Ravens should they elect to cut or trade Joe Flacco. Nice work.
So What Does It All Mean?
I’ve seen a few people call this “essentially a three year deal.” While that’s true in the sense that the Ravens won’t have to touch Flacco’s contract for 3 years, they can’t exactly get rid of him with such a huge cap penalty until at least after the 2016 season, and probably 2017. Flacco will HAVE to restructure his 2016 base salary to lessen that cap hit of $28.55 million. So that pushes the $15.3M cap hit and potential dead money charge in 2017 even higher. Flacco would have to play pretty poorly for the Ravens to take a cap hit of $15M+ for someone who wouldn’t be on their roster.
In short, Flacco is going to restructure his contract after the 2015 season. How much salary he converts into a signing bonus is something that will have to be determined. For the Ravens, the hope is that Flacco continues to play well and he earns an extension that allows them to continue to push large amounts of money down the line. The Ravens helped themselves now, but if Flacco doesn’t live up to this contract, this could be a Mark Sanchez type of contract that they don’t want to keep but can’t afford to get rid of.