28

March

Packers Contracts, the Salary Cap, and More – Part 6: Aaron Rodgers and the Big Contract

packers_piggy_bankOne of the hardest things for the average fan to comprehend is how NFL contracts work and how they apply to a team’s salary cap. There are many complicated elements, rules, and exceptions that can be hard to sort out. In this series, my goal is to help you better understand how this whole system works, plus what it means to the Green Bay Packers’ current salary cap and contract concerns.

Before reading, make sure to check out the previous article(s) in the series:

Our sixth and final article focuses on Aaron Rodgers and the “big contract.” Ted Thompson has been preparing for this moment for a long time now, and we’re going to attempt to scratch through the surface of this major negotiation.

Across this series, we’ve talked about a lot of things concerning NFL player contracts and the salary cap. Now is when the rubber meets the road, though, and we try to put this knowledge to use. I’m also going to introduce a few new things that will keep it interesting, such as general cap economics and the concept of “option bonuses.” Fair warning: there is going to be a lot to digest here.

First and foremost, we have to understand why Aaron Rodgers needs a new deal – and soon. Here is how his current contract looks:

rodgers_contract

 

This is the extension he signed in 2008, which was the first year he started after Brett Favre left. It was a very smart move by Ted Thompson, not only because it locked up their new franchise quarterback, but also because it meant very little for the Packers in the way of financial demands. After 2009, Thompson could have cut Rodgers with no dead money to worry about.

At this point, going into the contract’s sixth year, the Green Bay Packers need to give Aaron Rodgers a new deal. He is clearly the franchise’s number one quarterback for as long as he can play; plus, he won them a Super Bowl title in 2010 and earned the title of NFL MVP in 2011.

26

March

Packers Contracts, the Salary Cap, and More – Part 5: B.J. Raji and the Escalator

packers_piggy_bankOne of the hardest things for the average fan to comprehend is how NFL contracts work and how they apply to a team’s salary cap. There are many complicated elements, rules, and exceptions that can be hard to sort out. In this series, my goal is to help you better understand how this whole system works, plus what it means to the Green Bay Packers’ current salary cap and contract concerns.

Before reading, make sure to check out the previous article(s) in the series:

Our fifth article focuses on B.J. Raji and the use of “escalators” in contract negotiations. Yesterday we detailed how “incentives” work, and there are some similarities between those and escalators. However, there is a major difference that gives teams a lot of financial power when it comes to future roster decisions.

As should be common knowledge, B.J. Raji was drafted in the same year as Clay Matthews (2009), though Raji was a higher first-round pick. If you compare his contract to Matthews’ from yesterday, you’ll notice some obvious differences outside of the generally larger dollar amounts. The difference I want to note today is how Raji’s contract is boosted with escalators, while Matthews is boosted with incentives. Take a look:

B.J. Raji NFL Contract, 2009-2013

 

B.J. Raji’s base salaries in 2012 and 2013 have the possibility of being escalated by $1.2 million and $2.35 million, respectively. So what exactly is an escalator? It’s a clause in the contract that, when triggered, increases the salary of the player. The triggers can be anything from playing time to performance/statistics-based benchmarks. In this case, it is very much like an incentive. If Player A accomplishes X, then he gets paid more.

The big difference, though, is that escalated money goes into effect in a future year, while the incentive gets paid out immediately. So in B.J. Raji’s case, his escalator of $1.2 million had to be triggered prior to 2012, but the money wasn’t added to his salary until that year.

25

March

Packers Contracts, the Salary Cap, and More – Part 4: Clay Matthews and Incentives

packers_piggy_bankOne of the hardest things for the average fan to comprehend is how NFL contracts work and how they apply to a team’s salary cap. There are many complicated elements, rules, and exceptions that can be hard to sort out. In this series, my goal is to help you better understand how this whole system works, plus what it means to the Green Bay Packers’ current salary cap and contract concerns.

Before reading, make sure to check out the previous article(s) in the series:

Our fourth article focuses on incentives, and although we’re going to use Clay Matthews’ contract as an example, the discussion will be oriented in a more general sense. This is something most people should have a simple understanding of, but there are some details on how these incentives are paid out and applied to the salary cap that might be new knowledge.

When Clay Matthews was drafted by the Packers in 2009, the new CBA and its “rookie salary scale” were not in existence. This allowed agents to negotiate larger contracts, especially for the top draft picks. In order to find some middle ground, teams would work in “incentive” pay to ensure they were getting their money’s worth. Even the top picks are a risk, so teams want to avoid being financially handcuffed to “busts.”

The rookie compensation rules in the new CBA have actually driven away these incentive-laden contracts, but that’s a conversation for later. Teams still use incentives in many of their contracts as a way to motivate player performance. Before we continue, though, let’s take a quick look at Clay Matthews’ contract details:

Clay Matthews NFL Contract, 2009-2013

 

Notice how the incentives – worth a total of $3.275 million – aren’t figured into the charted cap numbers. It’s one of those contract details that don’t get pushed into the basic cap numbers for two reasons: (1) they have to be earned based on performance, and (2) most incentive benchmarks aren’t released to the media. Some players’ incentive details have been published, but usually they’re in general terms. Only noteworthy benchmarks tend to get released in any detail.

22

March

Packers Contracts, the Salary Cap, and More – Part 3: Jermichael Finley and the Two-Year Deal

packers_piggy_bankOne of the hardest things for the average fan to comprehend is how NFL contracts work and how they apply to a team’s salary cap. There are many complicated elements, rules, and exceptions that can be hard to sort out. In this series, my goal is to help you better understand how this whole system works, plus what it means to the Green Bay Packers’ current salary cap and contract concerns.

Before reading, make sure to check out the previous article(s) in the series:

Our third article focuses on Jermichael Finley’s current contract and what its purpose served last offseason when each party agreed to it. Namely, why was it only a two-year deal, and why were the monetary details set as they were? We’ll use this as an example of how teams and players approach contracts in general to give both sides what they want.

Last offseason, Jermichael Finley was set to become a free agent and could have commanded a lot of interest from outside teams. He was about a month away from turning 25 when the Packers struck a deal to keep him under contract for another two years. They weren’t ready to let their potential playmaker slip away, and they certainly didn’t want to enter into a bidding war with other teams.

The option of using the franchise tag on Finley was discussed among the media, but it would have left the Packers in the same situation after only a year. (There was also talk of using the tag on Matt Flynn or Scott Wells.) So after the season ended and before free agency began, a deal was struck between both parties. It was a contract that broke down like this:

 Jermichael Finley NFL Contract, 2012-2013

 

When news broke of Finley’s new contract, it was originally announced as a two-year, $15 million deal. Though the numbers make it look like a $14 million package, there are $1 million in incentives that could push the total money up to $15 million. Either way, people were mostly concerned with the fact that it averaged out to about $7 million per year.

This is where the “average per year” amount falls a little flat on its face. If the player does indeed play out the entire contract, then it has some merit; however, since most players don’t see every penny in their deal, the average can misconstrue things.

21

March

Packers Contracts, the Salary Cap, and More – Part 2: A.J. Hawk and Contract Restructuring

packers_piggy_bankOne of the hardest things for the average fan to comprehend is how NFL contracts work and how they apply to a team’s salary cap. There are many complicated elements, rules, and exceptions that can be hard to sort out. In this series, my goal is to help you better understand how this whole system works, plus what it means to the Green Bay Packers’ current salary cap and contract concerns.

Before reading, make sure to check out the previous article(s) in the series:

Our second article focuses on A.J. Hawk and his current contract restructuring. Make no bones about it, this is a pay cut for Hawk; however, it’s not like he’s getting peanuts for the deal. The point of most restructured contracts is to take an original deal and adjust it for cap reasons. A lot of times, teams are looking to push money into the future for present cap relief, though it’s not unheard of to take advantage of current cap room and relieve some of the burden in later years.

We’re going to start by taking a look at Hawk’s original contract. If you’ll remember, the Packers cut Hawk in 2011 to avoid a $10 million base salary, only to turn around and offer him a new five-year contract. Take a look:

A.J. Hawk Initial NFL Contract, 2011-2015

 

He still got his $10 million that year (plus a little extra), but his cap number was much lighter, and his salary was reduced for the remaining years. An $8 million signing bonus was prorated over five years at $1.6 million per year. With added roster and workout bonuses, A.J. Hawk was looking to chop about $7 million off this current year’s cap number. As many fans have pointed out, that’s simply too much for his value to the team, and apparently the Packers front office agreed.

Now, the biggest problem is that the Packers couldn’t outright cut A.J. Hawk without a significant cap hit. His “dead money” was sitting at $4.8 million, which if you remember is the remaining three years of the amortized signing bonus. While the Packers could split that across two years by cutting Hawk after June 1st, it’s still a substantial chunk of change.

20

March

Packers Contracts, the Salary Cap, and More – Part 1: An Introduction to the Basics

packers_piggy_bankOne of the hardest things for the average fan to comprehend is how NFL contracts work and how they apply to a team’s salary cap. There are many complicated elements, rules, and exceptions that can be hard to sort out. In this series, my goal is to help you better understand how this whole system works, plus what it means to the Green Bay Packers’ current salary cap and contract concerns.

Before I begin, I’m going to offer you a short list of resources that I used in my own personal education of this topic. These have really helped me piece everything together, and I highly suggest checking them out. It takes some time to digest, but it will be worth it in the end:

So where do we begin?

The idea of a Salary Cap is essentially a two-fold mechanism: (1) even the playing field of NFL teams to create parity (competition) within the league, and (2) prevent the escalation of player salaries in the era of free agency. In 2013, each team has a salary cap of $123 million, which was determined using a complicated calculation based on the “All Revenue” stream for the league. The salary “floor” for 2013 is 89% of the cap, meaning each team must at least use up roughly $109.5 million of the allotted $123 million.

That part is fairly simple to understand. The hard part is figuring out what applies towards any given year’s salary cap.

Broadly speaking, the salary of each player on the regular season roster (and the top 51 salaries of the offseason roster) counts against the cap. According to AsktheCommish.com, “salary” refers to “all compensation paid to a player, including money, property, investments, loans or anything else of value,” with the exception of benefits (e.g., health insurance). One interesting thing to note is that, unless a player has a “split” contract, his salary will still count against the cap even if placed on injured reserve.

12

March

Packers Renegotiate Salary for Johnny Jolly

Packers DL Johnny Jolly

Packers DL Johnny Jolly

According to Tom Silverstein of the Milwaukee Journal Sentinel, the Packers have made a deal with the recently re-instated Johnny Jolly to reduce his salary from $2.5 million to $715,000 for the 2013 season.

Jolly signed a 2.5M first round restricted free agent tender in 2010, before getting arrested again and subsequently being suspended by the NFL.  Jolly had been released from jail in May after serving six months of a six year sentence, but remained suspended by the NFL until just a few weeks ago.

Despite Jolly’s repeated missteps, the Packers organization have shown considerable compassion for Jolly, believing he is not a bad guy, but more a victim of choosing friends and situations poorly.  Many teams would have cut him by now, but not the Packers.

The Packers are certainly hoping their faith in Jolly will be rewarded, especially with the possibility of Jerel Worthy not being ready for the start of next season. Jolly has played well for the Packers in the past, knows their system, and is a much cheaper option than bringing in a free agent like Chris Canty.

Silverstein points out that the Packers could still choose to release Jolly down the road, and it’s not known if the Packers have had an opportunity to work him out to see what kind of shape he’s in.

As it stands, the Packers save $1.8 million on this year’s salary cap and will only owe Jolly 383,000 if he ends up on injured reserve. That’s a win-win for Ted Thompson.

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Jersey Al Bracco is the founder and editor of AllGreenBayPackers.com, and the co-founder of Packers Talk Radio Network. He can be heard as one of the Co-Hosts on Cheesehead Radio and is the Green Bay Packers Draft Analyst for Drafttek.com.

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