The Aaron Rodgers saga is over (at least for now) because he made a decision about his football future last week and subsequently signed a new contract to remain with the Packers for likely the rest of his career. Rodgers was scheduled to make $26,970,588 in 2022 consisting of a $26,470,588 base salary and $500,000 workout bonus. His $46,664,156 2022 cap number prior to the new deal was untenable. The 2022 season was the final year of Rodgers' contract because his 2023 contract year turned into a voiding/dummy year last July in an effort to end his rift with the Packers. Obviously, the issues that made Rodgers unhappy no longer exist.
A breakdown of Rodgers' new contract is in the chart below:
- Third day of 2022 league year roster bonus (fully guaranteed): $40.8 million (paid on or before Dec. 30), which is prorated in 2022 through 2026 at $8.16 million each year.
- 2023 option bonus: $58.3 million ($28.3 million paid with 10 days of option being exercised; $30 million on Sept. 30), which is prorated in 2023 through 2026 at $14.575 million each year.
- 2024 option bonus: $47 million ($23.5 million paid with 10 days of option being exercised; $23.5 million on Sept. 30), which is prorated in 2024 through 2026 with $15,566,666 in each of the two years and $15,666,668 for the last year.
- Guaranteed money: $150.665 million
- Fully guaranteed at signing: $101.515 million
- Deal total: $150.815 million ($123,844,412 new money)
- Contract length: Three years (two-year extension)
- Average per year: $50,271,167 ($61,922,206 new money)
Year | Base salary | Workout bonus | 4/15 roster bonus | Bonus proration | Salary cap number | Cash flow |
2022* | $1,150,000 | $50,000 | N/A | $27,333,568 | $28,533,568 | $42,000,000 |
2023** | $1,165,000 | $50,000 | N/A | $30,408,570 | $31,623,570 | $101,515,000 |
2024*** | $2,250,000 | $50,000 | N/A | $38,401,666 | $40,701,666 | $150,815,000 |
2025 (option year) | $15,850,000 | $50,000 | $5,000,000 | $38,401,666 | $59,301,666 | $171,715,000 |
2026 (option year) | $10,000,000 | $50,000 | $5,000,000 | $38,401,668 | $53,451,668 | $186,765,000 |
*2022 base salary guaranteed for skill, injury and salary cap
**Initial $59.465 million 2023 base salary guaranteed for skill, injury and salary cap; a $58.3 million payment is required to exercise an option for Rodgers' 2025 contract year to drop his 2023 base salary to a fully guaranteed $1.65 million; the window to exercise the option is the first day of the 2023 league year until a day before Green Bay's first 2023 regular-season game
*** Initial $49.25 million 2024 base salary guaranteed for injury; skill and salary cap on fifth day of 2024 waiver period (five days after Super Bowl LVIII); a $47 million payment is required to exercise an option for Rodgers' 2026 contract year to drop his 2024 base salary to a fully guaranteed $2.25 million; the window to exercise the option is the first day of the 2024 league year until a day before Green Bay's first 2024 regular-season game
Analysis and observations
1. Rodgers' contract is realistically a three-year deal running through the 2024 season. Should Rodgers want to continue playing football in 2025 when he is 41, a new contract will surely be negotiated to replace the artificially low $20.9 million and $15.05 million compensation of the 2025 and 2026 contract years, which are considered placeholders. The 2025 and 2026 contract years will be real once the respective options are exercised. Contrary to some reports, 2025 and 2026 aren't voiding/dummy years.
2. Professionals within the industry (agents and team negotiators) typically value deals by new money, which is the amount of compensation in a contract excluding what a player was scheduled to make before receiving a new deal. Rodgers' contract will be an exception since the new money average of $61,922,206 per year through 2024 for what would be a two-year contract extension is a 37.6% increase over the 10-year, $450 million extension (worth up to $475 million through incentives) Chiefs quarterback Patrick Mahomes signed in 2020. Mahomes had been the NFL's highest-paid player at $45 million. Rodgers replaces him with a three-year-deal average of $50,271,667 per year.
In this case, it seems likes the parties were operating as if Rodgers' contract was being ripped up and replaced with a new deal. The cumulative cash through 2024 and the total money of the five years mirroring the last three digits in Rodgers' scheduled 2022 compensation (588) would have suggested a contract extension, where using the new money average would have been more warranted. The three- and five-year totals are $150.815 million and $186.765 million rather than $150,815,588 and $186,765,588.
3. Rodgers sets new NFL standards with $150.665 million in overall guarantees and $101.415 million fully guaranteed at signing. Bills quarterback Josh Allen had been the benchmark in both of these metrics. He has $147,381,405 of guarantees. It's $150 million if Allen's fully guaranteed $2,618,595 2021 third day of training camp roster bonus earned a few days before he signed his six-year, $258 million extension last August is included, like some people do. Allen's $97,381,405 was fully guaranteed at signing. It's $100 million if the training camp roster bonus is included.
4. Rodgers has a very easy threshold with his annual $50,000 workout bonus. All he has to do is attend three days of offseason organized team activities. In most cases, 84.375% participation in the scheduled workouts is required to earn these types of bonuses.
5. The Packers pick up $18,100,588 of much-needed 2022 salary cap relief in Rodgers' new contract. Rodgers' 2022 salary cap number goes from $46,664,156 to a much more palatable $28,533,568. The $19,173,568 and $7,673,570 of existing bonus proration for 2022 and 2023 prior to the new deal remain intact. Interestingly, Rodgers got the Packers to give him a $40.8 million fully guaranteed roster bonus rather than a $40.8 million signing bonus with a 2022 base salary just above his league minimum salary to lower his cap number. Fully guaranteed roster bonuses are prorated on the salary cap, just like signing bonuses. The benefit to Rodgers is the Packers can't recoup any of the $40.8 million as a roster bonus for any type of contract breach, including retirement, after the 2022 league year although the salary cap treatment is the same as a signing bonus.
6. Rodgers' contract contains two option bonuses. The double option bonus contract structure is seldom used by NFL teams. Most notably, the five-year, $125 million extension defensive end Myles Garrett signed with the Browns in 2020, which made him the NFL's highest-paid non-quarterback, contains two option bonuses. The benefit of this structure is the cap numbers in the initial years are more manageable because option bonuses are 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. Rodgers having nominal compensation in 2022, 2023 and 2024 besides the roster and option bonuses contributes to the workable cap numbers. The drawback is the cap numbers will eventually have a big spike because of the extra bonus proration due to the option bonuses.
This extra bonus proration can be problematic if a player is traded, released or retires when this structure is used. The Packers are going to have to contend with $76,803,334 of dead money, a salary cap charge for a player no longer on the roster, if Rodgers retires in 2025. As with the roster bonus, Green Bay won't have any recoupment rights with the option bonuses past the year when exercised.
The Packers will have significant dead money if Rodgers decides to retire after the 2022 season because of the roster bonus proration. The option bonus proration would come off Green Bay's books so there wouldn't be any cap charges associated with the option bonuses. Green Bay would have $40,313,570 of dead money consisting of $32.64 million of roster bonus proration and the $7,673,570 of 2023 bonus proration that already existed before the new deal. The dead money would be the same with a trade before exercising the option for the 2025 contract year, except the option bonuses would become the financial and cap responsibilities of the acquiring team.
Trading Rodgers in 2024 wouldn't be feasible. There would be $68.205 million of dead money by dealing Rodgers before the second option is exercised. In this case, the bonus proration from the first option in 2023 would be part of Green Bay's dead money. With a trade occurring before the option for 2026 is exercised, the acquiring team would have financial and cap responsibilities for the second option bonus.
7. There's a wide window to exercise the options. It starts on the first day of that respective league year and closes on the day before the first game of that regular season. Ordinarily, the window to pick up options is anywhere from five to 10 days at the beginning of a league year. For example, Buffalo has a five-day window beginning on the first day of the 2022 league year to exercise an option for Allen's 2028 contract year, which requires a $42.4 million payment. The extended window provides Green Bay with more flexibility in case Rodgers retires or a trade is explored. Rodgers doesn't have a no-trade clause in his contract.
Impact on quarterback market
Teams are going to quickly dismiss Rodgers' new money average of nearly $62 million per year for two new contract years running through 2024 if any agent attempts to use it in negotiations of a high-end quarterback deal. The more appropriate way to value Rodgers' deal is just under $50.275 million per year on a three-year deal.
The most immediate beneficiary could be Matthew Stafford. The optimal timing for the Rams to extend Stafford's contract is before his $10 million fifth day of the 2022 league year roster bonus is due on March 20. In doing so, this $10 million could become part of the signing bonus Stafford would receive in an extension and prorated over the life of the contract up to a maximum of five years, which would help lower his current $23 million 2022 salary cap number.
Stafford possesses significant contract leverage after a stellar postseason in which the Rams won Super Bowl LVI. The Rodgers deal should give Stafford ammunition to easily top Mahomes' $45 million per year.
Under the theory of "a rising tides lifts all boats," it's conceivable that two quarterbacks on rookie contracts, Lamar Jackson and Kyler Murray, eligible for new deals could also surpass Mahomes. Jackson's market was clarified last year for the Ravens when Allen, his fellow 2018 first-round pick, signed his $43 million-per-year extension. Murray, who has two years left on his rookie contract, has been putting pressure both privately and publicly on the Cardinals about getting a new deal done as soon as possible. The Rodgers deal will surely be raised by Erik Burkhardt, Murray's agent, in contract negotiations considering the all capital letters statement he released a couple of weeks ago essentially demanding a new contract and his social media commentary about Rodgers' value around the same time.
The Seahawks are officially dealing Russell Wilson to the Broncos as soon as the 2022 league year trading period opens at 4 p.m. ET on March 16. He has two years remaining on the four-year, $140 million extension he signed in 2019. Wilson replaced Rodgers as the league's highest-paid player with his $35 million-per-year extension and will likely want do it again whether he gets a new deal this year or next year.
Joe Burrow and Justin Herbert -- both 2020 first-round picks -- have entered the elite quarterback discussion after just two NFL seasons with the Bengals and Chargers, respectively. Both are poised to pass the $50 million-per-year mark. It wouldn't be surprising if both took a turn as the league's highest-paid player when signing their next contract. First-round picks from 2020 will be eligible to sign contract extensions once the 2022 regular-season ends next January.
The vanilla contract structure in Bengals deals with veteran players could be a bigger sticking point than the money in Burrow's case. Cincinnati deals are light on contract guarantees. The only guaranteed money is a signing bonus or a roster bonus due a few days after signing. The bigger deals contain a third or fifth day of the league year roster bonus in the second year. This roster bonus is supposed to be a substitute for additional contract guarantees.
The Steelers structure contracts for veterans the same way as the Bengals. An exception was made for current NFL Defensive Player of the Year T.J. Watt when he become the NFL's highest-paid non-quarterback with a four-year, $112.011 million extension averaging $28,002,750 per year last September. Watt got $80 million fully guaranteed at signing, which is a record for a non-quarterback. The Bengals abandoning a long-established contract precedent with guaranteed money may be a necessity for Burrow, just like the Steelers did with Watt.
Mahomes' unusually long contract, which runs through the 2031 season, could come back to haunt him. The deal represented nearly a 29% increase over Wilson's $35 million per year, which put him at the top of the NFL salary hierarchy at the time.
The dramatic increase should have been enough to keep Mahomes there for multiple seasons instead of less than two years. Mahomes is no longer at the top of the NFL pay scale before playing any of the new contract years of his extension. He may not be one of the league's five highest-paid players by the start of the 2023 regular season. It's just a matter of time before Mahomes isn't one of the NFL's 10 highest-paid players given the length of his contract.
Mahomes' deal is set up for the Chiefs to continually convert his massive March roster bonuses in each year to signing bonus for cap room, which in turn raise the cap numbers in the next four subsequent years. His saving grace might be the Chiefs recognizing that his salary needs to be adjusted once his cap numbers become astronomical, which could be before the middle of the extension is approaching in 2025 or 2026.
