Agent's Take: Incentive-laden contract trend for RBs looms large for Bell, Freeman
Three big RB deals were signed this offseason that leaned heavy on performance-based incentives
The consistent growth in the salary cap has led to salaries escalating at most positions. Offensive linemen hit the jackpot in free agency this year. The NFL's first $25 million per year player and $20 million per year non-quarterback are on the horizon. There are a record number of cornerbacks, safeties and wide receivers with long-term contracts averaging at least $10 million per year.
The opposite is happening with running backs. The running back market is experiencing an unprecedented economic downturn.
The high water mark for running backs salaries was in 2012. The average of the top five running back contracts was approximately $10.85 million per year and contained almost $26 million in guarantees where the average length was five years. LeSean McCoy is currently the NFL's highest-paid running back with a multi-year contract. The five year deal he received in 2015 when the Eagles dealt him to the Bills is worth $40.05 million with $26.55 million in guarantees. Le'Veon Bell was designated as a franchise player by the Steelers in March, which provides him with a one-year salary of $12.12 million.
A new phenomenon started occurring with running backs contracts this offseason. They are becoming more reliant on performance bonuses. Whether this trend continues or ends up being an anomaly remains to be seen.
Performance bonuses representing a small fraction of a player's overall compensation is a well-established practice with NFL contracts. For example, the base value of Steven Jackson's five-year extension with the Rams in 2008 was slightly over $43 million. Salary escalators increased the maximum value of Jackson's contract to approximately $49 million. A little over 12 percent of the overall value was in performance bonuses. More recently, Doug Martin re-signed with the Buccaneers for $35.75 million over five years in 2016. The deal is close to $43 million with salary escalators and incentives. The performance bonuses represent 16.73 percent of Martin's possible overall compensation.
Performance bonuses can be divided into two basic groups: incentives and salary escalators. Both types of bonuses have been traditionally used to bridge the financial gap when there is a disagreement in a negotiation between a player's agent and the team on the player's value. Incentives are frequently in one-year "prove it" deals for players who performed poorly or suffered an injury in a contract year where the market for a satisfactory long-term contract doesn't develop. Eddie Lacy took a one-year deal from the Seahawks during free agency this year for $4.25 million that can be worth as much as $5.55 million through incentives. Incentives are also a way for a player taking a pay cut to make back some or all of the money he is losing through the salary reduction.
Incentives are usually designed to be classified as not likely to be earned (NLTBE) so that they will not count against the salary cap when a deal is signed. Generally, any incentives with higher thresholds than the player or team's statistical performance in the prior season qualify as NLTBE. The most frequent categories for individual achievement are playing time or based on the player's primary function (i.e., rushing yards for a running back). Coupling an individual achievement with a team statistical performance also makes an incentive NLTBE. Incentives like this don't count against the salary cap until after the season ends if earned.
The emerging trend
Contracts signed this offseason by running backs Latavius Murray, Adrian Peterson and Marshawn Lynch stuck out like a sore thumb because of the percentage of money in performance bonuses. The following chart summarizes the breakdown of the base value and performance bonuses in their contracts:
|Name||Team||Base Value||Deal Max||Percentage as Performance Bonuses|
Murray signed a three-year, $15 million contract to be Adrian Peterson's successor in Minnesota after his rookie contract with the Raiders expired. He makes $500,000 in incentives by rushing for 900 yards in 2017. The amount earned increases by $250,000 for every additional 100 rushing yards up to 1,500 yards for a maximum of $2 million. The same amount earned gets added to Murray's base salary in the following year. He also has an annual $300,000 incentive for making the Pro Bowl. His ability to cash in on his performance bonuses has been compromised by Minnesota's selection of Dalvin Cook in the second round of this year's NFL Draft. Splitting carries or backing up Cook will be costly for Murray.
Peterson's two-year, $7 million contract with the Saints is the byproduct of a soft free agent market after the Vikings declined to pick up the $18 million option year for a 32-year-old high mileage running back coming off an injury plagued 2016 season where he was largely ineffective. There is a total of $1 million annually based on Peterson's rushing total each season. It's $150,000 for 750 yards. The amount increases to $250,000 at 1,000 yards. It goes up to $750,000 at 1,250 yards with another $250,000 for 1,500 yards. Peterson can make a maximum of $750,000 depending on how many touchdowns he scores. He gets $250,000 for six touchdowns and an additional $250,000 with eight scores. The remaining $250,000 is contingent on hitting the end zone at least 10 times and leading the NFL in rushing touchdowns. $1 million is tied to team success and Peterson rushing for at least 750 yards. It's $250,000 for playing in the wild card or divisional playoff rounds. There's $250,000 more for an NFC Championship Game appearance. The final $250,000 is for playing in the Super Bowl. Any incentives earned in 2017 also get added to Peterson's weekly roster bonuses during the 2018 season, which currently total $1.25 million.
Peterson, who has been getting rave reviews in the Saints' offseason workouts, is in a crowded backfield for the first time in his career. Mark Ingram was 11th in the NFL in rushing last season with 1,043 yards.
A chance to play for his hometown Raiders before they depart Oakland for Las Vegas in 2020 prompted Lynch to end his one-year retirement. After the Raiders swapped late-round picks with the Seahawks to acquire Lynch's rights, he signed a two-year, $9 million deal. Lynch doesn't have to be Beast Mode to start earning extra money in 2017. He'll make $400,000 at 500 rushing yards with another $400,000 for 600 rushing yards. Eight hundred and 1,000 yards are each worth an additional $600,000. Starting at 1,100 yards, it's an extra $250,000 with every additional 100 yards up to 1,600. Lynch picks up $250,000 by rushing for nine touchdowns. There's another $250,000 at 12 rushing touchdowns. He'll make $500,000 by hitting the 12 rushing-touchdown mark while rushing for at least 1,000 yards where the Raiders make the playoffs. The 2017 incentive package also includes payment for league honors. There's $250,000 for being selected to the Pro Bowl, $250,000 for winning NFL MVP and $500,000 for being named Super Bowl MVP.
The incentives in 2018 aren't nearly as extensive. It's $250,000 each for hitting the 1,200, 1,400 and 1,600 rushing yard marks. The honors incentives from 2017 also apply to 2018. Lynch has the best chance among the three players of being his team's primary ball-carrier. Duplicating Murray's 2016 performance in Oakland of 788 rushing yards and 12 rushing touchdowns this season would earn Lynch $1.3 million.
Bell, Freeman highlight RB deals to come
The Steelers shouldn't have any problem paying Bell more than McCoy's $8.01 million per year considering he is the NFL's best dual-threat running back in a depressed market. Bell redefining running back salaries given his injury history and NFL substance abuse policy violations is a different story. These factors make Bell an ideal candidate for a contract in which performance bonuses increase the maximum annual value of a long-term deal to the $12 million neighborhood (the same as his franchise tag) with outstanding performance. It's extremely unlikely because the Steelers would be required to deviate from their standard conventions with contracts. Quarterback Ben Roethlisberger and safety Mike Mitchell have the only current Steelers contracts with any type of performance bonuses.
Falcons running back Devonta Freeman appears to be in line for a new contract before the 2017 season ends. General manager Thomas Dimitroff recently expressed confidence about working out a new deal. With Freeman being the only running back to rush for at least 1,000 yards in each of the last two seasons, his agent is looking for him Freeman's 2,135 rushing yards are second only to McCoy's 2,162 yards during this span. Freeman also leads NFL running backs over the 2015 and 2016 seasons with 3,175 yards from scrimmage (combined rushing and receiving yards).
Three of the top five veteran running back contracts were signed last year in free agency. In addition to Martin's contract, Lamar Miller received a five-year, $32.5 million contract with $14 million fully guaranteed from the Texans. Chris Ivory signed a five-year, $32 million deal (worth a maximum of $35 million through salary escalators) with the Jaguars.
The Falcons should be willing to pay Freeman in the same neighborhood as these three. Using performance bonuses to give Freeman an opportunity to earn significantly more than McCoy wouldn't be unprecedented. Several Falcons contracts in recent years have contained salary escalators, including Jackson's 2013 pact after he and the Rams parted ways. The higher thresholds of Jackson's rushing yards escalator would require Freeman establishing a new season best by gaining 1,250 and 1,500 yards on the ground. Jackson's 1,600 yards from scrimmage threshold would probably need to be raised to 1,700 yards to make it more challenging for Freeman, given he topped the 1,600-yard mark in 2015.
Incentives should be Freeman's preference. Triggering an escalator doesn't necessarily mean that the player will make the increased salary. The escalated amount is rarely guaranteed, so teams can still ask the player to take a pay cut or release him without any financial obligation. This happened with John Abraham in 2013. The Falcons cut him instead paying him $6.5 million for the 2013 season after he triggered a $1 million base salary increase with 71.62 percent defensive playtime and 10 sacks in 2012.
Bengals running back Jeremy Hill may be a good bet for a contract similar to Murray's as a free agent in 2018. The addition of Joe Mixon in the second round of this year's draft probably makes Hill expendable after the season. Fellow backfield mate Giovani Bernard received a three-year, $15.5 million extension last June when he was entering the final year of his rookie deal. Hill looked like a feature back in the making during a 2014 rookie season in which he was second in the NFL in rushing during the second half of the season with 775 yards. His 5.1 yards per carry average was third among NFL running backs in 2014. Hill followed up his promising rookie campaign with two subpar seasons in which he also led the Bengals in rushing. A fresh start with a new team in 2018 should afford him a better chance to regain the form for his rookie year.
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