The 2011 collective bargaining agreement drastically changed the NFL's rookie compensation system. The rookie wage scale implemented after the 2011 lockout significantly reduced salaries for players taken at the top of the NFL Draft.
The practice of routinely paying unproven commodities like Pro Bowl-caliber players ended. For example, Cam Newton signed a fully guaranteed four-year, $22,025,498 deal, which included a $14,518,544 signing bonus, with the Panthers as 2011's first overall pick. Based on the annual increase for top picks at that time, Newton was probably going to sign a six-year deal that had a base value in the $86 million neighborhood with a maximum of approximately $95 million in which close to $55 million would have been guaranteed if the system hadn't changed.
A six-year contract with a base value in excess of $140 million with more than $90 million fully guaranteed is probably what Kyler Murray would have been expecting from the Cardinals as the first overall pick had the old system remained intact, given how rookie contracts at the top of the draft were escalating. The maximum value for Murray's six years could have been as much as $160 million. Murray's actual signing bonus will be comparable to what his average yearly salary likely would have been under the old system.
How the rookie wage scale operates
The rookie wage scale is essentially a salary cap within the overall salary cap. The increases in rookie salaries from one draft class to another are tied to growth of the salary cap. The 6.21 percent increase in the salary cap from 2018 has resulted in signing bonuses for each pick this year going up by approximately 7.97 percent.
There's a league-wide limit on the total amount of compensation for rookies, with specific salary parameters for each draft slot. Teams have maximum and minimum amounts that can be spent on their picks based on draft position.
All contracts for draft choices are four years. Each pick in the draft has a salary floor and ceiling in the first year and over the four years of the contract. There are very few negotiable items with rookie contracts anymore. The salary components of a deal are restricted to signing bonus, base salary, roster bonus, reporting bonus, workout bonus and select incentives. The type of salary escalators and incentives that were responsible for salaries skyrocketing at the top of draft are prohibited under the rookie wage scale. A majority of picks only have signing bonus and base salaries in their deals.
An extremely important aspect of these deals is the first-year salary cap number (also known as the rookie pool number) because it helps determine the overall value of contract. The first-year cap number or rookie pool number consists of the player's prorated amount of signing bonus and the rookie minimum base salary, which is $495,000 in 2019.
The maximum annual increase in each of the four years of a deal is 25 percent of the first-year cap number. To illustrate this concept, 2018 fourth overall pick Denzel Ward's cap numbers were limited to a $1,325,698 increase in each year of his deal because his first-year cap number was $5,302,792. Since all of these deals have minimum base salaries in the first year, the remainder of the contract is derived within these constraints.
Draft pick contracts can't be renegotiated until the conclusion of a player's third NFL regular season. This means the earliest Ward's deal can be redone is late December 2020 or early January 2021.
Teams have an option for a fifth year with first-round picks that must be exercised after the third year of the deal. The period for exercising fifth-year options begins when a player's third NFL regular season ends (Dec. 31, 2018 with the 2016 first-round picks). These options must be picked up prior to May 3.
The fifth year is guaranteed for injury when the option is exercised. The option year becomes fully guaranteed on the first day of the league year in the fifth contract year (early to mid March 2020 for the 2016 first-round draft picks).
The fifth-year salary for the top 10 picks is the transition tender, which is average of the 10 highest salaries, for a player's position in the fourth year of his contract. The Rams picked up the option for 2016 first-overall pick, quarterback Jared Goff. His option-year salary in 2020 is $22.783 million. The fifth-year salary for players selected outside of the top 10 (picks 11-32) is the average of the third- through 25th-highest salaries at a player's position.
Third- through seventh-round picks have a base salary escalator for their fourth year based on participating in a minimum of 35% of the offensive or defensive plays, whichever is applicable, in two of the first three seasons of their deals or an average of at least 35% playtime in their first three seasons. The salary equals the lowest restricted free-agent tender in the fourth year. The 2019 salary for 2016 third- through seventh-round picks that earned the escalator, such as Cowboys quarterback Dak Prescott, is $2.025 million.
The Packers are the first team to sign a first rounder: 12th overall pick Rashan Gary received a fully guaranteed four-year, $15,877,312 contract, where $9,567,136 of Gary's deal is in signing bonus. Darnell Savage, the 21st overall pick, signed a fully guaranteed four-year, $12,517,688 contract containing a $7,123,772 signing bonus with the Packers.
Here's a look at the deals a select group of first-round picks are expected to sign. A discussion highlighting important considerations or issues relating to the first-round contracts follows.
|Pick||Name||Team||2019 salary cap number||Signing bonus||Four-year total|
There are very few negotiable items with rookie contracts anymore. The two primary negotiating issues, particularly at the top of the draft, are the payment schedule of the signing bonus and whether salary guarantees will have offsets.
Deals are now signed at a much quicker pace than they were prior to the rookie wage scale, since contract values and signing bonuses are predetermined. The Eagles signed their entire 2018 draft class before rookie minicamps, which can be held during the first two weekends after the draft, started last year. About 90 percent of 2018's 256 draft picks had been signed when offseason workouts ended in the middle of last June.
A majority of rookies didn't sign contracts until the latter part of July, as training camp approached, before the rookie compensation system was overhauled. In 2010, no player selected in the first two rounds had signed by the Fourth of July. First-round picks holding out wasn't unusual, either. For example, 2007 first overall pick JaMarcus Russell held out for 47 days before signing with the Raiders. Rookie holdouts are largely a thing of the past.
In 2016, the Chargers and third overall pick Joey Bosa engaged in the longest contract dispute for an incoming NFL player under the rookie wage scale. Bosa was the first rookie since 2013 that didn't show up to training camp on time. He missed 31 days before signing his contract.
The Chargers and Bosa weren't disagreeing over the amount of money in his contract, because the total value was dictated by the rookie wage scale's constraints. The dispute was largely over whether the deal should contain offsets and the payment schedule of his signing bonus. The concession the Chargers made to Bosa was a better payment schedule than they typically give to players with big signing bonuses.
An offset clause allows a team to reduce the guaranteed money owed to a player when he is released by the amount of his new deal with another team. The player receives his salary from the team that released him in addition to the full salary from his new contract with another club when there isn't an offset (also known as "double dipping").
Linebacker Roquan Smith, 2018's eighth overall pick, missed the first two weeks of training camp because he and his agents objected to language where the Bears had the right to void his guarantees for an ejection or suspension from a game for violating NFL playing rules. A compromise was reached on the number of games in a suspension necessary to trigger voiding.
The voiding of contract guarantees could be a sticking point with Nick Bosa, Joey's younger brother. The 49ers have some of the NFL's broadest language for guarantees voiding. Even quarterback Jimmy Garoppolo, who briefly became the league's highest-paid player last offseason, has San Francisco's team-friendly language in his contract.
One thing that won't be a sticking point with Kyler Murray is a baseball clause. Although 2015 first overall pick Jameis Winston's rookie deal with the Buccaneers had a clause prohibiting him from playing baseball, that type of contract language is no longer permissible.
Large signing bonuses in NFL contracts aren't typically paid in one lump sum. This is a long accepted practice in the NFL. Signing bonuses for top draft picks are usually paid in two to four installments. For example, Mayfield received $14.2 million of his $21,849,440 signing bonus from the Browns within 30 days of signing his contract. The remaining $7,649,440 was paid this past Jan. 31.
The Raiders customarily have paid the entire signing bonus for first-round picks by the middle of the player's rookie season. It might make sense for the agents of Oakland's three first-round picks to push for significant deferrals until the Raiders' relocation to Las Vegas in 2020. California has the nation's largest state income tax at 13.3 percent. Nevada doesn't have a state income tax.
Payment of the entire signing bonus before the end of a player's rookie season can depend on whether his contract contains offsets. A team generally receives a more favorable signing bonus payment schedule with a significant amount deferred until early in the next calendar year when there aren't any offsets.
Agents have essentially lost the battle on offsets. Teams with early first-round picks in 2013 were adamant that contracts contain offsets after largely conceding the issue the previous year. Nearly every team besides the Jaguars and the Rams, who didn't have a first-round pick this year, require offsets with salary guarantees for draft picks, including those selected in the top 10. As a compromise, most teams structure deals containing minimum base salaries in the final three years with the remainder of a player's salary in annual fully guaranteed third or fifth day of training camp roster bonuses for top-10 picks.
A quarterback has the best chance of extracting a concession on offsets than players at other positions. Mitchell Trubisky, the second overall pick in 2017, signed a deal with the Bears where his $465,000 2017 base salary and training camp roster bonuses in 2018 through 2020, which contain most of the money in the last three years of his contract, don't have offsets. All of the other Bears first-round picks signed under the rookie wage scale, which include 2015 seventh overall pick Kevin White and 2016 ninth overall pick Leonard Floyd, have offsets.
It will be interesting to see whether sixth overall pick Daniel Jones can get treated by the Giants in a similar manner as Trubisky was by the Bears. Saquon Barkley, who was selected second overall last year by the Giants, has offsets.
The entire contracts of the first 22 picks of the first round were fully guaranteed in 2018. The deals for the final 10 picks of the first round were guaranteed for the first three years. A decreasing portion of the fourth-year base salary has been guaranteed as the picks progress. Ninety-five percent of 2018 23rd overall pick Isaiah Wynn's fourth-year salary in 2021 is fully guaranteed, while 20 percent of 2018 32nd overall pick Lamar Jackson's is fully guaranteed.