Agent's Take: The hidden economics lurking within the 2014 NFL Draft
The rookie wage scale transformed draft deals, including why the 49ers are paying for picking Colin Kaepernick in Round 2 instead of Round 1.
The 2011 Collective Bargaining Agreement (CBA) changed the way rookies are compensated, especially at the top of the NFL Draft, by implementing a rookie wage scale. Cam Newton signed a fully guaranteed four-year, $22,025,498 deal, including a $14,518,544 signing bonus, as 2011's top pick. Previously, 2010 first overall pick Sam Bradford signed a six-year contract with a base value of $78 million with $50 million in guarantees. His deal is worth a maximum of $86 million through base salary escalators and incentives.
All deals for draft choices are four years under the rookie wage scale. Teams have an option for a fifth year with first-round picks. The option must be exercised after the third year of the deal, with a May 3 deadline. The fifth year is guaranteed for injury when the option is exercised. It becomes fully guaranteed on the first day of the league year in the fifth contract year (approximately March 10, 2015 for 2011 first-round picks).
The fifth-year salary for the top ten picks is the transition tender (average of the ten highest salaries) for a player's position in the fourth year of his contract. For example, Newton's 2015 salary, his option year is $14.666 million. The fifth year salary of the rest of the first round (picks 11-32) is the average of the third through twenty-fifth highest salaries at a player's position.
Option year salary discrepancy
Narrowly missing out on being a top-10 pick has significant financial ramifications that aren't immediately apparent. When J.J. Watt was the 11th overall pick of the 2011 draft, he signed a four-year deal worth $11,237,498, which was $764,148 less Blaine Gabbert's four-year deal as the 10th overall pick. Watt's 2015 salary, his option year, is $6.969 million. If Watt had been drafted one pick higher, his 2015 salary would be $10.633 million, a difference of $3.664 million.
The two tiers of option year salary creates added valued for those picks right outside of the top 10. Not only are the salaries for these picks lower than top 10 picks, there's additional future savings with the option year.
A front office executive from a team with a top 10 pick in the draft within the last two years told me, "We thought about trading out of the top 10 because of the option year salary but weren't sure the player we actually drafted would still be available if we did. I think it will start becoming more of a factor for teams at the end of the top 10."
It may have already inadvertently occurred in the 2013 draft. After trading down from the third overall pick to the 12th overall pick, Reggie McKenzie selected cornerback D.J. Hayden. At the time, McKenzie said he would have taken Hayden third overall if he had not made the trade. Whether or not the economics were a driving force behind the move, McKenzie is saving almost $10.25 million over four years for the player he coveted. It's too early to know the option year difference in 2017 but 2011 fifth overall pick Patrick Peterson's 2015 salary is $10.081 million while Jimmy Smith's option year salary as the 27th overall pick is $6.898 million. The option year salary discrepancy for cornerbacks in 2017 should at least equal this year's $3.183 million difference.
The Detroit Lions could be a prime candidate to trade down if improving the secondary is the top draft priority. Trading down could be a good move because it may be a bit of a reach for secondary help (Ha Ha Clinton-Dix, Darqueze Dennard, Calvin Pryor, etc.) with the 10th pick. But the Lions might not get as much draft choice compensation as in the past with such a move. "Teams wanting to move up in the draft should be able to get good deals in a trade because of the difference in option year salaries," an AFC front office executive said.
Bottom of first round versus top of second round
Under the old CBA, teams near the bottom of the first round would look to move back into the second round to get a player they were targeting at a better financial value. Teams may be looking to do the reverse because of the fifth-year option, especially with quarterbacks.
The San Francisco 49ers would have the luxury of time with Colin Kaepernick's contract extension if they had traded into the bottom of the first round instead of the top of the second round to draft him. Instead of 2014 being his contract year, the 49ers would have a fifth year for him in 2015 at $9.686 million. The extra year would have allowed the 49ers to a get a better idea of whether Kaepernick is an above average or potential franchise quarterback.
For example, by moving up to the 29th overall pick, the 49ers would be paying Kaepernick slightly under $16.75 million for five years absent a new deal. The five-year total is a little less than this year's $16.912 million non-exclusive franchise tag for quarterbacks.
The franchise tag wouldn't have potentially come into play until 2016. With the non-exclusive quarterback franchise tag expected to be above $18 million in 2015, Kaepernick would make right around $23.125 million by playing out his existing $5,124,296 rookie contract and one year in 2015 with this franchise tender. It would be considerably more with the exclusive franchise tag, which prevents negotiations with other teams, because it is currently projected at over $22 million in 2015, more than double what Kaepernick's $9.686 million option year salary would have been.
There are different dynamics involved but the same general principles hold true for 2011 second round pick Andy Dalton (35th overall) and the Cincinnati Bengals. Dalton at $9.686 million in 2015 would be ideal for Cincinnati.
It wouldn't be a surprise for at least one of the quarterback needy teams with early first rounds picks (Houston Texans, Jacksonville Jaguars, Minnesota Vikings, Oakland Raiders) to attempt to get into the bottom of the first round if they don't take a quarterback with their pick. This doesn't apply to the Cleveland Browns because they have 26th overall pick in addition to fourth overall pick.
"Teams at the bottom of the first round should be able to drive a hard bargain to move down in a trade given what could be at stake with a quarterback," the AFC executive said.
Additionally, the financial disparity between late first-round picks (potential option year excluded) and early second-round picks has decreased under the rookie wage scale. The difference in the four-year deals of the last pick in the first round and the first pick in the second round is now close to $1.3 million. Most of the difference is in signing bonus. By contrast, the last pick in first round's deal was worth over 50 percent more than the first pick in the second round's contract in 2010, the last year before the rookie scale.
Joel Corry is a former sports agent who helped found Premier Sports & Entertainment, a sports management firm that represents professional athletes and coaches. Before his tenure at Premier, Joel worked for Management Plus Enterprises, which represented Shaquille O'Neal, Hakeem Olajuwon and Ronnie Lott.
You can follow him on Twitter: @corryjoel
You can email him at email@example.com
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