Agent's Take: Why still no Aaron Rodgers deal? Let's examine the NFL's opt-out clause
Though Rodgers is arguably the NFL's best QB, he's facing an uphill battle to get a groundbreaking contract structure
When Falcons quarterback Matt Ryan signed a five-year, $150 million extension with an NFL record $100 million in overall guarantees in early May, he became the league's first $30 million-per-year player. Ryan's deal set a salary floor for Aaron Rodgers, whose contract with the Packers runs through the 2019 season. The expectation was the Packers and Rodgers would quickly reach an agreement on a new contract since Ryan's deal further defined the quarterback market. Around that time, Packers general manager Brian Gutekunst publicly expressed optimism that a deal could get done soon.
Four weeks later, a new contract doesn't appear to be imminent. NFL Media's Mike Garafolo reported late last week that Rodgers is seeking a clause in the extension allowing him to opt out of the deal at some point so he can better control his future. Rodgers characterized recent reports about negotiations as "just conjecture" but didn't deny he was looking for such a clause when talking to the media on Monday. He also reiterated his desire to play his entire career with the Packers.
Opt outs in NFL contracts
Opting out or opting in contract years is fairly commonplace in the NBA. LeBron James opting out of the final two years of his contract with the Heat in 2014 led to him returning to the Cavaliers, who made him the first-overall pick in the 2003 NBA Draft. The threat of James opting out has forced Cavaliers owner Dan Gilbert to repeatedly go over the luxury threshold in player salary spending in order to placate the superstar. After the NBA Finals, James is expected to opt out of a contract that would pay him $35.6 million next season in order to explore his options in free agency next month.
In the NFL, it's a rarity for players to have the ability to opt out or void remaining contract years at their discretion. Contract years automatically voiding on a specific date is an accepted practice. These types of clauses are usually put in contracts to allow a team to prorate a signing bonus over a longer period of time for salary-cap purposes (as was the case in quarterback Drew Brees' 2016 extension with the Saints) than otherwise permissible.
Two backup quarterbacks, Chase Daniel and Nick Foles, have the power to void their contracts. Daniel can opt out of the second year (2019) of the two-year, $10 million contract he signed with the Bears in March by repaying $5 million during a 10-day window in February, right after Super Bowl LIII.
Foles' renegotiated contract with the Eagles is more complicated than Daniel's. The Eagles have an option to pick up Foles' 2019 through 2021 contract years containing healthy salaries for a starting quarterback by the middle of next February. If the option is exercised, which isn't the intention, the Super Bowl LII MVP can void the years with a $2 million payment to the Eagles.
Rodgers is facing an uphill battle in getting a contract with a groundbreaking structure. Although Rodgers is arguably the best quarterback in the NFL, he doesn't have the type of leverage Kirk Cousins had when he signed a fully-guaranteed three-year, $84 million deal (worth a maximum of $90 million through incentives) with the Vikings in March. Cousins' power came from being an unrestricted free agent after playing the previous two seasons on franchise tags.
Rodgers is scheduled to make $42 million through the 2019 season -- his salary is $20.9 million this year and $21.1 million next year.
The Packers could put an exclusive franchise tag on Rodgers, which would prevent soliciting offers sheets from other teams, in 2020. This number currently projects to $29.56 million. A second franchise designation in 2021 would be $35.472 million, a 20-percent increase over the 2020 franchise number. A third franchise tag with a 44-percent increase over the 2021 figure would be in excess of $51 million.
Realistically, the Packers can control Rodgers' rights over the next four seasons by paying him slightly more than $107 million. Rodgers wouldn't get his first chance to potentially hit the open market until 2022 as a 38 year old with Green Bay going this route. It wouldn't make sense for the Packers to give Rodgers an opt out, which seems unlikely anyway, until 2023 at the earliest because of this franchise-tag dynamic.
Generally, teams are extremely reluctant to establish new contractual precedents -- which is what Rodgers wants -- that will be used against them in future negotiations with other players. Green Bay probably already feels it has accommodated Rodgers by making structural concessions that are unique to him with their veteran contracts. Rodgers is the only player on the Packers with a veteran contract that has guarantees after the first contract year.
Rodgers would have been in a better position to take strong stand about his contract in 2013 as a 29 year old entering the prime of his career. Instead, Rodgers signed his current five-year, $110 million extension, which made him the NFL's highest paid player, with two years remaining on his first lucrative veteran contract. If the Packers hadn't been willing to meet the structural demands Rodgers is reportedly now making, he would have been able to name his price in free agency in either 2017 or this year after playing the franchise tag game for two or three years.
The Packers agreeing to tie Rodgers' salary in the later years of the contract to the growth in the salary cap is about as likely as granting him an opt-out. A slightly more appealing concept to the Packers could be Calvin Johnson's structure in his 2012 deal with the Lions that made him the NFL's highest paid non-quarterback. The last two years of Johnson's seven-year, $113.45 million extension were voidable. The Lions had the right to buy back 2018 and 2019 by paying a nominal fee and guaranteeing $3.5 million in each of those years. Rodgers would probably want a substantial buy-back payment and increased salaries in those years. These types of elements were typically in the deals of top draft picks during early to mid-2000s.
The big difference between Rodgers and Johnson's situations is their leverage. The Lions couldn't handle the wide receiver's league-high 2012 cap number of approximately $21 million and were staring at a franchise tag for more than $25 million the following year without a new deal.
Steelers quarterback Ben Roethlisberger has a salary escalator in his contract that attempts to help him keep pace with changing market conditions. His 2018 and 2019 third-day-of-the-league-year roster bonuses increase by a maximum of $3 million and $6 million based on his regular-season MVPs, Super Bowl MVPs and Pittsburgh's Super Bowl wins in the previous years of his contract. Roethlisberger has yet to earn any of the salary escalators because of the extremely high performance thresholds. Even if Roethlisberger had, the escalator wouldn't have been sufficient because of the way quarterback salaries have grown since he signed his four-year extension in 2015.
Salary escalators aren't a foreign concept to Green Bay. Several players, including wide receiver Davante Adams, offensive tackle David Bakhtiari, defensive lineman Mike Daniels and outside linebacker Nick Perry, have annual escalators ranging from $125,000 to $500,000 for being selected to the Pro Bowl. Presumably, Rodgers' escalators would have to be more lucrative than Roethlisberger's.
There aren't any current high-end contracts with a mechanism to help prevent the deals from becoming outdated over time. When I was first getting started in the agent business, I worked on a deal for six-time Pro Bowl cornerback Eric Allen, one of the clients of the firm that employed me, which ensured he remained as one of the NFL's highest paid defensive backs. After a lengthy preseason holdout in 1992, Allen signed a three-year contract with the Eagles where his 1994 salary would be adjusted so that his pact would equal the average of the three highest-paid NFL defensive backs deals if he was no longer being paid in that stratosphere provided he earned Pro Bowl or All-Pro honors in the previous two seasons.
Allen's contract was signed during the pre-salary cap era. I don't recall any veteran contracts addressing this issue of rising salaries in this manner since the salary cap was implemented in 1994.
Rodgers playing the 2018 season under his existing contract is the likely outcome if he is adamant about being able to opt out of his contract. Green Bay would probably want a much bigger buyout payment from Rodgers than Daniel has with a surprising concession on the voidable provision. For example, Bears wide receiver Earl Bennett could out opt of his 2011 extension after only one season. There was one catch. He had to made a $20 million payment to the Bears to do so, which obviously didn't happen.
Rodgers knowing that the Packers agreeing to give him this type of control of his future with two years remaining on his current contract and the prospect of franchise tags afterwards is most likely wishful thinking, continually insisting on the voidable provision could be a good negotiation strategy to get a better conventional deal. If this is the case, Rodgers should eclipse Ryan's $94.5 million fully guaranteed at signing and $100 million in overall guarantees by a decent margin.
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