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Cam disingenuously listening to his head coach

Cam disingenuously listening to his head coach

Four years ago, I noted with some annoyance that the Carolina Panthers signed Olindo Mare to a 4-year, $12M deal, while at the same time signing Cam Newton to a 4-year, $22M contract. I was not a fan of the way rookies were treated under the new Collective Bargaining Agreement, and the Mare/Newton situation was a perfect example of the problem. With the new rookie wage scale, the NFL had taken money that was going to go into Newton’s pocket and placed it into the wallets of players like Mare.

Much of the outrage over what rookies made under the old Collective Bargaining Agreement was due to the fact that “unproven” players were making so much money. Even look at the comments to my old article: there are several who expressed the idea that proven players should get rewarded at the expense of unproven players, and Newton would benefit from that scenario once he became a proven player.

Well, that’s sort of true. I assume that most everyone would agree that Newton is now a “proven player” or else that is a term without any meaning. This week, Newton signed a five-year contract extension worth an additional $103.8 million. According to Over The Cap, Newton received a $22.5 million signing bonus and $7.5 million roster bonus upon signing the contract, and you can read Jason’s full article on Newton’s new contract here.

The contract extension Newton signed is pretty close to a “market value” contract for Newton, although I do think he’d make more on the open market than what he just received.  Newton’s leverage was slightly limited by the fact that Carolina had him under contract for $14.66M in 2015, and could use the franchise tag on him in ’16 (which would probably cost Carolina around $20M).

But the real issue is the lack of any “catch up” payment.  Newton lost real dollars on his rookie contract due to the new structure, and he’s never going to get to make those up. The rookie wage scale has always been B.S., and I’ve said so much from the moment it was instituted.  But the new system was, by some, argued as an improvement because only the “proven players” would be rewarded. Sure, a rookie might make less now, but he’d get to make more in the future. After all, if teams weren’t forced to pay so much to rookies, there would be more money to go around for the “proven” veterans, right?

But that logic doesn’t work once we look at Newton, who has been the Panthers most valuable player over the last four years, and will probably be the team’s most valuable player over the next six, too.  As a rookie, Newton was grossly underpaid, with a salary cap value of $4M while the salary cap was $120M.  As a result, Carolina was able to lock up Newton for just 3.3% of the cap, which enabled the team to overpay players like Mare.

In 2012, Newton’s cap hit only rose to $5M, or 4.2% of the cap.  In 2013, his cap hit became $6M, or 4.9% of the $123M cap.  And then last season, Newton’s contract reached $7M, which was 5.3% of the $133M cap. It goes without saying that the Panthers received quite a deal over the last four years.  On average, Carolina devoted 4.4% of its cap from ’11 to ’14 to Newton.  This season, he will cost the Panthers $13M salary cap dollars, or 9.1% of the cap.

Let’s assume that the salary cap will increase by $7.5M per year over each of the next five years. And let’s assume, naively, that Newton will play out his entire contract.1  In that case, he will take up about 12-13% of the Panthers salary cap from ’16 to ’20.  But that still means that over his first ten seasons in the NFL, Newton will, on average, only take up about 9% of his team’s salary cap.

In the table below, I’ve shown Newton’s salary cap hit, the NFL salary cap, Newton’s percentage of the cap in that season, and Newton’s career average (in terms of percentage of cap hit) through that season. In each case, I’ve assumed a $7.5M yearly cap increase beginning in 2016. Here’s how to read the ’16 line: That year, Newton will have a cap hit of $19.5M, while the salary cap will be $150.8M. That means Newton will take up 12.9% of the Panthers cap, but will have only taken up, on average from 2011 to 2016, 6.6% of the Panthers cap dollars over the course of his career to date. As you can see from the last entry in the table, Newton — if he reaches the end of his contract — will only take up about 9% of the Panthers salary cap over the first decade of his career.

YearNewton CapNFL CapSingle Yr %Career Avg %
2011$4,004,636 $120,375,0003.3%3.3%
2012$5,005,795 $120,600,0004.2%3.7%
2013$6,006,954 $123,000,0004.9%4.1%
2014$7,008,113 $133,000,0005.3%4.4%
2015$13,000,000 $143,280,0009.1%5.3%
2016$19,500,000 $150,780,00012.9%6.6%
2017$20,166,000 $158,280,00012.7%7.5%
2018$21,500,000 $165,780,00013.0%8.2%
2019$23,200,000 $173,280,00013.4%8.7%
2020$21,100,000 $180,780,00011.7%9.0%

The $7.5M increase is just an estimate, but it works well enough for our purposes. If the salary cap continues to increase by about $10M per year, then that percentage will drop, but only to 8.8%. If instead the cap increases by an average of just $5M/year, Newton’s percentage will only rise to 9.3%. In other words, the Panthers will be able to lock up the first overall pick for a decade and pay him an average of just about 9% of the team’s salary cap.

Is that right? Well, that’s not the correct question to ask.  The correct question, I think, is “is that market?” And the answer there seems pretty clearly “no” to me.   If the number one pick is a quarterback who turns out to be a success and even he is only getting 9% of his team’s cap space over the first ten years of his career, that seems very out of whack with actual market value.

Perhaps nobody cares or will care, because why should people care whether Newton makes $140 million or $180 million? But I do think it’s worth recognizing that the NFL gas screwed over rookies with the new CBA, and part of the narrative was that it came with the promise that if those players weren’t busts, they could make up that money in their second contract.  Looking at Newton now, that doesn’t seem to be the case.  If a top draft pick is merely okay (but not a bust), a team will likely avoid having to pay serious dollars to that player, as it could always just replace him with a rookie at a fraction of the cost.  That’s the obvious downside to the rookie wage scale for veterans: cheaper replacement labor is now available. But there’s another downside to the rookie wage scale for veterans: even if that player turns out to be a success, he’ll only receive market value for about half of his first decade with the team, and he’ll always be chasing the dollars he lost.

Of course, everything above applies even more strongly to Russell Wilson. That will be another contract worth watching, but don’t expect the Seahawks to give Wilson a bump just because the team got to ride his low-salary contract for years.

  1. In reality, he will be cut if he under-performs and see less money, or likely restructure the deal with an extension towards years four or five if he is successful. []
  • wiesengrund

    But part of that is cearly that he is not Wilson (or Luck) who will get paid more than just non-busts. 9% for one player is still a huge amount considering the average roster payout of 1.8% What would a fair number be? Flacco will jump to around 20% next year, is that the fair market value? I think keeping the top-heavyness of teams in check is not a bad thing.

    I was wondering how do those numbers stack up against Flacco, Ryan, Stafford and Bradford (maybe even Rodgers), the last few old-CBA guys.

    • Well, Wilson won’t get more than 9%, either. Luck may, but how much more? 10%?

      I don’t think 9% is a huge amount at all. A fair number would probably be something closer to 12 or 13%, if you believe he’ll be on a market contract from ’16 to ’19.

      I haven’t crunched the numbers for those guys, but you’re more than welcome to do so and post them here.

      • mrh

        But is the market correctly valuing QBs?

        Newton produced 7.5% of the total Panther AV from 2011-2014 (63 of 836 if I’ve run the filters right on PFR). Assuming he improves his contribution some over the length of this contract, it’s not unreasonable to think that he’ll produce 9% of the total AV in Carolina from 2011-2020.

  • Anders

    Look at the Lions why the old system was flawed, the Lions had a nightmare scenario because they hit on 3 straight top 5 picks on the old CBA

  • sacramento gold miners

    Panthers made the right move, and Newton is a good QB, but I don’t know if he’s the type of player who can lead a team to a championship. Newton reminds me of a Randall Cunningham/Michael Vick type, who will produce regular season wins, and occasionally make the spectacular play, but not quite have enough to put a team over the top. Of course, the Niners reached the SB with a similar kind of QB, but he’s regressed since then.

  • Clint

    I’m not sure if I get the point of this. Seems like a “pick your battles” kind of situation. Maybe they should get a little more, but this is far better than just handing them one of the biggest contracts in the league before they even play.
    The Panthers had a chance to use their cap space on something valuable to build around their already productive QB.. and they gave it to Mare. I do agree with you on that being a silly move.
    In hindsight, after his first or second season, they could’ve locked him up. It would’ve looked like a bad and risky move at the time, but I bet they could’ve saved $20-40 mill in the process. Of course, maybe he wouldn’t have wanted to go long-term at that point. Now they don’t have as much room in the cap to help him out. Most likely, they’ll just be a fringe team for the rest of his career. Just a thought.

    • Richie

      “Maybe they should get a little more, but this is far better than just
      handing them one of the biggest contracts in the league before they even

      Yeah, it seems to me that the NFL, as a whole, is a better league when Cam Newton makes $125M during the first 9 years of his career, and is worth every penny, than when teams are stuck paying Sam Bradford $78M over 6 seasons.

      But part of this is on Cam. He chose to give up a bigger contract in exchange for security. He could have let his current contract expire (after Carolina exercises their year 6 option), then become a free agent and sign with the highest bidder.

      Has any first-round drafted QB done this? I can’t think of any offhand who were entrenched starters and let their rookie deals run out.

  • Michael

    The better question is if the Bucs would have traded the #1 pick (Winston) for Cam Newton and his current contract. If they would, then that means he is worth the equivalent of the #1 pick but the #1 pick is paid half as much as market value.

  • Richie

    I wonder how much Newton could make on the open market if there was no salary cap. Or Andrew Luck. At his current pace, Luck would probably be the ultimate example of pedigree and early success. So when his rookie deal runs out, if teams had no salary cap, how much would they be willing to pay him? $30M/year? $50M/year?

  • sunrise089

    To everyone claiming that in the old system having a high pick was actually a net cost, where are the examples of teams paying to trade down?

    Rookies were still underpaid in the old system, just less so than now. Bradford didn’t work out…well neither did Haynesworth when he was signed as a ‘proven’ player around the same time.

    @Chase – I can’t imagine ‘fair’ wage for a top flight QB like Luck to be any less than 20% of the cap. If Luck hit free agency teams would fall all over themselves to sign Luck for a contact that blows away the Suh deal.

  • DaleR

    There is so much more to consider than salary. Guaranteed money, team viability, endorsements for winning players, and the “good of the sport” are but a few of the intricacies of today’s sports business. If Andrew Luck ends up commanding 25% of Indy’s cap they will not win, they will not even remain competitive. The Dolphins will have one or two good years with Suh and they will plummet. You simply cannot win with a quarterback and a defensive lineman making 30% of your cap. The market is adjusting to the rookie wage scale era and I for one like it much better. I got really sick of a first round offensive lineman making sixty million dollars before his first snap. If the current setup helps football regain it “team”ness then I’m all in. I don’t want the NFL to become the NBA where a superstar’s worth is artificially inflated and teams are pathetically deflated to get a shot at the golden ring. You shouldn’t earn top dollar the first day on the job. Screw market value, twenty million a year should be enough for anyone… anyone.

    • Andropov

      A superstar’s worth in the NBA really isn’t inflated, though. He really will be a greater part of his team’s success than a football or baseball star because of the structure of the game.

      • DaleR

        Look at the NBA teams that stay in contention year after year. San Antonio has been there a long time. Duncan retired and they’re still there. LA always had multiple stars. When Kobe had to do it alone they lost. I agree that generational stars are worth it because they have changed the game to fit the financial model. The thing is that Jordan and James only come along for one team every ten years. If they break down physically their team is screwed for a long time.

        • Andropov

          You do know Tim Duncan hasn’t retired, right? In any case, stars are more valuable in the NBA versus the NFL or MLB. That’s just a function of how few players will take the court in a given game. And yes, injuries to major players can have a tremendous impact on teams (though this is less true in the NFL, where contracts still aren’t fully guaranteed for some reason). But that doesn’t mean the players don’t deserve it, in a certain sense. They are, after all, most of the reason people watch the games. They should be getting a large portion of the proceeds generated thereof.

          • DaleR

            I thought Duncan was playing role player minutes these days. I was wrong. He’s still averaging 35 minutes a game. It is interesting to note that he is only making $10.3 million for the upcoming season.

            I’m not saying players don’t deserve the money, I’m arguing that one player should not tie up so much cap that you can’t build a quality team. I’d like to see a rule that reduces the gap between the highest and lowest paid player on the team. Over the last decade the owners have honed the NBA into a superstar marketing factory. I believe they have done so at the expense of the game.

            Players are only valuable within the structure of a league that makes games accessible, honest, and competitive. Fans watch for the adrenaline, the emotional response to competition involving players they have bonded with. Taint the games or remove them from TV and see how valuable the players are.

            • Andropov

              There are very few circumstances, I think, were single players have entirely prevented the building of quality teams. Overpaying several stars or having one or two decline or succumb to injury can submarine a team in any league, but I don’t think I can remember an instance where a single player on a market rate deal performing as expected has prevented their team from being built around them. It’s almost always a combination of overpays, bad luck, and poor management that results in a cash-strapped franchise (like the Panthers).

              • DaleR

                The following quote about Peyton Manning’s lack of Superbowl victories states my argument better than I can:

                “His teams often had critical shortcomings that were exposed in the playoffs. Lack of a running game, porous defense and undersized defensive line are just some of the issues.
                An elite QB can mask these deficiencies a lot during the regular season, but once you are in the playoffs, teams tend to be the best in the league that year and more focused on the upcoming game. Seldom are they looking past their next opponent to the next round.
                In these cases, when your key need is to shutdown just one part of the offence- the passing game- and to exploit the overt weaknesses of the defense, good coaches of more well-rounded teams can design schemes that do that very well.”

                In the NBA it happens frequently that an overpaid star like Amar’e Stoudemire prevents the acquisition of quality depth.

                Conversely the Seahawks were able to take advantage of rookie contracts for highly productive players in normally expensive positions (ex. quarterback and cornerback) which allowed them to have the deepest team in the league.

                • Andropov

                  If our standard is either a team wins a championship or it’s a failure, then I suppose you have an argument.

  • Dr__P

    The NFLPA acted like just about every union in treating future members less well than current VOTING members. Von Miller had to sue the NFL separately, though it was consolidated with the NFLPA lawsuit at trial, specifically about the rookie salary structure as the union had a conflict of interest.

  • Garon Galloway

    JaMarcus Russell was the poster child for “franchise” QBs in the old system. He held out through training camp and didn’t sign until week 1 for $68M for 6 yrs and then put up 36/66 for 373 2 TDs and 4 Ints in Y1. After two more years of showing to camp out of shape, he was released. It makes you wonder if he would have fared better working for his first big contract where he had actually gone to training camp like current rookies do. In my opinion, the only thing that needs to be fixed in the current system is larger post-season bonuses when players perform. Russell Wilson received $222k performance bonus after his rookie year after getting $405k base.

    • Richie

      Yeah, Russell Wilson is one of the few guys I feel sorry for. He was probably getting paid about 1/100th of what he could earn on the open market. I think the situation was probably similar for Richard Sherman.

  • Andropov

    The new(ish) system also screws early round picks more than anyone else. A first round pick is almost always signed to a four year contract with a fifth year team option. A late round pick won’t have that option year, which means that they can get a market value contract earlier and teams have less leverage negotiating extensions with those players.