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Rookie contract Cam sees how little he is making.

On July 28, 2011, proven NFL veteran Kevin Kolb was traded from Philadelphia to Arizona, and signed a five-year contract worth a maximum of $63.5 millon, with $21 million guaranteed. He was cut after two seasons, but still received $30M from the Cardinals.

The next day, unproven rookie Cameron Jerrell Newton signed a completely fair 4-year, $22M contract, with a team option for a fifth year at a cost-controlled rate. No really, it was completely fair, at least according to Pro Football Talk:

The difference between the old rookie pay scale and the new rookie pay scale means a difference of tens of millions of dollars to Newton’s bottom line.

And although Newton can’t be happy about it, that’s a good thing: The new Collective Bargaining Agreement between the players and the owners divvies up the salaries differently so that the veterans who have proven themselves get a bigger slice of the pie than the unproven rookies. That’s completely fair.

If Newton turns out to be the great player the Panthers hope he is, his next contract will be enormous, and he’ll have earned every penny of that.

If Newton turns out to be a bust, he’ll still have earned enough money that if he’s smart about it, it will last him several lifetimes. But he won’t be nearly as expensive as busts of the recent past have been. That’s good for the Panthers and good for the NFL.

Newton, of course, did sign a new contract that was enormous. He signed a five year, $103.8 million contract extension with the Panthers on June 2, 2015 containing $31 million fully guaranteed. He’s doing very, very well. But that doesn’t mean he wasn’t underpaid for the first four years of his career — or, spoiler alert — he’s not still on a contract that underpays him.

The rookie wage scale, particularly once you add in the fifth-year option, has always been a terrible idea. Jason Lisk wrote about it before the deal was even finalized. He predicted exactly what would happen — young stars in years 3, 4, and 5 would be massively underpaid — because this is what happens when you artificially suppress the wages of young employees in an industry where young employees are often the most valuable employees even ignoring salary.

Yesterday, Mike Freeman at the Bleacher Report posted an article saying that NFL veterans now realize how much they screwed over rookies in the 2011 CBA negotiations. And given that we are four years away from the next potential collective bargaining negotiations, there’s a simple fix for this: eliminate the rookie wage scale.

There is a reason why rookies got screwed over: they didn’t have a say in the process!  The NFLPA doesn’t include rookies, just NFL veterans.  Is there any wonder that incoming rookies had their pockets picked?  On that day Kolb was traded to Arizona — July 28th, 2011 — I published an article at the old PFR Blog titled NFL veterans robbed Cameron Newton to pay Olindo Mare. I’m republishing it in its entirety below, without edits, because that article was as true and relevant then as it is today.

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Olindo Mare gets paid to kick footballs, not to predict the future. So cut him some slack for being wide right on one projection. In March, he said that he would give a hometown discount to Seattle.

I think that whole highest bid thing for me is not quite as important with the four kids…. [On whether he would give Seattle a hometown discount] Oh, absolutely. For sure. I would be stupid not to. The Seahawks gave me an opportunity. I always take that into consideration also. But we’ll see. I have to get a offer first…. What would be great would be is if there was a bunch and it would show that people appreciate what you do, and that’s always flattering. Just to get all your options available. If you signed [for] three, four, five years, that would be your last contract. You want to make sure that everything was done right. But yeah, Seattle will definitely get a home discount.

Mare was operating under the assumption that a few teams would pay him market salaries and he’d sign with Seattle if they were in the same ballpark. In 2008, he signed a two-year contract for $3.25 million, good money for a 35-year-old kicker. Seattle didn’t want to give a long-term contract to a 37-year-old placekicker, so they franchised him for the 2010 season, electing to pay him $2.8 million for one year instead of giving him a contract extension. Presumably, in the spring of 2011, Mare was hoping for something along the lines of a three-year, six million dollar deal. That would be a bump over what he signed three years earlier in both years and per-year value, and would be a coup for a 38-year-old kicker.

Seattle may have offered him that contract, but Carolina instead gave Mare a four-year, $12 million dollar offer. That happened not because Mare went back on his word, but in the intervening months, the NFL veterans decided to rob Cam Newton to pay Olindo Mare. The most important (and player-friendly) aspect of the new CBA was the salary floor, requiring teams like Carolina to spend tens of millions of dollars. Only not on rookies. In the past 48 hours, Carolina opened up their paychecks to spend:

  • an undisclosed amount to extend Thomas Davis’ contract for another five years, because why not? (That’s a rhetorical ‘why not,’ as Davis has torn his ACL twice in the past two years and has played in just 7 games since 2009).

In addition to the Mare signing, Carolina also spent $8.5M on former Chiefs DT Ron Edwards and signed several other veterans to smaller deals.

But between Mare, Williams, Anderson and Johnson, Carolina has opened the door to spend $155 million dollars on three players who were on the team last year and a kicker. But hope and optimism for the Panthers in 2011 and beyond mainly rests on the drafting of Auburn star Cam Newton. And what will Carolina pay the young quarterback? Roughly 22 million dollars over four seasons, with a team-option for a fifth year.

That’s right: over the next four years, Carolina will pay their 38-year-old placekicker 12 million dollars and their franchise savior 22 million dollars. Newton’s contract looks even worse when you consider that Carolina can hold him for a fifth season, making it difficult for players to renegotiate until after they’ve completed three seasons.

Over the next three years, Matt Hasselbeck will make 21 million dollars from Tennessee. Hasselbeck made the Pro Bowl in 2007, but will be 36 years old in September. The last three seasons he’s sported a 12-23 record while playing in the worst division in football, and despite averaging only 4.46 Adjusted Net Yards per Attempt over that span. Since ’08, only Derek Anderson has a lower ANY/A average.

On the open market, Cam Netwon would likely sign a six- or seven- year deal worth $70-$90 million dollars. If you’re the Cardinals, you can’t sign Aaron Rodgers or Philip Rivers or Ben Roethlisberger. You won’t be able to touch Josh Freeman or Matt Ryan, or even Matt Stafford or Mark Sanchez. Young quarterbacks are in such high demand because if that quarterback can be productive, the team can hold on to him for a decade.

Playing in the NFL is very different than almost any other job. The best engineers in the world are rarely 23 years of age. The most valuable lawyers aren’t 22-years-old. But as Chris Johnson showed, sometimes the best offensive player in football can be 24-years-old. Now, Frank Gore is holding out because the San Francisco 49ers don’t want to pay him, at 28-years-old, a big contract. The 49ers think his best days may be behind him, and certainly don’t want to give an aging player a big money contract. But NFL GMs and owners have talked out of both sides of their mouths, not wanting to reward “unproven” players or “old” players.

That’s why the players’ biggest coup was enforcing the minimum salary floor. As PFT’s Mike Florio writes, “99% of the salary cap must be spent in cash in aggregate between 2011-2012. The league-wide number falls to 95% after that. Teams must spend at least 89% of the cap from 2013-2016 and 2017-2020.”

Teams are therefore forced to spend their money, and not allowed to spend their money on rookies. Hence this post’s title: owners must pay veterans and must pay them lots of money. The Panthers and Bucs were two of the teams that were “forced” to spend the most money. We saw what the Panthers did. While Tampa Bay hasn’t made any big splashes yet, the Bucs resigned Quincy Black — a linebacker most fans have never heard of — to a five-year deal worth $29 million. Essentially, Quincy Black is getting Cam Newton money. Fans have tended to blast rookie salaries on the basis of “right” and “wrong.” But no one could argue that Black and Newton are equally valuable prospects over the next decade of play.

And, of course, this is not simply a Cam Newton diatribe. The Bengals signed fourth overall pick A.J. Green to a four-year deal worth $19.6 million, with a team option to extend the deal to a fifth year. Sidney Rice just signed a deal for $41 million over five years, Santonio Holmes went for $50 million over the same span, and Santana Moss just got $15 million over three years from the Redskins. Only one of those contracts looks like a steal. Even the Bengals wouldn’t be silly enough to trade Green for Moss, yet Moss’s contract is actually more player-friendly than Green’s! Try getting someone in your dynasty league to trade A.J. Green for Santana Moss, and see how that goes. Green isn’t as proven as Holmes, but his contract is significantly less attractive. On the open market, I suspect he’d sign for a bit more than the megadeal Rice just landed.

The rookie cap isn’t going away. And outside of a few holdouts by younger players over the next few years, we may not hear much about this. But the media’s lack of outrage — Jason Lisk notwithstanding, of course — over the way veterans have stolen money from rookies is disappointing. Helpless to defend themselves, the best rookie on the planet is going to get a deal equivalent to a decent linebacker on Tampa Bay. Rookie contracts never struck me as “unfair” before, but they certainly do now.

Update: Within five minutes of publishing this article, Kevin Kolb’s new contract with the Arizona Cardinals was announced. Five years, $63.5 million. Kolb will be getting double Cam Newton money. Because he’s a proven veteran, after all.

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As always, please leave your thoughts in the comments.

  • When these “student athletes” aren’t payed close to market wages for their work and aren’t allowed to unionize they have no leverage against management that wants to decrease their risk and increase their wages and veteran labor that wants to be paid more fair wages for their work. The NCAA is a completely garbage institution that should be burnt to the ground. The NFL isn’t far behind (And yes, I see the enormous hypocrisy in a fan like myself saying that. Doesn’t make it any less true.)

  • sacramento gold miners

    I’m going to have to side with ownership in this case. Too often, unproven rookies like Jamarcus Russell were vastly overpaid, and that had a ripple effect on the rest of the team. For young players who actually overperform their contracts, they still have outside opportunities for enhancing their visibility and income.

    • Josh Sanford

      It’s a complicated situation with no easy solution. I know that my mother in law would say that even the most-underpaid pro athlete is grossly overpaid. And a lot of people agree with that sentiment. But that’s not economics; it’s morals. From an economic standpoint, there are always inefficiencies. One of the main thing that the NFL has done to eliminate inefficiencies is to make certain that there are seldom any guaranteed contracts. But of course the inefficient contracts are probably a wash as between the owners and the veterans, with most of the cost being billed to the rookies.

  • Dr__P

    There is a reason why Von Miller sued separately from the NFLPA. Rookie interests were different than veterans.

    The Union recognized there is a limit to what the teams were going to pay. The union settled for a percentage of the take. Salary caps mean any dollar for someone is one dollar less for another. Rookies who make the team in the future are not the same power base as existing veteran members.

    Similarly the union would prefer no fifth year and have ful free agency. Yet remember the union does not like any tag system either. The fifth year option acts like a tag and was agreed to for the same reasons.

    These are are parts of the TOTAL package agreed to though competitive bargaining, hence the term CBA

  • Frank Yi

    Economic papers have shown players under restricted contracts, on average, earn about 35-50% of fair market salary. However, prior to the existence of drafts and restricted contracts, top incoming rookies earned more than established veterans. I think the restricted salaries are necessary, since there is a lot of projection to an incoming rookie; however, the contracts need to be shorter. I’d say 3 years max, no 1st-round option. And get rid of the franchise tag

  • Richie

    Since the cap makes this a zero sum game, I’m mostly fine with the system. Yeah, Newton may have gotten more in an open market, but he still gets plenty. And why not let Olindo Mare get some of that instead?

    A heavier bonus system might be nice to try to help give money to valuable players.

    I feel a little bad for the lower round players, whose salaries aren’t the kind that can set you up for life, who end up overplaying their pay. Russell Wilson is an example. He was one of the most valuable players in the league, but stuck with a $300k salary. If his career lasts long, he’ll make out fine. But if he got hurt or his skills eroded, his NFL performance could have been underpaid by millions.

    What were Keepernick’s career earnings? He probably made way less than the value he provided.

    A comparison of player career earnings to performance would be interesting.

    • McGeorge

      Running backs get screwed.
      And players not selected in the 1st round get screwed.
      If players could go free agent after 3 years then the deserving ones would have a chance to earn more, and it would cut into the pay of the lesser and older players. I’m fine with that.

  • Anthony Brown

    Thank you for republishing. This is more proof, if any were needed, that the players lost the Lockout War of 2011. I’ve already read hints that the owners plan to lock out the players again at the end of the current CBA. Is the Players’ Association is up to the task this time, or will they repeat that mindless “Let them play” campaign? Richard Sherman has already that players should be prepared to strike. Who’s listening?