At this point in the offseason the Rams only have one QB under contract for 2015: Sam Bradford. Renegotiating the final year of his contract (before the start of the new league year on March 10) is right near the top of the Rams’ to-do list. Part three (of a 12-part Rams salary cap series) examines Sam Bradford’s contract, and what can be done to reduce its impact on the Rams’ salary cap in 2015.
The Rams have a few multi-million dollar questions needing to be answered in the coming weeks. The Rams’ entire offseason plan may hinge on the answers to those questions. The questions involve the final year of Sam Bradford’s rookie contract. Will the Rams and Bradford successfully renegotiate the final year of his contract? Will the Rams release or trade Bradford, if the two sides are unable to reach an agreement on a restructured/renegotiated contract? Bradford’s base salary for 2015 is $12.985 million. When push comes to shove, will the Rams retain Bradford irrespective of the cost involved, if deemed necessary by the organization?
At his season-ending media session on December 30, Jeff Fisher hinted at upcoming negotiations with Bradford regarding his contract:
“We have some work to do obviously, from a contractual standpoint, but I’m confident we’ll sort some things out.”
“I’m not going to go into specifics…but I think it would make sense that both sides get together and work something out.”
All indications point to the Rams wanting Sam Bradford back in 2015 (albeit at a reduced base salary, and with real competition at the position). Bradford has also given every indication he’d like to be back in the horns this coming season. Re-working/reducing Bradford’s base salary to a mutually agreed-upon figure appears to be the only difficult issue the parties will face in bringing about Bradford’s return.
Contract Renegotiation Considerations
The key in any Sam Bradford contract renegotiation is determining what he’s worth on the open market. The three most important considerations involved in determining Bradford’s fair market value: Supply, demand, and current NFL QB contract valuations. In addition, leverage, precedent, a possible contract extension, and the Rams’ QB depth chart could all play roles in negotiations.
Supply and Demand
Quarterbacks are overpaid. It’s a fact of life in the NFL. A basic economic principle is responsible for the ever-increasing QB salary levels in the NFL: When demand far exceeds supply, prices will rise. It’s the single biggest reason why average QB’s such as Alex Smith and Jay Cutler can command salaries in excess of $17 million per year. In today’s NFL, quarterback is by far the most important position on the field. As evidence, look no farther than the last four QB’s remaining in the playoffs this season: Aaron Rodgers, Tom Brady, Andrew Luck and Russell Wilson.
The supply/demand equation will come into play in Sam Bradford’s contract renegotiation, and will work in Bradford’s favor, given the lower-quality, limited “supply” available this year in both Free Agency and the 2015 NFL Draft. In addition, up to a dozen teams could be looking for quarterbacks in 2015 for various reasons.
Current NFL QB Contract Valuations
An analysis of current QB contracts reveals two very distinct tiers. Franchise quarterbacks (16 of them) signed to long-term contracts averaging over $11.4 million per year represent one tier. Only 9 of the 16 quarterbacks’ teams made the playoffs in 2015. Lower-level starters, backups, and QB’s still playing under their rookie contracts (ex. Russell Wilson, Andrew Luck, and Cam Newton) comprise the second tier, with contracts averaging under $5.5 million per year.
It’s reasonable (bearing in mind prevailing market conditions) to expect Sam Bradford’s renegotiated base salary to fall between the two tiers ($5.5-$11.4 million). Given the circumstances surrounding the renegotiation, a base salary on the lower end of the suggested scale ($6-$7 million) is appropriate in my estimation.
Many assume the Rams have all the leverage in any contract renegotiation with Sam Bradford. In reality, the leverage scales are fairly evenly balanced, with the Rams having the slight edge.
Bradford and his agent are aware of the dearth of quality QB alternatives/options in both the Free Agent/trade market and the upcoming draft. The demand for his services would be significant on the open market, as many teams are looking for solutions to their own QB problems. Bradford is the only QB on the Rams’ roster at this point in the offseason. Bradford (if healthy) likely gives the Rams the best chance to win and produce a successful season in 2015.
The Rams in turn know there isn’t a team in the NFL willing to pay Bradford $12.985 million in base salary for 2015 (due to his injury history and middle-tier performance level). Bradford’s base salary will likely be substantially reduced in 2015, no matter which team he ends up playing for. Bradford’s base salary for 2015 is not guaranteed. It’s unlikely another team would guarantee his base salary, for the reasons already noted.
The Rams also possess a margin of control over Bradford, for the simple reason he’s under contract with the team until the end of the 2015 season. The timetable for any renegotiation, release, or trade is strictly at the Rams’ discretion. The Rams could make it very difficult for Bradford to sign a player-friendly contract with another team, if for no other reason than timing (example – releasing him less than a week before the regular season started, as opposed to the opening of Free Agency in March).
The Rams have already budgeted for Bradford’s return at the full $12.985 million base salary figure. Salary cap constraints will not be a critical factor in negotiations.
The Rams’ QB depth chart
The Rams have only one quarterback under contract for 2015: Sam Bradford. Austin Davis and Shaun Hill are eligible for Free Agency on March 10. Case Keenum was signed (by Houston) off of the Rams’ practice squad before the 2014 regular season ended. Garrett Gilbert was released from the practice squad and is no longer with the organization (signed by New England).
The Rams will undoubtedly be looking to sign/re-sign one or more QB’s from their own pending Free Agents or from another team(s). In all likelihood, the Rams will also be looking to select a QB in the upcoming NFL draft. There are no guarantees the Rams will be able to adequately fill out the QB depth chart during the offseason. It all adds up to a difficult situation for the Rams. From a negotiating standpoint, the lack of QB’s on the roster works in Sam Bradford’s favor.
It’s not often one sees a franchise quarterback (especially one with a large salary cap hit like Sam Bradford’s) suffer two consecutive season-ending injuries. It’s difficult to find similar instances to serve as a guideline for renegotiating Sam Bradford’s contract. The closest may be the circumstances surrounding New York Jets‘ QB Chad Pennington in 2006.
From USA Today:
“Pennington hurt his shoulder during the 2004 season, missed three games, then returned for the end of the regular season and into the playoffs. It was clear then that his arm strength was significantly reduced and after the season the team said he would have rotator cuff surgery.”
“He returned in 2005 but was injured in the third game of the season and again had surgery, missing the rest of the season.”
Pennington had signed a $64 million extension in 2004, which included an $18 million signing bonus. Initially, his 2006 salary cap hit was scheduled to be $12 million, and included a $6 million base salary plus a $3 million roster bonus, all of which was guaranteed. Given his injury history (and less than outstanding results on the playing field), the Jets were hesitant to retain Pennington for 2006 (and beyond) under those contract terms. The Jets and Pennington ended up agreeing on a restructure of his contract.
Under the new agreement, Pennington’s 2006 base salary was reduced to a guaranteed $3 million, and the roster bonus was eliminated. However, the contract also provided Pennington the ability to earn back the $6 million reduction through playing time and performance incentives. Pennington started all 16 games in 2006. The Jets finished with a 10-6 record and made the playoffs. When looking at the figures involved, it’s important to note that teams were dealing with a $94.5 million salary cap in 2006. I expect the 2015 salary cap to be in the area of $146 million.
Perhaps (when/if the contract issue is resolved) Sam Bradford will offer the same commentary Pennington did after his restructure:
“Heading into the offseason, I knew that re-working elements of my contract was a possibility. That’s the business side of the industry and that’s what the offseason is for. It was nothing personal and I understand that. Moving forward, I am anxious to return to the playing field and feel very positive about where I am in the [rehabilitation] process.”
On the surface, there appears to be little incentive for the Rams or Bradford to extend his contract beyond 2015. There’s too much uncertainty involved. Can Bradford stay healthy for an entire season? Will missing the last 25 games affect his performance level? It’s likely both parties would want to evaluate the 2015 season before making further contractual commitments.
Notwithstanding the uncertainty, a one-year extension may be helpful in ensuring/promoting an ongoing contractual relationship between the Rams and Bradford (if the circumstances warrant it) without any long-term commitment. A one-year extension can also act as a “bridge” to a more lucrative long-term contract in 2017, if warranted by Bradford’s play and continued good health through 2015-2016. A one-year extension gives the Rams time to add and develop quality QB’s on the depth chart, and allows Bradford the time to quell any doubts about his abilities and health.
An extension for 2016 would involve a modest base salary ($7-$8 million, not guaranteed), and the inclusion of significant escalators and de-escalators based on Bradford’s health/playing time and performance levels in 2015. The escalators/de-escalators can significantly alter Bradford’s earnings in either direction ($15 million maximum – $3 million minimum). A significant portion of the extension could become fully guaranteed if Bradford remains healthy and achieves agreed-upon performance levels in 2015.
Perspective On Sam Bradford’s Contract
Nick Wagoner’s (ESPN) take on the Bradford contract situation (which I agree with):
“They won’t take the risk of outright releasing Bradford so any deal will have to be agreed to before the Rams would do anything with the old contract. The Rams can get a big savings here, but it will depend heavily on how much less the player is willing to take and then how he performs after. If the Rams did outright release Bradford, it would save them nearly $13 million but again, that’s almost certainly not going to happen.”
Also from ESPN’s Nick Wagoner (a scenario I’ve been recommending/suggesting for three months):
“There are those around the league who think Bradford could get more than some might expect. In other words, a reworked deal might cost the Rams something in the $6 million to $8 million range with incentives that could take it up to or past the current base salary of nearly $13 million.”
Sam Bradford Contract Proposal
The accompanying charts present my proposed restructure of Sam Bradford’s contract for 2015:
Sam Bradford’s 2015 Renegotiated Contract
|Contract Type||Base Salary||Prorated Bonus||Total Cap Hit||Dead Money||Cap Savings|
NLTBE Incentives $ Value Weekly Active Roster Bonus 400,000 16 x $25,000 Weekly Starting Bonus 16 x $150,000 2,400,000 Performance Bonus 1,185,000 Rams Make Playoffs 1,000,000 Pro Bowl Invite 1,000,000 Total Incentive Package 5,985,000
Contract Terms And Observations
Under the terms of the new contract, Bradford’s base salary is reduced by $5.985 million (from $12.985 million to $7 million). The $5.985 million pay cut represents a 46% reduction in Bradford’s base salary for 2015. The entire $5.985 million reduction in base salary can be earned back by Bradford, through an extensive incentive package included in the new contract.
The Rams immediately gain $5.985 million in salary cap relief from the reduction in Bradford’s base salary.
The incentives in the new contract are categorized as NLTBE (Not Likely To Be Earned). The CBA categorizes them in this manner because Bradford did not play in 2014, nor did the Rams make the playoffs. The distinction between NLTBE incentives and LTBE (Likely To Be Earned) incentives is an important one. NLTBE incentives, if earned in 2015, can be counted against a teams salary cap in either 2015 or 2016. They afford a team flexibility in accounting for salary cap charges incurred due to earned incentives.
The incentives are (for the most part) self-explanatory. The “performance bonus” can be comprised of many statistical measures, including (but not limited to) touchdown passes, interceptions, passer rating, wins, and completion percentage. The various incentives (as a whole) take into account Bradford’s health throughout the season, his individual performance level, and overall team performance.
If Bradford fails to hit on any of the incentives, the worst the Rams could suffer financially is a $7 million salary cap charge for his base salary. If Bradford earns ALL of the incentives, it would mean he (and the Rams) had a great season. Bradford would earn the full $12.985 million, a bargain by any measure.
The prorated bonus amount from Bradford’s old contract ($3.595 million) cannot be altered or reduced, and remains a salary cap charge for the Rams irrespective of Bradford’s status with the team. Bradford’s base salary is the only amount allowed to be altered in a renegotiation. The prorated bonus constitutes dead money for the Rams, even if he’s released and plays for another team in 2015.
Bradford has no guaranteed money remaining in his original contract. As an inducement in negotiations, $3 million of Bradford’s 2015 base salary becomes fully guaranteed if he’s the Week 1 starter in September. Because there’s no guaranteed money triggered before the first week of September, the Rams could release Bradford at any time between the signing date of the new contract and the beginning of the season without incurring a $7 million charge against their salary cap.
Ideally, the renegotiated contract should be agreed to before the opening of the new league year on March 10. If completed by that date, it allows the Rams to gain additional salary cap space to re-sign their own Free Agents or sign Free Agents from other teams, plus gives the team a measure of cost certainty for budgeting purposes.
The possible extension for 2016 is discussed above. It in no way affects the renegotiated numbers for 2015.