Rice’s new deal could handcuff Ravens in the future

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So, they got it done!

There’s nothing like a deadline to spur action and get the parties to be serious about getting a deal done.

Following the pattern set with Haloti Ngata last year and Terrell Suggs in 2009, the Ravens again waited until the late in the 11th hour to get a deal done with star RB Ray Rice.

Rice’s base deal is reported to be 5 years, $35M, with a Signing Bonus of $15M.  Another $5M is available via a one-time escalator.    

The deal breaks down as follows:

Year
Signing
Bonus
Option Bonus
Base
Salary
Cap
Charge
2012
15,000,000
 
2,000,000
5,000,000
2013
 
7,000,000
1,000,000
5,750,000
2014
 
 
4,000,000
8,750,000
2015
 
 
3,000,000
7,750,000
2016
 
 
3,000,000
7,750,000
 
The most interesting detail of Rice’s new deal is the $5M escalator.  According to ProFootballTalk.com, Rice will earn this one-time bonus if he reaches specified rushing and receiving benchmarks (the specifics of which are still unreported) during any of the first 3 years of the deal and the Ravens also finish in the top 10 in offense during that same year.  If Rice and the Ravens offense reach those plateaus, Rice is immediately due $1M and the remaining $4M will be spread out over the remaining years of the deal. 
 
This escalator will not have any Salary Cap implications until it is actually earned.
 
Under the Franchise tender, Rice was slated to count $7.742M against the team’s Salary Cap.  With the new deal, Rice’s Cap number has been reduced to $5M, thereby creating additional Cap of $2.742M.  Ideally, that additional Cap space will go a long way toward creating Cap space that may be necessary to accommodate a long-term extension for QB Joe Flacco. 
 
The Ravens now have $3,348,858 in available Cap space.  (Complete list of team’s current salary cap numbers)
 
While the Ravens have rarely let any of their young, core players leave via free agency – and while Rice is certainly a class act and team leader, deserving of such a contract – the structure of the deal does raise some concerns. 
 
This deal is an incredibly frontload contract. 
 
Rice will receive $17M in 2012, $25M over the first 2 years of the deal and $29M over the first 3 years of the deal.  While the yearly average of Rice’s base deal is only $7M (or $8M if you include the escalator), the first year payout and the payout over the first 2 years of the deal exceeds that contained in the recent contracts for RBs Chris Johnson, Arian Foster, LeSean McCoy and Matt Forte.  It’s also just slightly less than the 3-year payouts received by Johnson and Foster.
 
If Rice fails to live up to the expectations or is injured, the team will face serious Salary Cap ramifications because so much of his contract is tied up in the $15M Signing Bonus and $7M Option Bonus.  Those amounts account for close to 63% of total base value of the deal.  That is an incredibly high ratio of bonus money versus total contract value.  Because those amounts are going to be prorated over the life of the deal, if Rice fails to perform as expected, the team will either be forced to keep him, despite having to overpay him, or release him and possibly incur a huge amount of dead money against the Cap. 
 
For instance, in 2015, Rice is set to have a Cap number of $7.75M.  If Rice is not meeting expectations at that point, the team could release him, but it would cost $9.5M in dead money against the Cap.  That would mean that the team would take on an additional Cap charge of $1.75M over what Rice was already slated to count against the Cap.  That would be an unprecedented amount of dead money to have to account for.
 
So, the Ravens, in order to get Rice’s future with the team secured, are definitely gambling that Rice will continue to play at a high level for all 5 years of the contract.  If not, the upfront money that they’ve agreed to give Rice will really come back to haunt them.
 
One other concern, albeit less of a worry, is that the structure of the deal leaves Rice will only $3M to be paid in each of the last 2 years of the contract.  In the past (and present, if the reports about Jets’ CB Darrelle Revis are accurate), that often leads to players wanting to renegotiate their contract because by then those amounts make them feel underpaid, even though they’ve been very well paid in the early years of the deal. 
 
Rice does not seem to be that kind of player, but you never know.
 
Hopefully, for Rice and the Ravens, he will play well and live up to the contract, so that neither of these issues will ever become a concern. 
 
The Ravens are betting on that and Rice certainly has proven to be a guy who deserves that kind of faith.

 

This entry was posted in Salary Cap Analysis by Brian McFarland. Bookmark the permalink.

About Brian McFarland

Brian McFarland
Known on Ravens Message Boards as "B-more Ravor", Brian is a life-long Baltimorean and an avid fan of the Ravens and all Baltimore sports.  A PSL holder since 1998, Brian has garnered a reputation as a cap-guru because of his strange (actually warped) desire to wade through the intricacies of the...more

4 Raves on “Rice’s new deal could handcuff Ravens in the future

  1. ravcolt on said:

    The Ravens decision to pay Rice and the structure of the contract was not warranted. First, Flacco, playing the most important position in sports, needed to be the one who received a long term deal. The Ravens can survive without Rice, but not Flacco. Second, the Ravens – Ozzie Newsome’s – seemingly pathological obsession to continue to over reward their high-profile players creates a problem by limiting their salary cap ability to add the much-needed depth that is the core of any championship contender while exacerbating the “us vs. them” mentality that the front office and their “Raven-type” players garner. Congratulations to Rice. He has certainly has earned a more lucrative contract than he was due, but the Ravens approach seems ass backwards. His position is the easiest to replace despite his success. We will now see if he continues to produce at the same level. Finally, why is Ed Reed being paid $7.2 million this year?

  2. Matt on said:

    “in 2015, Rice is set to have a Cap number of $7.75M”

    I’m not totally up on the issue, but what is the projected cap in 2015? My thinking is a 10-12% hike would soften the blow in ’15 bit.

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