Salary Cap

WILL THE RAVENS AND TERRELL SUGGS FINALLY MAKE A DEAL?

by Brian McFarland

July 13, 2009
4:00 am

Reading Time: 5 minutes

Reportedly – actually, straight from Terrell Suggs’ own mouth – the Ravens and Suggs are very close to agreeing to terms on a long anticipated multi-year contract extension. Any extension must come early this week, because as of
4:00 p.m. on Wednesday, July 15th, the Collective Bargain Agreement prohibits teams from signing a player who has been franchised to a long term contract extension.

While Suggs suggested that his deal would be less than that of the deal received by Colts Defensive End Dwight Freeney (6 years, $72M, $30M in guaranteed money), it has also been reported that Suggs has been offered a deal that is just shy of the deal signed last year by Vikings Defensive End Jared Allen (6 years, $74M, $31M guaranteed).

So, what gives? Is the ever loquacious Suggs just talking for the sake of talking again or is there some way to reconcile these two reports?

The guess here is that there is likely some truth to both. Suggs indicated that there were still some details to be worked out, but that, for the most part, the “basic structure” of the deal was done.

If that is so, then it’s likely that the team and Suggs’ agent have agreed on the total value of the contract and the amount of guaranteed money, but have yet to reach an agreement on how and when the money is paid. This may sound like a minor matter when the total value is already agreed upon, but there is a constant tension between a team’s desire to backload a contract and the player’s desire to have as much money as possible paid in the early years of a deal. While contracts in the NFL are not guaranteed, a contract with a big bonus generally means that the player will not be released in the early years of the deal, so the player would like the yearly salaries in those years to be as high as possible in order to maximize his return on the deal.

This is further complicated by the "last capped year" rules that are currently in effect (due to the owners exercising their early opt out of the CBA). In particular, the 30% rule has made it difficult to backload contracts and that has likely made it more difficult to find a happy medium on which both sides can agree.

For example, based on the way that the teams has structured deals in the past, Suggs would likely have gotten $30M in guaranteed money, paid in three bonus of $15M (2009), $10M (2010) and $5M (2011). The balance of the deal would then be paid out in escalating yearly salaries, with the first year or two being veteran minimum salaries of less than $1M. However, now, with the “last capped year” rules applying, it is much more difficult to backload contracts and most contracts given this year are much more “flat” in terms of their structure and payout – i.e., the player gets more base salary sooner.

As an illustration of this, compare the structure of Ed Reed’s contract of 2006 (in fact, if you somewhat double it, you’ve probably got something close to what a backloaded deal for Suggs could look like) with that of the deal signed by Domonique Foxworth earlier this offseason:

Reed:

Year	Signing Bonus	Base Salary	Cap Charge
2006	7,500,000	585,000	2,085,000
2007	6,000,000	595,000	3,095,000
2008	1,500,000	605,000	3,405,000
2009		3,600,000	6,400,000
2010		6,000,000	8,800,000
2011		6,500,000	7,800,000
2012		7,200,000	8,500,000

Foxworth:

Year	Signing Bonus	Reporting Bonus	Base Salary	Cap Charge
2009	4,000,000	3,380,000	620,000	5,000,000
2010	6,000,000		3,200,000	6,200,000
2011			4,400,000	7,400,000
2012			5,600,000	8,600,000

As you can see, in 2009, the deals have much larger first year base salary/reporting bonus and cap numbers, because the 30% Rule prohibits a player’s “salary” (base salary, plus roster/reporting bonus and prorata shares of any option bonuses) to increase by more than 30% of the player’s first year “salary”. This creates a “flat” contract, in which the player receives more of the contract value earlier on the deal.

However, one team – the New Orleans Saints – appears to have found a loophole that does allow teams to, just as in past years, backload contracts.

For a (very) detail description of this loophole, click here…

Since this loophole came to light very late in the free agent signing period, it appears that very few teams took advantage of this maneuver. Clearly though, it creates even more tension between the team’s wishes and those of Suggs and his agent. It is likely that, given the size of the deal, the Ravens want to use the loophole to backload the deal as much as possible, while Suggs’ agent wants a deal that is structured more closely to the “flat” deals that have been signed this offseason.

Whether they can reach a middle ground remains to be seen, but if they are close, then this very well could be where the problems arise.

Hopefully, they can find a way to bridge that gap. There really is too much at stake here – for both sides – to not get a deal done. Suggs certainly proved this past season that he is deserving of a fat contract (although, it can be argued that what is rumored is perhaps too rich of a deal for him), and by again playing under the Franchise Tender (albeit a payout of over $10M this year) Suggs takes substantial risk in getting injured and possibly losing out on his shot at the big payday.

On the other hand, Suggs may be willing to play out this year under the Franchise Tender and then try and hit the Free Agent market next year, when there may not even be a Salary Cap.

So, it really all comes down to Suggs and whether he’s willing to take that risk. Suggs’ comments aside, if the rumored offer of “close to Jared Allen money” is correct, then the Ravens have certainly made him a fair offer and given that he is only 25, it is very likely that he is going to play out the entire contract anyway, so the exact structure shouldn’t be as important – except to his agent, perhaps.

From the Ravens perspective, this is really a deal that needs to get done because Suggs has essentially clogged up their Salary Cap for the last 2 offseasons and if he isn’t signed long term now, they will be faced with the no-win proposition of having to either again clog up their Cap (if there is one) by tagging him again next year or just letting him walk for, perhaps, a compensatory pick at the end of the 3rd round of the draft. They could always attempt a “tag and trade”, but those aren’t particularly easy to work out and it would have to be done immediately, otherwise, he would just continue to eat up a sizeable ($17-20M) chunk of their Cap space.

Letting Suggs get away after this season – regardless of who’s at fault for the failed negotiations – would have to be considered a loss for the Ravens’ Front Office because of the time and extra Cap space that were wasted on their failed attempts to sign him long term. Some might argue that they got 2 good years (hopefully) out of Suggs, but the question would still remain – was it worth it or could that money have been used better elsewhere and would that have served the team better long term?

Hopefully, it won’t come to that. I have a feeling both sides want to get something done – and I do believe that Suggs’ preference is to stay in

Baltimore – but, given that they’ve already been working on a deal for 3 years now, it’s definitely hard to say that it will get done, but they do appear to be closer than ever before.

So, with fingers crossed, I will venture the guess that they will finally agree to a deal and that it will be announced some time late on Tuesday evening.

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 NFL's salary cap and actually make sense of it for those of us who view it as inviting as IRS Tax Code. Brian, who hails from Catonsville, MD and still resides there, is married and has two children.