It’s time to play “The Price Is Right”!
Here we go again.
As was the case in the spring of 2013, the Ravens and Joe Flacco are faced with a decision that will have great impact on the coming season (and beyond). In 2012, the goal was to reach a long term deal and avoid the use of the franchise tag that would have essentially crippled the team’s Salary Cap for 2013.
This time around, while Flacco is still under contract through 2018, the need is to get Flacco restructured and extended, so that they can reduce his $28.55M Cap number and create the Cap space needed to address a roster that, all of a sudden, appears to have a lot of holes.
The remainder of Flacco’s present contract breaks down as follows:
As the number show, the Cap numbers for 2016 and 2017 are very high and when the contract was signed in 2013, it was pretty much universally understood that the contract would have to be restructured and extended in 2016.
And, now here we are.
This is without a doubt the team’s biggest decision of the offseason. And, while GM Ozzie Newsome indicated that the team was prepared into 2016 without having adjusted Flacco’s contract, his comments were likely nothing more than the first salvo in the negotiations. It’s not like Newsome was going to sit there and say that they really, really need to get this done. Flacco and his agent, Joe Linta, already seemingly have all of the leverage in the first place, so there was no way the team was going to add to that by saying how important it is for them to get Flacco’s Cap number reduced.
There will be many factors involved in the negotiations – some big, some small, but all part of the equation:
FLACCO’S INJURY
Let’s dispose of this right away. Throughout his career, Flacco has been extreme durable and, prior to injuring his knee on November 22nd, hadn’t missed a game. In the past, such a knee injury could have meant at least a year-long recovery, but modern medicine has allowed players to return much earlier.
As former agent Joel Corry of The National Football Post and CBS Sports suggested to me, “The injury shouldn’t be a factor. Joe Linta will cite Carson Palmer as an example.” Palmer, whose injury and surgery in 2014 were both about 2 weeks earlier than Flacco’s, returned in time for training camp and has already won several Comeback Player of the Year awards for his 2015 season. Now, certainly, Flacco’s injury was more severe, but he’s also younger and has proven to be more durable throughout his career.
As such, any mention of the injury by the Ravens will likely be summarily dismissed by Linta.
RAVENS NEED THIS DEAL FAR MORE THAN FLACCO
As Corry also points out, the “Ravens need to do something more than Flacco does”.
Let’s face it, Flacco is already rich beyond his wildest dreams and as a reportedly very frugal guy, is already set for life. In the first 3 years of his present deal (2013-15), he received $62M and is set to make another $18M in 2016.
From a money perspective, Flacco would be more than happy to just play out the contract and receive the $58.6M that is still due to him.
So, any enticement from the Ravens will more than likely be driven by one and/or two motives: (1) we need the Cap space to improve the team around you and (2) we’ll be happy to extend the deal and write you a $30M-ish check today.
There’s no doubt that Flacco would likely be amenable to a new deal to accomplish both of those goals, however, figuring out how to reduce Flacco’s 2016 Cap number (basically via a bonus and new base salary) is likely the easiest part of the deal to come to an agreement on.
And, let’s be clear, this contract is going to be huge. This isn’t a situation where, as some have suggested, the team can just turn base salary into a bonus and lower Flacco’s 2016 Cap number. While doing so would reduce Flacco’s Cap number by more than $11M, it would also add over $11M in dead money onto his 2017 and 2018 Cap numbers ($5.67M each year). That would raise his 2017 Cap number to close to an untenable $37M.
Simply put, doing so would be Salary Cap suicide.
So, if they want to get something done, it’s going to have to come from an extension that will added new years to the deal and give Joe a lot more money.
OTHER CONTRACT FACTORS AT PLAY
When assessing the “value” of an NFL contract, there are many measuring sticks that come into play – total value, yearly average, guaranteed money, “new money” average and the first 3-year payout.
Probably the most important of those factors are the first 3-year payout and the amount of new money.
The first 3-year payout is important because these are the years that a player is unlikely to be released. Therefore players want to get as much in those years as possible. The new money average is similarly important because it measures the amount of money that is added to the contract over and above what was already owed to the player under the prior deal.
Now, recall that Flacco is still due $58.6M over the last 3 years of the present deal. As such, Linta and Flacco are going to want at least that much over the first 3 years of the new deal.
The present standard for the first 3-year payout is Cam Newton’s 2015 contract, which will pay him $67.66M over the first 3 years of the deal.
The present standard for new money average is Aaron Rodgers’ 2013 contract, which had a new money average of $22M. But, as Joel Corry points out, that was 3 years ago and it’s about time for that number to be topped.
The other factor that is often focused on is the guaranteed money, but as we’ve learned, what is fully guaranteed, or just guaranteed for skill, injury or Cap can often mean that the reported guaranteed money isn’t actually so guaranteed.
POSSIBLE DEAL
So, how about some proposed numbers?
They could look like this:
Total deal: $125M
2016 Signing Bonus – $30M
2017 Option Bonus – $10M
Guaranteed money: $65M ($44M fully guaranteed)
This deal would be 6 years, for a total of $125M, with a first 3-year payout of $65M. The yearly average of the entire deal would be $20.83M, and would contain $66.4M in new money. That would make the new money average equal $22.13M, thereby topping Rodgers’ 2013 deal.
Again, Flacco is owed $58.6M over the next 3 years of the current deal and if he’s going to top Rodgers’ new money average, then that’s an additional $66M (3 additional years at $22M per year), meaning the total would have to be at least $124.6M. As structured, this deal would give Flacco more in the first 3 years ($65M) than presently scheduled (keep in mind, the Ravens need to give him reasons to want a new deal) and would put him just under Cam Newton’s standard bearing, first 3-year payout of $67.66M.
As I said, it’s going to be a big deal (although, the above is probably the upper limit of what the deal will turn out to be).
The biggest question is whether Flacco is going to push for a maximum deal as above or if he’s willing to accept a lesser deal and give the team a hometown discount (whatever that might mean on a deal of this size).
A deal such as this would create two (2) advantages for the Ravens:
First, and most importantly, it would create $8M in new Cap space for 2016 and would lessen his 2017 Cap number by $5.6M.
Second, by using a flat structure for the deal (i.e., not a great amount of fluctuation of Cap numbers from the beginning to the end), the Ravens would likely avoid the need to renegotiate the deal in the future. This type of structure is now more commonly used for contracts of this size (especially for the 2nd extension for QBs), so it’s likely that the Ravens would want to pursue such a structure and would point to this trend to support their position.
On the other hand, as pointed out by Glenn Clark of Glenn Clark Radio, it’s quite possible that Linta may balk at that idea and may instead push for a deal with a structure similar to the present deal, with another forced restructure in 3 years, to potentially get Flacco one more big payday (and Linta another nice commission).
These are the types of issues that could hold up the deal, which brings us to…….
THE LINTA FACTOR
By now, it’s pretty well known that Flacco’s last contract negotiations got pretty contentious. For whatever reason, Linta and Newsome apparently didn’t hit it off very well, and if Linta’s post-contract comments are any indication, things appear to have gotten personal (at least, on Linta’s side).
[Related article: Linta’s ‘Dumb’ Talk Could Signal Problems For Ravens]
As such, another key to the negotiations is whether Flacco is going to drive the negotiations or if he’s going to let Linta handle everything. If it’s the latter, all of the above parameters are going to indeed be in play and Linta will push for maximum dollars.
Again, achieving a reduced 2016 Cap number is likely to be the easiest part of this deal. It’s the rest – structure, total dollars, guarantees, 3-year payout – that’s going to be the most contentious part.
BOTTOM LINE
In all probability, the Ravens and Flacco will get a deal done, but it’s going to be pricey. The key to it all will be the timing. If they can get the deal done before free agency starts on Wednesday, March 9, the Ravens should have ample Cap space to re-sign players they’d like to (and perhaps use the franchise tag on PK Justin Tucker if necessary) and wade into the free agent market a bit. If they can’t get it done by then, it’s likely to be a long offseason.
The Ravens and Flacco are on the clock and it’s time to make a deal. Hopefully……the price will be right.
POSTSCRIPT
There is one other possible scenario that perhaps should not be ignored, and that is that they don’t get anything done with Flacco – either by choice or by failing to reach an agreement. This could force them, for all intents and purposes, to sit out of the offseason or make moves with players that they might otherwise want to keep around. Let’s not forget that Newsome did acknowledge this as a possible option that they would consider.
Newsome during State of the Ravens: “hopefully, if we are strategic enough, we can possibly put together a football team and not necessarily have to re-do Joe’s contract. That has to be an option that we will look at, but we will sit down and talk about it. Then, at that point, there could be some conversation between Joe Linta and Pat.”
Again, this is probably just part of the negotiations, but from a Salary Cap perspective, waiting until 2017 would definitely shift some leverage in the team’s direction because the team’s ability to release Flacco is much more realistic in 2017.
While it is unlikely they would ever consider releasing the best QB in team history, the team’s ability to use it as a possible threat is much more realistic in 2017. After all, as the past will show, it’s not like Newsome is averse to making tough (and, sometimes, unpopular) decisions.
Any such threat this year would likely be met with laughter from Linta because the team is not going to release Flacco and take on $25.85M in dead money (with only $2.7M in savings on the Cap). But, in 2017, those numbers shift dramatically, as the dead money reduces to $15.3M, with Cap savings of $15.85M. Waiting a year longer also reduces the amount still owed to Flacco, so it could alter the length and size of the deal in the team’s favor as well.
So, from a Salary Cap perspective, waiting another year before considering a restructure does make a lot of sense, but given the present needs of the team, it seems likely that they will make every effort to do something this year.
