Kirk Cousins and His Coming King-Sized Contract, Part 3
By Steve Thomas
Well, here we are. Again. Still discussing Kirk Cousins’ potential long term contract. I wrote the original version of this piece immediately following the end of the 2015-16 season, and updated it in July, 2016 (you can read the updated version here: http://www.thehogsty.com/2016/07/19/updated-kirk-cousins-and-his-coming-king-sized-contract/). Those two columns gave you all of the relevant contract and performance data for what I labeled as the “elite”, “good”, and “class of 2010/2011/2012” quarterbacks, and provided averages for each group, along with Cousins’ performance data and the basics of a projected contract based on those averages. My original plan was to update the data again this offseason in order further lock in, from a statistical perspective, the nexus between Cousins’ on the field performance and a projected long term contract. However, the way this offseason has played out thusfar, there haven’t been any relevant quarterback signings (No, sorry, Mike Glennon, you don’t count. Don’t be mad.), so I decide to forego another round of those particular mind-numbing calculations and jump directly to the most important question: what type of long-term contract could the Redskins and Cousins agree to that would make both parties relatively happy? This time, though, I’m going to provide you specifics of my proposed deal on a year to year basis.
As you all know from following The Hog Sty and every other Redskins media outlet, there’s been a wee bit of controversy regarding the Cousins negotiations since the season ended. I’m not going to summarize all of that here, because (1) we’ve already covered that ad nauseum on the show and in our written columns on the website, and (2) I’ve already pulled my fingernails out once today and don’t need to put myself in that much pain for a second time in 12 hours.
Before I start this in earnest, let me just get a disclaimer out: I’m not a player agent and I’m not employed by the NFL or an NFL team; I’m just a regular guy with a solar-powered calculator and a laptop computer. #NotAnAgent. I have no inside information on these negotiations. This entire exercise is just my educated guess made after many hours of free time wasted studying the salary cap and creating massive excel spreadsheets about it.
Executive summary
Here’s a little preview of my proposed contract: 5 years, $130M.
***Gasps, cries, and shouts of alarm from the readers***
Wait, wait, wait, stop! Don’t close this column in disgust just yet! All I ask of you, readers, is just one thing:
DO. NOT. FREAK. OUT. OVER. THE. TOTAL. VALUE.
At least, not until you read the whole column. I promise you there’s a method to my madness, and that it makes sense. If you get through to the end and still think I’m out of my mind, they by all means leave me a comment and tell me what you think. As a matter of fact, please do that anyway. But all I ask is that you read the entire column before you do so. Glad that’s out of the way. Onward.
Background
As of this moment, Kirk Cousins has signed the exclusive franchise tag contract offered by the Redskins, which will pay him $23,943,600 for the 2017 season, all fully guaranteed. A third franchise tag applied by the Redskins in 2018 would be worth approximately $34.47M, and I think we can all agree that the Redskins aren’t going to take on that big of a cap hit in 2018, nor should they. However, the Redskins would have the option of applying the transition tag at approximately $28.78M, all fully guaranteed. Therefore, if Kirk Cousins plays the 2017 and 2018 seasons for the Redskins under the franchise tag and transition tag, respectively, he would earn approximately $52.78M. Keep that number in mind, because I’m going to get back to it later.
The NFL’s salary cap for the 2017-18 season is $167,000,000. The Redskins also have a bit over $15M in what’s known as “rollover” cap space, which is the unused space from the 2016-17 season. This gives the redskins approximately $182M in total salary cap space for the coming season. If you want to study the Redskins’ cap situation in detail, we have the complete salary cap chart projected through the 2021 season on our website (http://www.thehogsty.com/hog-sty-projects/cap/). Reasonable estimates have the salary cap increasing at approximately $10M per year over the next four years.[1] The salary cap is governed by the NFL’s Collective Bargaining Agreement[2], and projection is a very complicated analysis of future revenue, as that term is defined in the CBA. A further description is beyond the scope of this column; if you want to know more, see the CBA and the article cited above. The jump from the 2016-17 cap to the 2017-18 cap indicates that $10M future annual increases might be a conservative estimate, but if you assume for these purposes that $10M is a decent number, that puts the salary cap for the next 4 seasons at the following:
2018-19: $177M
2019-20: $187M
2020-21: $197M
2021-22: $207M
In order to get a complete projected cap picture for the Redskins, in particular, we need to also add in a rollover amount for each year. As stated above, the Redskins have a bit over $15M in rollover cap this year. However, is a large amount, and the Redskins aren’t going to have that much rollover cap each year. For example, as of this writing, for the upcoming season, the Redskins only have approximately $8.5M in cap space if the rookie salary pool is added in (see our salary cap chart for more details: http://www.thehogsty.com/hog-sty-projects/cap/), assuming no other big-money free agents are signed. We have no real way of estimating the rollover space each year; therefore, let’s be conservative and project a $5M rollover cap for each of these seasons. This puts the Redskins’ salary cap for the next 4 seasons at the following:
2018-19: $182M
2019-20: $192M
2020-21: $202M
2021-22: $212M
Keep these numbers in mind. How does this relate to Kirk’s contract? I’ll get to that in the next section.
My guess at Cousins’ contract
Still with me so far? Good, and thanks. Without further ado, here are the details of what I think both the Redskins and Kirk Cousins could live with for a long term deal:
Total value: 5 years, $130M, $20M signing bonus (all paid at signing), $57M guaranteed at signing, $62M total guaranteed.
Year 1, 2017-18 season: $17M base salary (fully guaranteed), $21M cap hit, $37M dead cap
Year 2, 2018-19 season: $20M base salary (fully guaranteed), $24M cap hit, $36M dead cap
Year 3, 2019-20 season: $20M base salary (non-guaranteed), roster bonus of $5M that accrues on first day of league year, $29M cap hit, $17M dead cap
Year 4, 2020-21 season: $23M base salary (non-guaranteed), $27M cap hit, $8M dead cap
Year 5, 2021-22 season: $25M base salary (non-guaranteed), $29M cap hit, $4M dead cap
I’ll wait right here for a moment for you to catch your breath and think of a few creative curses to hurl at me.
Explanation
First of all, the term “dead cap” is the amount of money that would be assigned to that year’s salary cap if the player is cut. Therefore, if the player’s cap hit is less than the dead cap number, then the team essentially cannot cut that player and save money (for example, Brandon Scherff is in this situation for 2017).[3] The dead cap number each year is the pro rata portion of the unearned contractual guarantees; for example, in year 1 of my hypothetical Cousins contract, the total dead money is the amount of his fully guaranteed base salary of $17M and the total $20M signing bonus, whereas in year two, the portion of the signing bonus that is assigned to the dead cap decreases to $16M. A player with no guaranteed money in his contract does not have any dead cap hit and can be cut by his team without penalty. When you hear analysts talking about players who just signed multi-year contracts essentially being on year to year deals, this is what they mean (for example, WR Maurice Harris, along with a host of other Redskins, is in this situation). This is one component of a “team friendly deal”.
Second, the salary cap hit is the amount of money the player will make in the current year, including both base salary and bonuses that are likely to be earned. The cap hit for my proposed $20M signing bonus is spread out over the life of the contract. Therefore, over this proposed five year deal, it adds $4M to each annual cap hit. There are a number of bonuses that can be included in a player contract beyond just a signing bonus and a roster bonus, such as performance-related bonuses and workout bonuses, but that level of detail is too hard to predict and beyond the scope of the contractual overview I’ve provided here. #NotAnAgent.
I added a roster bonus that is earned on the 1st day of the 2019-20 league year because it injects a bit more value into the contract, and I think Cousins will want to force the Redskins to make a decision about him. The team won’t want to pay a $5M bonus to a player they are going to cut later. I also think it’s possible that the Redskins will end up guaranteeing at least a portion of his 2019-20 on the first day of the league year, even though I didn’t include that in my proposed contract as a nod to being more team-friendly. But watch for that.
Remember when I mentioned above that Cousins would earn approximately $52.78M in the 2017-18 and 2018-19 seasons if he plays on the franchise tag and then the transition tag and asked you to keep it in mind? Well, guess what: my proposed contract guarantees Cousins more than that on the day he signs while simultaneously reducing the Redskins cap hits for each year. Under my deal, Cousins is immediately guaranteed to earn $57M in the first two years. The Redskins are also free of the onerous dead cap penalty by the third year of the contract – if you check out my previous column on this subject (click here: http://www.thehogsty.com/2016/07/19/updated-kirk-cousins-and-his-coming-king-sized-contract/), you’ll see that very, very few quarterback contracts lock teams into players via huge dead cap hits past year two, and teams that do almost always end up regretting those deals and have to renegotiate them (really, Tony Romo, Drew Brees, and Joe Flacco are the only active quarterbacks who had contracts like that, and their teams forced all three to renegotiate their contracts halfway through the respective contract terms). No matter what chatter you hear from the Cousins’ side about Kirk wanting the Redskins to prove their loyalty by allowing them to be locked into Cousins past year 2, this would be a stupid thing for the Redskins to do. Say what you want about Bruce Allen, but when it comes to contracts, he’s not stupid.
What’s all of this projected cap talk have to do with Cousins in particular? Well, as it turns out, quite a bit. By now, you’ve read this, you sort of see my point, but alarm bells are going off in your head about the annual cap hits. You might be thinking that $29M, $27M, and $29M cap hits in years 3, 4, and 5 is a lot, way too much. Rest easy. Remember when I talked about the projected cap increases above and asked you to keep those numbers in mind? Here’s where it matters. Under the current cap projections, if Cousins plays 2017-18 under the franchise tag and 2018-19 under the transition tag, the percentage of the salary cap that his contract would take up would be approximately 13% and 16%, respectively. 13% is acceptable; 16% is fairly large for a quarterback like Kirk who, let’s face it, isn’t in the “elite” category that I set forth in my previous column (http://www.thehogsty.com/2016/07/19/updated-kirk-cousins-and-his-coming-king-sized-contract/). Under my proposed contract, the percentage of the salary cap used by Cousins each year actually isn’t as bad as you might think, dare I say even acceptable:
2017-18: approximately 12%
2018-19: approximately 13%
2019-20: approximately 15%
2020-21: approximately 13%
2021-22: approximately 14%
The Redskins can most likely live with those usage percentages as long as Cousins continues to perform at a high level. See? The $29M cap hit actually isn’t as onerous as it seems as long as it doesn’t come in years 1 or 2 when the total cap hasn’t risen yet.
Finally, for those of you who are concerned about Cousins not accepting the fact that he could be cut in year 3, remember this: if Cousins continues to improve and plays out of his mind, earning All-Pro honors, leading the team to a conference championship and, dare I say it, a Super Bowl, this contract can always be renegotiated again. The Redskins and Cousins could always agree to extend it another couple of years and guarantee Cousins more money.
A final disclaimer: I based this proposed contract largely on estimates of both the NFL’s salary cap in the coming years and the Redskins’ rollover cap in those years. If those numbers end up being substantially less than what I’ve cited and projected, then the contract I’ve proposed could all of a sudden end up being alot worse for the team. That’s just part of the risk that NFL teams take, and the Redskins’ front office is certainly more knowledgeable about these risks than I am.
Conclusion
If you’ve made it this far, thank you, and I apologize for droning on for this long. I realize this was a very lengthy and long-winded column, but I truly believe that this dilemma can be solved if both sides just agree to put egos and bad feelings aside and negotiate in good faith. Everyone wins in my scenario. The contract I’ve outlined allows Cousins to declare victory by virtue of getting more guaranteed money up front and providing him security for most likely a minimum of three years, and allows the Redskins to declare victory by providing stability at the quarterback position for the first time in decades without overly burdening the salary cap. And as an added bonus, it allows Cousins’ agent to declare victory by touting the $26M per year average annual value. Maybe I’m totally wrong and I’m a fool for being optimistic, but I firmly believe this will work.
Do it, Bruce. Please. I’m begging you.
[1] See “Projecting the NFL Salary Cap for the 2016-20 Seasons”, by David Levine at https://www.linkedin.com/pulse/projecting-nfl-salary-cap-201620-seasons-david-m-levine-cpa
[2] https://nfllabor.files.wordpress.com/2010/01/collective-bargaining-agreement-2011-2020.pdf
[3] The CBA allows teams to designate players as “pre-June 1” cuts, in which the entire dead cap number is assigned to the current cap year, and “post-June 1” cuts, which allows the dead cap hit to be spread over the current year and the following year. Every team uses the “post-June 1” tool, and it allows some players to be cut who otherwise couldn’t be cut.