Debunking 3 myths about the NFL’s salary cap, Part III

Ladies and gentlemen, welcome to the third and final installment of my Salary Cap Myths series here at Field Gulls. If you missed the first two articles, you can find them here and here.

Let’s briefly recap the past couple articles to refresh everyone’s memories. In part one, we discussed how more cap room is not always better. When a club has more cap room, it doesn’t automatically mean they’re in a better cap position than other teams. The main point I wanted you to remember from part one was this:

"Having your money tied up in players is NOT a bad thing – it’s only a bad thing when you have money tied up in not very good (or bad) players."

Part one concluded that having a club’s money tied up in foundational players for your franchise is sometimes better than not having that money tied up at all (or tied up in bad players).

In part two, we debunked the myth that "cap space is the best way to evaluate a team’s health". With Bryce Johnston’s help, we learned that cap flexibility is a better way to evaluate a team’s cap health. Cap space is temporary. It’s kind of like the tip of the iceberg. Everyone looks at a team’s cap space as the ultimatum – but the ability to freely open up space quickly is of far greater importance. The main point from part two that I wanted you to remember was the following:

"Teams with the most cap flexibility and the strongest core of franchise players have the healthiest cap situations in the NFL."

Of course – those are the obscenely condensed versions of part 1 and part 2. In part 2 – we made a decent jump in difficulty. Part three isn’t as difficult to understand conceptually – but tackles one of the most prevalent misconceptions. Without further ado, let’s dive right in.

Myth #3: Player A got paid ____ in 2012, so Player B should not get paid the same (or more) in 2015.

For starters, the NFL salary cap has not always been $143M. When the NFL salary cap was established in 1994, the salary cap was $34.608M. In 1990, Joe Montana signed a four-year/$13M contract. The reason I bring up his contract is to provide more context into how much NFL contracts have grown.

As the salary cap rises, so do player contracts. Obviously, if Joe Montana were playing today, he would not be making $3.25M a year – because the salary cap has grown more than a $100M since. Truly, the rise in cap limitations is attributed to the NFL’s financial success through large television deals, sponsorships, advertisements, etc. The NFL is rolling in dough – and that really shouldn’t be a surprise to anyone.

In 2000, the salary cap was at $62M. By 2003, it had jumped to $75M. In 2005, we were at $85M. In 2006, the NFL took a fat jump to $102M. It continued to grow – as the NFL’s 2015 salary cap is now officially $143.28M.

I hate to bring this up...because it was agonizing for Seahawks fans for months...but do you remember the debate over how much Russell Wilson should get paid in average annual value? Fans and "experts" kept bringing up Aaron Rodgers’ contract as a comparison. Rodgers signed a 5-year/110M extension in 2013. Divide that $100M number by five (the length of the extension) and one would find that Aaron Rodgers makes $22M in AAV (average annual value). Basically – this is one of the main numbers you hear in the media whenever a player signs a contract.

Now, of course Rodgers didn’t start out his contract by immediately making $22M a year – but instead gradually increases, like all NFL contracts. However, this is how fans and "experts" like to look at things – so this is how we’ll do it.

It’s incredibly important to note that Rodgers signed the deal in 2013. In 2013, the NFL’s salary cap stood at $123M. At making $22M a year, Rodgers would be taking up 17.89% of the Packers’ cap space in 2013. Here’s what I want you to remember:

With the rapidly increasing salary cap, comparing contracts signed years apart is dumb. If you're going to compare contracts in AAV, it is more accurate to compare the % of salary cap space used by a player.

If Russell were to take up 17.89% of the Seahawks’ 2015 salary cap space like Rodgers did with the Packers in 2013, he would have to be making $25.58M a year in average annual value. Instead, Russell signed for a tick below Aaron Rodgers – at $22.9M in average annual value.

Note: now if you follow me on twitter or interact with me anywhere – you know I hate to compare NFL contracts by average annual value. However, we will in this article for argument’s sake. It’s not what the agents are talking to team negotiators about, it’s not the sticking point of player contracts, and honestly – it’s kind of useless. Terms like 3 year cash flow, full versus total guarantees, rolling guarantees, etc. – are much more important...but that’s another article for another time.

This is why I firmly believe that the Seahawks won the Russell Wilson negotiations. Sure, if we look at this shallowly – Wilson won because he got $31M just for signing the contract. But the truth is – Wilson left millions on the table by choosing to re-sign with the Seahawks and forgo free agency. For an agent who talked so much about "maximizing his client’s value", free agency looked to be like the most viable option. However, that’s not what happened. With the increasing salary cap and the pending Andrew Luck extension, Wilson will not be the 2^nd highest paid QB for long.

So yes, Aaron Rodgers got paid $22M in 2013 – and Wilson should probably have been paid a little bit more than $22M AAV.

I hope that made sense. With the increasing salary cap and ballooning of NFL contracts, it just doesn’t make any sense to compare contracts over multiple years. Player markets and contracts are constantly fluctuating – and to refuse to take this into account is leaving out a lot of context.

I hope you enjoyed this series – as the NFL’s salary cap is a concept I love to study. If you have any questions regarding the salary or NFL contracts – don’t be afraid to reach out and connect with me on Twitter. Go Hawks!