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over.the.cap.com
OTC Advanced: Aaron Donald Cashes In With Record Setting Contract
link: https://overthecap.com/aaron-donald-cashes-in-with-record-setting-contract
Aaron Donald officially became the highest paid non quarterback in league history today when he officially signed a six year, $135 million contract extension. The contract has nearly $87 million in guarantees and pretty much deserves every accolade that it is receiving today on social media. Mike Florio has the contract particulars over at PFT and I wanted to look at a few things about the contract now that the numbers are out.
Massive Cash Flows
When the numbers were first announced at $22.5 million a season I mentioned how the contract was about $1 million short of Ndamukong Suh’s free agent heist with the Dolphins back in 2015 (it would have also been similarly short of Mario Williams spectacular contract with the Bills in 2012). The one million is easily understandable since those players were free agents while Donald was under contract but the cash flows of the deal illustrate the strength of this contract even if the APY didn’t meet the highest end numbers. Here is how the inflated values of the contracts line up.
The numbers to focus on here are the 3 year payments which essentially put he and Luck on the same level. He isn’t far off from Carr either and does have a better contract structure. This works out as one of those win-win arrangements as Donald can hit elite level QB metrics early before the Rams take the contract down a peg beginning in year four.
The Strength of the Cap Structure
I love contracts with big signing bonuses. It reflects awful on a team to have to turn around and release the player when they have massive amounts of dead money hanging over their head. It also generally leads to a season of a massive cap increase that can force a team into a restructure that increases the prorated money in the contract.
Donald hits two peak numbers- $25 million in 2020 and $27.9 million in 2021. These years will coincide with two important points- the end of Jared Goff’s contract and the end of the current CBA. Who knows what the Rams salary cap situation will be in 2020 but Goff’s cap number that year will likely be in the ballpark of $23 million while he negotiates for an extension. Todd Gurley and Brandin Cooks will both be over $16.8 million that year. There are some rules that year that could be a plus or minus on a restructure.
In 2021 the CBA expires. The last time around the salary cap fell about 7% from projected growth rates when a new deal came in place. Given how the cap is growing now it would not be a shock if a new reset caused the cap to shrink or at least not grow at the same rate it is now. That could lead to cap issues and restructures.
Any significant restructure of Donald’s deal in either year would like protect his non-guaranteed 2022 salary.
Impact on the Rams
This now gives the Rams two “market buster” contracts on the team with Donald and Gurley being about $6 million above the next highest paid player at the position. Im not sure there was ever a team to do that before. The contract should also clearly open the door for Goff, assuming he plays at a high level, to one day look to really reset the QB market.
Because the Rams recent drafts haven’t gone as well as hoped and players were allowed to leave in free agency the Rams cap space is still ok. They should have around $30 million next season which is about average. The following year they will likely be ranked around 22nd in the NFL. Of course they do have other contracts that will need to be considered (Marcus Peters, LaMarcus Joyner, offensive lineman) but this does not put them in a pinch in any way.
Looking at the structure of the contract I’d say the Rams need to get a solid 5 years out of the contract to get value out of it. Getting year 6 and 7 would be great but as long as Donald is playing at a high level for the next 5 years I don’t anticipate them looking back at the contract as a mistake even if the team doesn’t play as well as they hoped.
Impact on the League
This should set the stage for pass rushers to really move into elite pay territory. Unlike when Williams was king of the hill and JJ Watt and others were signing with multiple years left on their contract we have a few players, in particular Khalil Mack of the Raiders and Joey Bosa of the Chargers, who will soon be looking for big money.
For the Raiders the money here should be eye opening. Mack is set to earn about double what Donald was this year, meaning they will need to account for at least an extra $7 million in total value (i.e. a 7 year total) on the cap just to match it. The cash numbers would be close to their current QB’s. If they think its too rich to have two players at the same time earning that kind of money then they should get serious about a trade. The massive cash flows will be difficult for the Raiders to even dream of matching if they don’t change their philosophy on signing bonuses. This isn’t to say they don’t have the room to do it but it has to be more of a consideration for them than a team like the Rams with a rookie QB.
I think the way this played out also will be a bit of a model for other positional players who are looking to push the issue. I am sure there is already a lot of talk about Donald’s holding out versus Odell Beckham’s attending camp as a reason why Beckham came in under expectations. There may be some validity to that though I think the Rams and Donald were always cordial during the process. He just was showing he was serious about it and holding whatever leverage he could. Donald was also in a string position because the team came off such a good year and this is much harder to do when coming off a bad season (i.e. Mack and the Raiders).
This should also help show that teams will give big extensions to players under the right circumstance. Many of the biggest contracts (this one, Gurley, Adrian Peterson, Chris Johnson, Larry Fitzgerald, and Calvin Johnson) have come down with the player under contract to an organization. Suh and Williams were the two massive free agent ones in recent times but most of the free agent contracts are big numbers for second tier talent. I think its just finding the right place and time.
While pass rushers are the second highest valued position I think any player getting this far up beyond $20 million should push all players to look for this kind of money. If the league is ok with $22+ million for a pass rusher, receivers really should be close to $20 million and cornerbacks just below that based on the current hierarchy of salary allocations. Offensive tackles should be valued a bit higher than now as well.
Of course as with any big deal there may always be push back on outliers and the Rams will fit that bill with the Gurley deal also being on the books, but those arguments usually only last for a short period of time unless the contract is so outrageous you cant justify it. Even if Mack doesn’t get a deal done this should open the door for someone like DeMarcus Lawrence, if he has a good year, to hit $20 million and then the flood gates should open.
Some speculations.
I don’t think anyone guessed all of this–22.5 M annual avg. 6 years, high 80s guaranteed, huge bonus. And I mean no one, not on any board or in the media. Quite a few guessed the between 22 and 23 annual avg. but the rest was not guessable.
Part of what makes this deal unique is the combination of bonus money and guaranteed money. And that would be because of Kroenke. If I have the details on this right, a team has to have the cash set aside in advance to cover guaranteed money. And of course with the cap, most of the money for players comes through league revenue, but that’s not how signing bonuses work—the cap hit may be spread out over the length of the deal but the player gets the money upfront and for that you need cash flow.
So 2 things need cash flow money at hand—the guaranteed money and the bonus. AD got a huge bonus and a lot of guaranteed money, and then gave the Rams the years (6) and the annual avg. (22.5 is a bit less than the metrics say he should have gotten).
To me that looks like Kroenke’s advantage was cash on hand, and that allowed AD to compromise on years and annual avg.
I agree. No one got it all right. The unique thing is the large guarantee and the large upfront moneys. You need a lot of cash to do that.
Agamemnon
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