Haven’t we learned yet? The NFL is NOT like the other leagues. The MLB, NHL, NBA, MLS, EPL, just about everything, has guaranteed contracts. The number you see the day that a player signs is the salary and amount of time that the team is on the hook for. The NFL’s contracts are not fully guaranteed, you can take that problem up with an NFLPA rep if you like.
When Colin Kaepernick’s contract terms were released, there were scoffs and armchair general managers jumping at the throat of San Francisco 49ers GM Trent Baalke.1
For #49ers QB Colin Kaepernick: It’s a 6-year extension worth up to $126M with $60M guaranteed, source says. Under contract through 2020
— Ian Rapoport (@RapSheet) June 4, 2014
Colin Kaepernick's 6yr deal is worth $21M a year and has a guarantee of $61M, highest ever. As I said all along, he wouldn't take under $20M
— Jason La Canfora (@JasonLaCanfora) June 4, 2014
You can go to Twitter to find out what the twitterverse thought of these numbers for yourself, it is a lot of assumptions and overreaction, I warn you.
But, magically, this wasn’t the contract it was first reported to be. The numbers started to trickle out. The specifics, clauses and bonuses started to seep onto the internet. Finally, we started to get a real look at what this contract was. Kaepernick was betting on himself to be worth this amount for the next six years to avoid getting the axe, despite the overally friendly nature of the contract.
Now you know that “up to” $126 million is a huge red flag when reading the terms of any contract. That’s because the “up to” usually signifies maximum value with all applicable bonuses applied and without the player being cut at any time during the deal. That’s an increasingly rare thing to happen.
What is $126 million divided by six? $21 million per year! That’s one of the higher per year salaries of anyone in the NFL! Hell, Aaron Rodgers only makes $22 million per year on average.2 Nevermind that his base salary only reaches $20 million in the final year and his cap hit never hits $22 million in any single year of the contract. But the average annual value! The horror. Don’t listen kids.
If you’d like a look at the “specifics” of the Kaepernick mega-contract, look no further than spotrac.com and let’s dig through what it all means.
The first thing I always like to figure it out is when can the team cut the player without a huge financial and cap burden. Think about Jay Cutler’s contract3 and notice that there is ZERO dead money in the last four years of the deal. Those are essentially three team-option years. The team can cut him at zero cost to their salary cap. Kaepernick has two such years on his contract, understandable since this is his first new contract and he is much younger than Cutler. If he doesn’t tank, Kaepernick looks to be guaranteed a roster spot for about three years. Once the dead money drops to about $4 million, that is easy enough for a team to absorb to avoid the $21 million cap hit. They would be hard pressed to cut him earlier because, don’t forget, they get some money back, but they lose their starting QB in a league with few quality starters.
Also notice that Kaepernick has steady $2 million roster bonuses every year after the first. Those are coming in the form of game bonuses and can only be collected in full if he plays all 16 games ($125,000 per game). Outside of some key clauses in the contract that I’ll touch on later, Kaepernick loses $125,000 for EVERY game he misses.
The signing bonus on this contract is just over $12 million. Compared to QB contracts like Flacco ($30 million), Rodgers ($35 million), Drew Brees ($37 million) and Matt Ryan ($28 million); the 49ers walked away with a steal. Some teams like to put high signing bonuses on certain players because that amount of the contract is spread out over the life of the deal, but to avoid that and avoid a high annual salary is the mark of a good deal for the team.
Now, about the newly popular term “de-escalators”. Most contracts include escalators for players that make it to the Pro-Bowl, reach yardage or touchdown thresholds, or reach other career benchmarks. When they reach those benchmarks, they get a hefty roster bonus. Kaepernick’s deal includes the opposite. The contract is reported as having the $2 million bonus in each season and only goes away if he does NOT reach two thresholds; taking 80% of the snaps and playing in a Super Bowl or making a 1st or 2nd All-Pro team. Without doing that, the “up to” $126 million contract can fall by “up to” $12 million.
The complete and utter outrage on day one of the contract’s reporting was replaced by people claiming to always have been ok with the signing on day two. This is a lesson that must be taught every single off-season; in the NFL the reported numbers mean little to nothing.
In the end, this contract is Kaepernick betting on himself being worth it and the 49ers rewarding that by giving him an increased AAV number. Trent Baalke can cut bait and run later in the deal with Kaepernick fails to silence his critics.